anyone remembers the overstocking chip inventories back in 2001 that led to chaos?
since then no one dares to keep excess inventories and almost all rely on JIT deliveries. that means any small glitch at either side (vendor or customer) and poof here it goes the production line.
ICs are so inexpensive these days that I am wondering why neither HITACHI or NISSAN made a very small investment to stock their 3 days needed material?
wouldn't that worth their business relationship and production loss, sure it would.
Well, I'm not sure why this is such a big deal. Of course it is to Nissan and I understand. Line downs happen all the time in the industry, but most OEMs, unlike Nissan, won't admit to it.
Firstly, I don't understand why they can't develop a second source. It doesn't make any sense. I work with a lot of OEMs and most of them won't even work with you if you won't provide a second source and in case there is technically no way to enable a second source, the OEM will still develop a compatible solution with another supplier. I would understand ACME garage doors can't afford this approach, but Nissan? Of course, if the volume is lower per supplier, the cost may go up a little, but Nissan has a formidable buying power and should be able to negotiate an optimal deal nevertheless.
Last but not least, there are ways of managing buffer inventories, in case there really is NO way to have a second source and that you MUST utilize a specific IC vendor.
This has nothing to do with IDM vs. fabless, I know a lot of IDMs that go on allocation too.
I hope they fix this problem before they start the Leaf production as I'm on the wait list!
Hi Junko ... this is exactly the problem we have been warning the industry about for the last several years ... a snafu waiting to happen ... but everyone said we were stupid! Now the first serious snafu has happened, and it won't be the last, maybe the industry (chip makers and OEMs) will start to wake up, but I doubt it. This should be a warning shot for all of the fablite proponents ... from TI down. Fablite is a bean counter's illusion; lose control of your fab and you lose control of your wafers; lose control of your wafers you lose control of your chips; lose control of your chips your custonmer loses control of their business. Whatever happened to security of supply? It's one thing to have to pay a higher proce for your wafers from a foundry, that just hits your margin; it's another matter entirely when you don't get your chups at all, or they are late ... that hits your sales and your custromer's sales. Time fpr an industry wake up call ... fablite is dead, the IDM 'dinosaurs' will survive, unless they commit suicide by slow strangulation ... which some already have :-)
Chairman & CEO
incident will not be the last
I think there are so many suppliers available to produce the critical ICs used in the engine control units of the automotive. But it is definitely not an easy thing to have a second source for such component. I think Hitachi never expected this shortage. This again reminds me of the recent article printed in EE Times about the growth of the automotive makers in the recent times. More more and more cars - The IC foundries are maxed out!
Yes, that's a good thing! It is reflected in many chip vendors' good performances in the last several quarters.
However, this is also problematic to some chip vendors. Your ability to secure the capacity at foundries becomes much more important. You will be spending more time in managing your customers' expectations. And imagine the efforts it takes for them to restore relationships with their important customers!?!
You have a point, selinz. The automotive industry is very sensitive to quality issue.
It would be fascinating if this has anything to do with any quality, reliability issue of Hitachi's ECU.
However, as a reporter of the story, I actually don't think so.
Executives at the joint Hitachi/Nissan press conference made it clear that this is an issue of the component shortage. Translation: whoever this chip vendor is, that IC supplier is on allocation by a foundry.
The company obviously can't produce enough chips (that must go inside Hitachi's ECU) to satisfy its big-time customer like Nissan.
Supplying components to the automotive industry is a tough job. The quality has to be perfect and the supply has to meet the demand. The volumes can be huge and the product life can be very long. But you can never shut down a car line. This can affect many years of future business and incur monetary penalties. You can bet that the supplier at fault is working around the clock to remedy the situation.
There is no indication about the cause but the automotive market is much more sensitive to quality and reliability than other markets since system failures have much more dire consequences. Like Toyota in recent months (and unlike certain unnamed smart phone), it is possible that quality/reliability led to this decision. Nissan would do well to spin this as "better caught now than later."