How can semiconductor industries overcome supply chain challenges following earthquakes?

Vyra Wu, DIGITIMES Asia, Taipei 0

Regional semiconductor bases in Japan

Sudden, massive, and unexpected disasters pose significant challenges to global supply chains, particularly in industries like semiconductors. Semiconductor production involves a complex network of firms, and major production centers, including those in Japan and Taiwan, are situated in typhoons and earthquake-exposed areas, raising concerns about their vulnerability.

Disruptions from natural disasters often lead to communication breakdowns, supply shortages, transportation disruptions, inventory imbalances, increased lead times, and elevated costs. Preparedness strategies involving diversification, supplier collaboration, real-time monitoring, and agile operations offer solutions to mitigate these disruptions.

Infrastructure is vital in restoring supply chain robustness and ensuring business continuity. Understanding infrastructure levels and tailoring reaction plans becomes essential for companies operating in diverse supply chain environments.

Renesas Semiconductor Manufacturing's experience serves as a case study in earthquake preparedness. Following the Tohoku and Kumamoto earthquakes, Renesas aimed to create a production plant that is hard to break and easy to fix, implementing a risk management plan to enhance production line resistance and ensure a stable supply to customers. Renesas ran simulations of various earthquake scenarios, enabling the development of new business continuity planning training and preparedness measures.

McKinsey & Company emphasizes three priorities for supply chain resilience: resilience, agility, and sustainability. Understanding vulnerabilities across supply chain tiers, enhancing surveillance of participants, and conducting regular stress tests become essential. Agile operations, leveraging digital technologies, and flexible manufacturing and logistics approaches are crucial for enhancing supply chain agility. Agile supply chains require new capabilities and tools, including extensive use of digital technologies, smart automation, and a skilled, flexible workforce comfortable with advanced technologies.

The semiconductor industry's struggles have been intensified by black swan events. With natural disasters becoming more frequent globally, companies must draw lessons from recent calamities to strengthen disaster preparedness and enhance business continuity planning. Recognizing vulnerabilities and implementing proactive measures are key to building a resilient and sustainable semiconductor supply chain.