Guest blog: Semiconductor shortages impact global manufacturing, design & NPI

Through 2020 and 2021, the reduced availability of electronic components has negatively affected the electronics and manufacturing industry. The impact has been felt throughout the supply chain from the manufacturers down to the end consumers. With this a concern for our customers, we invited Nick Cummins, Founder of MHO Services, to share his expert view on the current shortage of electronic components. In this piece, Nick reviews why this happened, the impact worldwide over the past months and what will happen next. Nick also offers advice to those launching a new product or build.

Nick Cummins MHO

Nick Cummins, MHO Services

As has been highly documented and the media and discussed within the industry, the semiconductor shortage has had a significant impact. Semiconductors play an important role in all facets of manufacturing and therefore delays and shortages have sent shockwaves around the world. Without the required semiconductors, producers could not meet demand. Now in the 2nd quarter of 2021, the state of play in respect to the availability of electronic components remains volatile.

One of the industries which this shortage has affected is the automotive industry who saw an unprecedented spike in sales at the end of 2020. This was then followed by a slow down and even halt on production lines. This has been well documented in the mainstream media. In January 2021, BBC World Service discussed this shortage and highlighted how automotive giant Audi has had to furlough employees due to the lack of components. With car manufacturers typically operating a “just in time” model, any production delays can cause huge shortages of cars being produced. (BBC January 2021: BBC World Service – World Business Report, Semiconductor shortage impacts car makers).


Whilst this specific issue is starting to ease to some extent, mainly driven by greater focus and commitment by semi manufacturers on automotive products, the logical knock on is the capacity deficit will impact other industries. The general industrial and consumer industries being the most likely to be impacted, while other industries are prioritised. Whilst not insulated from the impact of shortages there is an accepted commitment that Medtech will be prioritised, as they play a vital role in the current global pandemic. An example of this is the recent agreement between UMC and Sensirion. Manufacturing capacity is being dedicated by UMC to produce vital components of Sensirion’s temperature sensors. These sensors are being used as part of the global COVID-19 vaccine transportation. (Sensirion, March 2021: Sensirion gains capacity support from UMC as both companies partner to support the battle against COVID-19| Sensirion)

Looking at the top 24 US Semi manufacturers, 15 are 100% reliant on external fab (TSMC, GlobalFoundries, etc). The remaining US Semi manufacturers have a significant reliance. This limits the flexibility of supply with those manufacturers, with the less reliant having more control due to internal production capability.

As a result of COVID-19 and February’s Texas Winter Storm (NXP has advised it restarted its 2 Texas Fabs, but could face a US$100m hit to revenue; Infineon has reported it is continuing to ramp but will only hit pre-outage levels by June), there continues to be capacity issues across the board impacting the material supply and fab capacity available. The shortage of wafers impacts supply with prices continuing to rise on a monthly basis.

Although US and European leaders have announced plans to expand and support the production of semiconductor fabs, this will take time to implement and it’s a medium to long term impact rather than any immediate relief. Levels of investment are increasing to drive capacity, however, the time required to build, kit, and commission a fab is several years long. There are a limited number of suppliers for semiconductor equipment so again that will likely prove a bottleneck to rapid expansion. Equipment manufacturers are now quoting 52wk lead times.

So how is the shortage likely to impact global markets and supply for 2021? Firstly, expect delivery and pricing issues to continue throughout 2021, as the market continues to be volatile. As we see TSMC commit to more automotive capacity, it is prudent to remember that the switch will impact industries in other areas that possibly till now haven’t been affected negatively to this point. 

We’re in a very volatile market with lead times stretching to 50+weeks on some products, and average lead times coming in around 20-26wks. It’s difficult enough to manage that capacity in an experienced production environment with planning and purchasing departments, but for a new design or product launch, it can be a very difficult situation.  



For any new designs being looked at with an ambition to launch a build (even at low quantities) there are a few basic rules:

1/ Look at the critical components and get advice on selection. Defaulting to the H/W designers preferred supplier might not be the best option

2/ Have more than one source where possible, even if it costs a bit more for dual layouts on devices, being able to move from a TQFP to QFN can make all the difference in availability. 

3/ Like your financial adviser or doctor, an independent opinion doesn’t hurt when working the supply chain.

4/ Don’t rely on eBay as a source and don’t use hobby websites for critical components.  

5/ Cost the BOM for real pricing in production volumes.

6/ Look at life cycles, min order quantities, etc., and pay attention to device selection as the wrong footprint can mean a significant cost due to reel sizes/excess material.

By Nick Cummins

Learn more about MHO here (


If you are concerned about the shortage of components and hoping to design a new product, please contact our team at [email protected]. With an international network of suppliers and knowledge of the market, we can advise on your next steps.