Back to articles
The complexity, global interdependence and vulnerability to disruption of the semiconductor industry make multi-sourcing and resilience critical for a chip company’s supply chain. Supply issues can have a major effect as we saw in the wake of the COVID-19 pandemic, when the perfect storm of manufacturing plant shutdowns, labor shortages and transportation bottlenecks combined with an initial drop in demand and misaligned forecasts, to have a profound impact on downstream industries.
The consumer electronics sector saw delays in smartphone, gaming console and PC production, while industrial and aerospace sectors faced delays in control systems, sensors, and other electronic components that slowed infrastructure and energy projects. In the automotive industry car makers experienced massive production halts due to a shortage of basic chips, that in 2021 alone was estimated to cost the industry over $200 billion in lost revenue and millions of units in lost production[1].
Making the most of multi-sourcing
Lessons were learned that still resonate five years later – don’t over-rely on a single supplier or region, keep demand forecasting flexible, and strategic resilience is essential. COVID-19 may be behind us, but regional tensions and conflict, trade restrictions and punitive tariffs, even the capacity strain created by the AI boom, are constant reminders of the need for multi-sourcing and supply chain vigilance.
There are many flavors of multi-sourcing ranging from ‘copy-exact’ (where a second fab replicates the original process and equipment configuration exactly), to ‘similar function’ (where the alternate fab produces functionally equivalent or similar chips but not necessarily using the same process, materials or tools).
In Nordic Semiconductor’s supply chain, we employ a combination of these strategies between the front-end (foundry) and back-end (assembly and test) to reduce risk, ensure supply continuity, and provide greater flexibility. This allows us to ensure the best possible device performance and features for our range of solutions.
This is another pillar of Nordic’s value offering. By providing customers with the product they need, when they need it, and at an acceptable cost, they can launch faster, enjoy greater uptime, scale smarter, and keep innovation moving.
From strength to strength across continents
For example, Nordic’s nRF54L Series features a new hardware architecture fabricated using TSMC’s 22ULL (22 nm) process technology. The nRF54H Series meanwhile is fabricated using GlobalFoundries’ 22FDX (22 nm) process.
Both of these leading wafer suppliers offer some very compelling features and strengths, on top of which they represent sourcing from two continents, with TSMC’s leading 22ULL fab in Taiwan, and GlobalFoundries in Dresden, Germany. Establishing a top-of-the-range RF SoC on a new technology involves a steep learning curve and significant investment, and to go ahead and complete that with two foundries requires scale. While it’s not unheard of among larger, especially logic-based suppliers, it’s quite unusual in Nordic’s part of the market.
We have a product roadmap with differentiated features between these two 22 nm technologies, with a primary focus on building on the strengths of each, but also allowing us to bridge the function-gap when needed. We believe this shows dedication and commitment to our belief in always trying to add value and drive the performance envelope.
On top of this, the vendors of both technologies have announced future capability for sourcing the same products from multiple fabs, again across continents, and further helping future-proof Nordic’s supply chain.
The right vendor for the right job
When you select a wireless chip vendor there are many factors developers are well used to taking into consideration. Your wireless protocol or multiprotocol requirements, system integration, power consumption, RF performance, a mature SDK, certification and compliance, price obviously, the ability to deliver a complete chip-to-Cloud solution – the list goes on.
- Read more: Managing IoT Devices from the Cloud
What has also become obvious in recent years is that in addition to all the above questions, developers are now increasingly focused on supply chain contingencies and resilience too. The best wireless chip in the world, is only as useful as its availability.
Questions to ask your preferred vendor include where the silicon is fabricated and on what process node, as well as current lead times, its track record and risk management strategy, as well as how allocation is handled during shortages.
A chip vendor with a resilient and proven supply chain should be able to answer all these questions and put your mind at rest, so you can focus on doing what you do best, building great connected products.
References
- Semiconductor shortages to cost the auto industry billions. AlixPartners, September 2021
