Between baking silicon wafers and shipping final products out to engineers, a lot goes on. Materials are sourced, chemicals shipped, wafers minted and polished, chips sliced and packaged, and final products warehoused, distributed, and delivered to customers around the world.
Now, the shipping and logistics firm DHL is trying to simplify the semiconductor supply chain. The company recently revamped its services for the chip industry, bundling solutions for handling gases used in manufacturing to shipping packaged chips to customers, while using cloud software to give chipmakers a continuous window into their supply chains.
“DHL already had a footprint in the semiconductor industry but we wanted to make the next step,” said Larry St. Onge, a senior vice president for DHL’s Technology Sector business, in an email interview. “While it appears relatively easy to provide the individual services, it is difficult to offer the complete suite.”
DHL can do so because of its manpower and infrastructure, he said. The company has assigned more than 3,000 employees to DHL Semiconductor Logistics. Some are specialists that know how to test products against compliance standards, package chips, and dispose of leftover materials.
This is not only a rebranding. DHL also announced a new shipping service for photolithography tools and other equipment. It is based out of the company’s Global Capital Support Center in Dublin, with offices in the U.S., Europe, and Asia. It provides monitoring around the clock, so that supply chain issues can be sorted out quickly.
The announcements come amid a growth spurt for the chip industry, which has been estimated to generate more than $400 billion this year. At the same time, chips are increasingly being used in new industries, like wearables, factory equipment, and cars. St. Onge said that new applications continue to “shape the markets towards high-volume, low-value semiconductors.”
After years of inconsistent growth and tepid investment into factories, the success is stoking fears that companies will run into shortages. This year, STMicroelectronics has denied reports that lead times for its microcontrollers – which are used in everything from credit card terminals to car transmissions – have stretched to nine months.
The Electronic Components Industry Association said in a recent report that average lead times for chips had increased from around 70 to 80 days over the last year. The products hit the hardest include memory chips and discrete devices like transistors and diodes, the report said.
DHL’s announcement comes after years of corporate matchmaking in the chip industry, which is grappling with pricing pressure and rising development costs. To prepare for the Internet of Things, chip makers have been buying each other desperately, reshaping the entire industry. In recent months, however, mergers and acquisitions have started slowing down.
“But that alone did not really influence our decision” to relaunch the semiconductor services, said St. Onge in an email. “What did influence our decision are the fundamental changes in the industry and the impact that the IoT and digitization are having across many different platforms.”