How to Navigate an Electronic Component Shortage

If you’ve paid attention to the news recently, and in particular semiconductor stocks, then you’ve probably heard that there’s a global semiconductor shortage in 2021. This has affected everything from consumer electronics like laptops and mobile phones to electronic component for automobiles. With regards to the latter, it’s caused companies like Ford and GM to delay or shut down production of new automobiles due to difficulty procuring critical integrated circuits.

If you’re a new designer or you’ve never scaled production to high volume, it’s important to know that there’s always a shortage of some components somewhere. In 2018, it was passives and capacitors. At the beginning of COVID, it was primarily SMD multilayer ceramic capacitors used in mobile phones, which are primarily produced in southeast Asia. Lockdowns were driving diversification of production during that time, sparking renewed debate in the US of on-shoring as a national security issue.

In 2021, there is now a semiconductor shortage driven by a heightened demand for electronics in the wake of reopenings, primarily in North America and Europe. Companies that are looking to design and manufacture a new product at scale should start by engaging with a design firm that understands these supply chain issues. The supply needs to be top of mind at the beginning of a design, rather than after a complex design is completed. Keep reading to learn some strategies for navigating an electronic component shortage and the important role your design firm can play in sustainable sourcing.

From Capacitors to a Global Semiconductor Shortage

In today’s world of globalization and just-in-time supply chains, most designer expect there will be sufficient stock of their favorite components to complete designs and get them manufactured. This might be true for one-off designs, but it makes volume production runs difficult. The fact is that there is always something that is low on stock or out of stock, and it’s driven by multiple factors. Changes in demand, limited production capacity, price fluctuations, and obsolescence force designers to confront sourcing problems early in the design phase.

So what does it mean to deal with an electronic component shortage? There are some practical steps designers can take to ensure they can produce their products at scale over repeated production runs. There will be some investment on the front end to make sure your product can be quickly adapted to new components should your desired parts go out of stock. However, a bit of up-front investment in finding alternative components will save you from redesigns later and will help ensure your design is sourceable over the long term.

Identify Drop-in Replacements Early

Components with a drop-in replacement have the same pinout and land pattern. Component manufacturers have been quite diligent in ensuring multiple components in their product lines have compatible pinouts and land patterns for a given package. At minimum, you’ll be able to replace a component with an alternate from the same manufacturer.

There are many components that come in standardized packages, and these can be leveraged to ensure your design is sourceable over multiple production runs. Some examples include:

• MOSFETs and BJT: These components have standard through-hole or surface-mount packaging that often allows drop-in replacement. For low-frequency applications, you generally only need to worry about current and voltage ratings to ensure compatibility.
• SMD passives and some LEDs: Passive components in SMD packages are bound to be some of the most common in your layout. These components also have standard packaging that enables drop-in replacement. The same applies to some LEDs, but be careful with this and be sure to check the land pattern.
• Memories: When it comes to memory chips, most designers will over-design their systems and will include much more memory than they actually need. It’s okay to opt for a smaller memory chip if it’s in greater stock and represents lower risk for your design. Memory manufacturers have also been diligent in releasing product lines that include drop-in replacements.
• Power regulators: This is another area where multiple companies have taken steps to develop drop-in replacement components. These components often have very comparable or identical specifications, making drop-in replacement very easy.

There are many other examples we could come up with, but these are some of the most common. Pay attention to component specs here to ensure your design doesn’t need any other changes to ensure electrical functionality. With drop-in replacements, you only need one version of your design to ensure compatibility with multiple components. Oftentimes, however, you’ll need to plan to design variants to accommodate replacement components.

Plan to Design Variants

As much as we would like every component to have a drop-in replacement, it’s not possible or practical, particularly for most integrated circuits. With most integrated circuits (e.g., MCUs or MPUs), you may identify a component with a compatible land pattern, but the pinouts don’t match. In some cases, you’ll find a suitable replacement on specifications, but the packages are different. In any of these cases, you’ll need to plan to design variants once you’ve identified potential replacements.

Design variants follow a simple concept: you have a single design with a specific layout that uses your desired components, and you’ll have a spin-off design that uses some of your alternates. You should try to limit the number of variants as documentation is needed to ensure you’re accurately tracking your design revisions. Some design software does a great job of helping you track variants for a project, both locally and on a managed cloud platform. The goal here is to help you stay agile by anticipating potential stock and lead time changes for critical components.

Assume Any Part Could Go Out of Stock at Any Moment

Just recently, we bought out Texas Instruments’ entire stock of a specific SoC for a client prototyping run. Only one week prior, there were hundreds of components in stock from multiple distributors. In only the span of a week, we nearly had a sourcing crisis on our hands that could have triggered a redesign. Thankfully, we were able to procure the parts we needed from Texas Instruments’ warehouse in Singapore. Unfortunately, the SoC now has a 55 week lead time and will need to be swapped on the next design revision.

This is meant to illustrate that the supply chain moves quickly, especially during an electronic component shortage. Just because you see large stocks from a manufacturer or distributor, don’t assume they will stay in stock over the coming weeks. Plan for replacements earlier rather than later, and assume you’ll need to make a replacement when stocks get low.

Consider Obsolete or NRND Components for One-off Designs

Ask anyone in the industry about obsolete components, and they will say these should never be used. In truth, there is nothing wrong with obsolete components or NRND components unless they were recalled at some point in the past. For a one-off design or an emergency one-time production run, obsolete components are just fine as long as they meet specifications. However, don’t rely on them for repeated high-volume production runs. At some point, you will need to replace obsolete components because they will eventually go EOL and will be permanently out of stock. If you find that your design does contain obsolete components, then it’s best to find start finding replacements before your design becomes unsourceable.

The Bottom Line

At the end of the day, you don’t need an elaborate sourcing strategy for every component. Focus on the critical components for which there are very few replacements. There are multiple electronics search engines that can give you insight and visibility into the supply chain and help you anticipate a potential shortage in your desired components. The right design firm can help you identify these components and come up with a strategy for navigating an electronic component shortage, as well as help you scale with the right manufacturer.

If your company is pushing the limits of telecom, data center, medical and consume electronics, and embedded systems, it pays to work with an experienced electronics design firm. PCBLOOP helps private companies, electronics OEMs, and industry primes design modern PCBs and create cutting-edge embedded technology. We’ve also partnered directly with EDA companies and advanced ITAR-compliant PCB manufacturers. We’ll help you navigate electronic component shortages and ensure your next system is fully manufacturable at scale. Contact PCBLOOP for a consultation.

Xiaolin Yang

Over 20 years of experience in electronics design, manufacturing, and Supply Chain Management (SCM).

Highlights:
Graduated from a top 1% university in China with a Bachelor of Science in Electronic Information Engineering
13 years various positions working experience with Fortune 500 companies Flextronics and Huawei
3 years of cross-functional team working experience in he Middle East and North Africa
Co-Founder of PCBLOOP Technology, an engineering service company with 24 engineers and 120 employees

Expertise in:
Electronic design and development
PCB manufacturing
Electronic assembly and manufacturing
Electronic testing and quality control
Product certification application
Structural design and assembly
Electronic supplier management and procurement
Customized PCB services

Proven track record of success in:
Leading and managing teams
Delivering projects on time and within budget
Meeting and exceeding customer expectations
Building strong relationships with suppliers and partners

Passionate about:
Innovation and technology
Solving complex problems
Making a positive impact on the world