How Engineers are Adapting to the Chip Shortage

Supply chain disruptions mean demand for semiconductor chips outpaces available supply. Here’s what engineers can do about it.

The ongoing semiconductor chip shortage has upended the global economy. Chip scarcity can be felt everywhere, from the automobile industry to the smartphone market, with the prices of goods and services spiking in many sectors. These price hikes have come yet another blow to consumers already coping with record-high inflation.

Supply chain disruptions, largely triggered by COVID-19, mean demand for semiconductor chips outpaces the available supply, inevitably leading to shortages, longer lead times, and higher prices for finished products.

Despite companies’ best efforts to counter the shortage’s effects, some manufacturers relying on semiconductor chips have been forced to cut their annual production volume by as much as 25 percent, creating somewhat of a downward spiral, with even fewer goods available, leading to even higher prices.

Manufacturers are now looking to their engineering teams to develop creative workarounds. One survey found that over 55% of engineers are redesigning products to respond to chip shortages.

But what’s the best strategy to adapt to supply chain disruptions? And how can manufacturers mitigate the impact of such shortages in the future?

Designing for Procurement

The chip shortage dilemma has largely fallen on the shoulders of procurement engineers, who work with designers to determine the raw materials necessary for a product. Since procurement engineers order and oversee the management of the technical supplies for production, they are also tasked with finding alternative sources if there’s a shortage of a certain material.

Unfortunately, there’s often no easy solution or alternative source for a global supply shortage. Still, such shortages have been the catalysts for a design principle called designing for procurement or designing for availability. Engineering teams are now designing based on the materials they do have available.

This involves making rapid design adjustments based on available components. The procurement engineer teams will collaborate with design teams to determine the available materials and leverage those to create feasible product re-designs that can be implemented swiftly.

For instance, because of the chip shortage, the automobile manufacturer Stellantis swapped digital speedometers for analog ones in its latest car models. The digital dashboards would have required semiconductor chips, but the analog speedometers don’t involve that tech, so the company executed a rapid re-design based on component availability. This responsive, flexible production can help to negate the effects of a supply shortage.

Building Resilience

Yet the idea isn’t just to respond to shortages but to implement flexible designs from the beginning and minimize reliance on rare or hard-to-find components. This flexible product architecture is crucial going forward because, although the world hopes for supply chains to return to “normal” soon, many experts believe this is highly unlikely.

After all, there are bound to be future disruptions from economic instability, political conflicts, and climate disasters. The philosophy is it’s probably best to plan for disruption rather than wait for the world to align with the needs of engineers.

So while engineers are responding to chip shortages with ad hoc changes to product designs, this is more of a band-aid. The problem is that the new designs are instituted after a crisis hits: the approach is reactive rather than proactive. But prevention is the best medicine.

Due to the difficulties associated with redesigns, engineers realize products must be preemptively designed for adaptability from inception. Certain vital features must be made redundant, meaning there are many back-ups if a certain component can’t be implemented as planned. Adaptability is also about having the foresight to identify materials that could become vulnerable to a shortage. Manufacturing and engineering teams are shoring up supplies in advance and creating more flexible product blueprints.

The goal is to build resilience into product design to allow components to be seamlessly replaced or eliminated as needed rather than waiting for, and praying against, future chaos. Engineers are now tasked with developing resilient, flexible product portfolios capable of weathering social, economic, and ecological shocks.

The degree of a single product’s resilience, or that of an entire product portfolio, can be tested by implementing hypothetical “what-if” scenarios or running such scenarios through AI models. What if there’s a shortage of semiconductor chips? What if we can no longer source material A from country B? How would production need to shift to accommodate these possibilities?

The results of these test scenarios can help engineers pinpoint vulnerabilities in product design and current supply chains to address outstanding liabilities before an actual crisis strikes.

Admittedly, this preemptive approach comes a bit too late for the shortage of semiconductor chips, which will inevitably continue into 2023. But pain points come with valuable lessons learned to better address and mitigate future disruptions. The chips won’t be down forever.