The impact of electronic component shortages on the global space industry
In 2021, the global satellite manufacturing industry was valued at $25 billion, and is expected to grow significantly over the next decade, from 380 to 1,700 new satellites per year. Satellites and spacecraft require a lot of electronic components and semiconductors in particular, which has enabled many new applications for space technology.
Covid-imposed raw material production shutdowns, growing demand for commercial work-from-home devices such as laptops, tablets and routers, and the continued growth of the space market, have led to supply chain issues. supply such as component shortages, extended lead times, price increases and in many cases, postponed launches.
In 2021, the global semiconductor market was valued at $450 billion, and is expected to reach nearly $1 trillion by 2028. The global space microchip industry was valued at $2.1 billion and is expected to reach $3.3 billion by 2028 (6.9% CAGR). 20% of all coins were used by pitchers! Sales of space-grade integrated circuits represent less than 1% of the total semiconductor market. In the midst of an international pandemic, is it fair that our industry is asking for more wafers when there are other more immediate priorities?
As an OEM, my company, Spacechips, has experienced extended lead times and increased component prices. Several prospects have demanded proof that we can obtain parts before signing a contract to guarantee the on-time delivery of their space electronics. I recently spoke to many stakeholders around the world to understand the impact of supply chain issues faced by the global space industry and want to share feedback from space-grade semiconductor manufacturers with foundries , fabless chip suppliers, passive parts suppliers, component distributors, as well as satellite and subsystem OEMs.
Several space-grade semiconductor manufacturers with their own foundries have reported delays in sourcing “raw materials” such as ceramic packages and leadframes. Typically these are made in Asia and the COVID-enforced lockdowns have impacted their availability resulting in longer lead times for some space-qualified ICs. To make matters worse, some manufacturers are required to produce to AS9100 quality, which includes auditing for on-time delivery. The cost of materials has increased, which is then passed on to the end customer. Will we ever see prices drop, I wonder, and could there be a future glut of parts once the supply chain normalizes? Some space-grade foundries in the United States and Europe manufacture for specific applications using specialized processes containing beneficial characteristics for radiation hardness, for example, SOI, low charge accumulation and SiGe.
Several manufacturers were able to cushion the shortage by keeping stocks of materials and wafers. To help you source parts quickly, some suppliers with their own foundry now allow you to purchase parts directly from their online store. The websites provide inventory indication, date code, lot information and provided you are not purchasing for an unscheduled new 500 Satellite Constellation, your parts will arrive within days.
Several fabless vendors of space-grade ICs are battling and competing for wafers and foundry time. Is it really a surprise? The problem we have as an industry is that even though we pay a lot more for fully qualified parts, our industry represents less than 1% of the global semiconductor market while at the same time competing with the rise in home and home work arrow. learning devices. Subsequently, manufacturing costs increased to meet this imposed need, leading to higher component prices and extended delivery times for spacecraft manufacturers.
Only last week, TSMC reported a record quarterly profit with a strong increase in investments planned for this year. A well-known supplier of space-grade semiconductors told me:We get bonuses that come our way with multi-million dollar contracts that jump in the air, do you know who we are and the importance of our program? The problem is that we simply cannot secure enough wafers.“During a global pandemic, should priority be given to the production of essential and life-saving medical electronics? This question raises many moral and human considerations!
Distributors of space-grade parts used to hold inventory, but this trend is becoming less popular and they too are experiencing longer delivery times and higher prices. A key comment from distributors is that New Space companies that manufacture automotive or industrial grade COTS parts will see delays. One approach that helps some investor-rich space companies is their ability to source and then hold components for when they’re ready to build, to ensure on-time future delivery to their customers.
I’ve spoken to OEMs and those who act fast and are willing to take risks have safe parts. Some purchased large inventory at the start of 2020 and now have a healthy inventory that allows them to deliver on schedule. However, access to COTS, industrial and automotive-grade parts has been a challenge that existed before the pandemic, with some spacecraft manufacturers competing with larger buyers from other industries. Several UK OEMs have mentioned that BREXIT has complicated export control requirements within the EU and the rest of Europe, adding further delays.
What can we do as an industry to reduce the impact of supply chain shortages, longer lead times and rising prices?
Understandably, many satellite/spacecraft manufacturers only order parts after winning a firm contract, however, given today’s challenges, this can be a risky approach to ensuring on-time delivery. As an industry, we need to improve our ability to predict future sales and plan purchases accordingly. To increase our influence in access to materials and wafers, as well as our purchasing power, in my opinion, distributors could play a greater role by combining the purchasing needs of several OEMs, while respecting the sensitivities individuals, and by negotiating directly with manufacturers/foundries. There is an entrepreneurial opportunity here! I also believe that agencies, governments and catapults could make a positive contribution to this discussion by providing loans or upfront contract payments to facilitate early procurement to mitigate longer lead times.
Producers of high-volume smartphones, tablets and laptops are able to predict future sales more accurately and then plan their purchases accordingly, for example, they have data on how many customers will want to upgrade their phones next year. This certainty gives them an edge allowing them to place large orders as the space industry takes a more cautious approach. That said, even Apple has been affected, delaying the launch of the iPhone 12 with impacted production throughout 2021. Chip shortages have also affected new SpaceX user terminals.
There have been political and national repercussions, with some countries investing in new local smelters to reduce their dependence on foreign factories. However, it takes time and billions to build new foundries and several space-grade semiconductor vendors have started this investment.
While I don’t think the current challenges will get any worse, I expect them to last through 2022. Foundries have worked hard to reduce capacity as much as possible and increase production, but it’s taking time . Microchip’s CEO recently provided his views on the supply chain and future prospects.
Have your space projects been impacted by longer lead times, increased component costs, schedule delays or postponed launches? If so, how did you handle the situation? What do you think the space industry could do better to reduce the impact of current shortages and how should we plan for the future? Please leave your comments below and the best answer will win a Courses for rocket scientists World Tour t-shirt. Congratulations to Dave from Canada, the first to answer the riddle in my previous post.
I would like to thank all of the component manufacturers, distributors, and OEMs that I spoke to while writing this article. Your contributions have been invaluable!
Dr. Rajan Bedi is the CEO and Founder of Spacechips, which designs and builds a line of Edge-based embedded processors, transponders and OBCs for telecommunications, Earth observation and navigation. , internet, 5G and M2M/IoT satellites. The company also offers space electronics design consulting, avionics testing, technical marketing, business intelligence and training services. (www.spacechips.co.uk). Rajan can also be reached on Twitter to discuss your space electronics needs: https://twitter.com/DrRajanBedi
Spacechips design consulting services develop custom satellite and spacecraft subsystems, and advise customers on how to use, select and purchase the right components, design, test, assemble and manufacture space electronics.