Frank Cavallaro Edited

How will Blockchain affect the semiconductor supply chain? · EMSnow

Written by Frank Cavallaro, CEO of A2 Global

The lack of chips has created a myriad of problems for industry participants:

  • The need for supply chain transparency
  • The need for supply chain security
  • A model for understanding the real buyer’s demand

The past two years have emphasized the need for a deep analysis of the electronic component supply chain down to the source. Enter: Blockchain 2.0.

Frank Cavalaro

Blockchain 2.0, the extension of Blockchain 1.0, introduced the concept of decentralizing businesses and markets through smart contracts, improving security and transparency. While the full effects of Blockchain 2.0 are still under development and the technology has yet to spread, its benefits are promising for supply chain management: accurate recording of price, date, location, quality and component approval; simplify data privacy solutions; and simplify authentication services.

Although the specific uses of Blockchain 2.0 are still under development, at a high level, there are three ways it will affect semiconductor supply chains.

Enhanced security

The shortage has amplified concerns about the quality of the ingredients. As of 2021, the low-end chip market has exceeded $75 billion in global value resulting in greater conversations in managing quality control and validation of ingredients without a significant investment in resources from buyers.

Integrating Blockchain 2.0 into the full scope of the semiconductor manufacturing process helps mitigate the problem of substandard components entering the market. During production, the manufacturing process machine can be registered on the blockchain with a unique identity to track performance, and maintenance history can be recorded. This can greatly reduce the burden of manually identifying substandard chips and reduce the likelihood of purchasing them.

We are already seeing this appear with the use of NFC tags encrypted by the blockchain. Tokens are attached to a component to efficiently authenticate its origin without interfering with chip performance, effectively connecting the blockchain and the physical world.

bigger vision

The recovery from shortage challenges underlined the continued need for deeper supply chain vision and planning. The traditional planning method used by supply chain partners is Collaborative Planning, Forecasting, and Replenishment (CPFR) in which companies communicate together to plan inventory to meet customer demand while reducing costs. Blockchain 2.0 improves this process by storing component data in a secure ledger for partners to access and analyze in one place.

CFPR can be applied to any industry where stock levels can have far-reaching consequences – the auto industry is an excellent case study because we continue to see vehicle shortages due to component limitations. The major auto manufacturers are not only working together to balance inventory, but they are also doing so using the blockchain.

In 2017, leading car manufacturers joined forces and launched the Mobility Open Blockchain Initiative (MOBI) to integrate blockchain into the automotive supply chain. founded by Leading automakers including Ford, GM and BMW, MOBI now represent more than 80 percent of the global auto industry by volume. By leveraging the resources of other manufacturers on the blockchain ledger, car companies can track chips and other components throughout the production process to improve security and transparency of sourcing components.

We will continue to see the focus on supply chain vision as chip shortages begin to subside and buyers can strategize for the future. Blockchain 2.0 shows promise in providing the necessary resources for better planning.

Anticipate customer needs

Unsurprisingly, the current shortage has made buyers wary of the future and want to reduce uncertainties; Blockchain 2.0 can support this. Blockchain incorporates historical data transmissions, smart contracts, and component tracking that give suppliers insight into customers’ buying habits and component preferences. With this information, they can make more informed decisions and recommendations that are coordinated according to the buyer’s needs.

These ideas also provide suppliers with a competitive advantage. Customers will naturally gravitate towards solutions that make them feel more secure, so suppliers who gain insights from Blockchain 2.0 will have an advantage in the marketplace by reducing costs and maintaining customer satisfaction.

What are takeaways?

Blockchain 2.0 has the potential to disrupt the global semiconductor supply chain as the industry searches for new solutions to mitigate future constraints. If deployed strategically, it can help solve three of the most pressing problems exacerbated by the shortages that are there to stay: safety, visibility, and buyer apprehension. However, this is a futuristic solution as suppliers look for stability solutions to ease current restrictions – with the market stable and they can think long term, Blockchain 2.0 could be a viable solution to keep them innovative and agile.

#Blockchain #affect #semiconductor #supply #chain #EMSnow

Leave a Comment

Your email address will not be published. Required fields are marked *