Notifications around end of life on semi-conductor components and supply constraints are now a daily customer concern that application engineers are faced with. On the ADI side, traditional queries relating to product functionality or performance are at times secondary to the growing number of queries arising from customers not being able to source recommended components. On the customer side, engineering teams are exposed to serious challenges while trying to integrate ADI technology with long lead-time parts that are required as companion products to the ADI anchor product. This is hindering customers prototyping phases and continued production cycles. Customer solution's time-to-market can be significantly increased as engineering teams are now highly focused on the BOM availability.
This blog describes common production challenges and showcases the advantages ADI product solutions can bring in the current era of BOM supply constraints.
Discrete passive components with standardized packages can usually be replaced with alternatives, although it is not unusual to select slightly different specifications as the supply stocks changes.
Parts with unique and non-standard packages are challenging for production planning and sometimes a re-design of the PCB is inevitable. Considering the current parts lead-times, modifying a PCB to fit an alternative part package could be a faster route.
On the processors and microcontrollers side, it is common to find pin-to-pin compatible alternatives product series or variants, with marginal changes to the architecture, for example Flash/RAM size, maximum clock speed etc. Such changes need to be carefully verified as it can impact on system performance, reliability or security besides the additional development required and potential software limitations (e.g. memory limitations, Real-Time OS support, Third-party software compatibility).
The first introduction to ADI technology usually comes through the evaluation support packages, including evaluation boards, software, drivers and documentation. ADI evaluation boards are designed to provide extended features and flexibility to quickly ramp up knowledge of ADI products. However, large BOMs are prone to part supply shortages, and we are continuously working with our manufacturing and operations teams to proactively manage future demand and planning. This include parts consignment and forecast planning with our manufacturer to get stock well ahead of production.
Raw materials and labor costs have significantly increased due to various factors such as the pandemic lockdown, logistics and energy cost increases or economies bouncing back. The semiconductor materials shortage has been a blow for the whole electronics industry. A recent IPC survey on manufacturers from March 2022 showed that from the participants, many expect a rise in material cost (84% of the participants), labor costs (77%) and orders (54%).
Outside the electronics parts, companies also need to consider the impact of other material shortages and cost increases related to their product top assembly (e.g. plastics, metal and rubber assembly parts…). As the labor costs increase, product commissioning and maintenance is also impacting the effective unit cost, driving the financial margins further down.
In despite of the tough challenges, manufacturers expect to see some level of stability regarding inventories, profit margins, ease of recruitment and shipments as documented in the IPC report below. Note that a diffusion index is a statistical measure used to detect economic turning points.
Figure 1: Direction of Key Business Indicators - Diffusion Index - Zone: Worldwide.
One of ADI’s key strategies is to provide integrated solutions that reduce the overall customer BOM size. For example, ADI’s Software Configurable Input/Output offerings, including the AD74412R, AD74413R and MAX14906, allows customers to design a single platform solution to support multiple module types. This results in a reduction in the customer’s overall inventory.
ADI is widely known in the industry for its quality of supply and rarely discontinuing parts. ADI provides technical support that can help solve customer issues, find alternative system solutions, or engineer workarounds through our team engagement with customers. Many of ADI's industrial parts are qualified for lifetime mission profiles in excess of 30 years. It is also ADI’s goal to ensure that customers' end solutions can achieve the same required performances and reliability when using like for like alternatives.
ADI evaluation boards can often be provided with extra features, which makes them more susceptible to BOM shortages. Our application teams are now working on the development of streamlined evaluation boards based on the parts supply situation to provide alternative options and mitigate the customer lead time. With that approach, ADI aims to develop designs that can be used as a reference and are pre-emptively scanned for potential BOM shortage. Engaging with approved distributors and third-party manufacturers early during the evaluation board design cycle mitigates the risk of long lead time.
The extensive ADI product portfolio provides a robust baseline for many aspects of system design. That includes our power parts from our LT series, processors and microcontrollers, communication ICs, analog and digital parts, sensors and many more. By leveraging ADI hardware, software and technical expertise, customers can reduce development time and BOM supply challenges associated with heterogenous systems.
ADI can also provide competitive alternatives for a wide range of products with a smooth transition for customers who are facing BOM challenges. Using ADI solutions guarantees long term parts availability and reduces development overhead by leveraging greater system support.
 “The Current Sentiment of the Global Electronics Manufacturing Supply Chain”, March 2022, ipc.org.