04.10.2021 | Latest

Innovation brake component crisis

Innovation brake component crisis

To create new products, you need competent and creative developers. Experienced hardware and software developers are hard to come by. Today, many companies are struggling in the personnel market to find the right people. Embedded developers are even rarer. These are either software developers who are confident to program chips on register level. Or they are hardware developers who are not afraid of hardware-related software. Experts for the intersection of hardware and software, i.e. experienced embedded developers, are on the red list. And since even in new products the software cannot do without hardware and vice versa, the personnel crisis is putting the brakes on the innovative power of many companies.


As if that were not enough, the component crisis is now also slowing down the realization of new product ideas. In the meantime, you can also read in the daily newspapers that potent automotive manufacturers with great purchasing power are shutting down production lines and sending employees on short-time work. The reasons for the component shortage are manifold: COVID has shaken up the markets and the ability to plan.


In countries like Malaysia, entire production lines have been shut down by the authorities. New markets of digitalization or electromobility are triggering huge demands. There are only a few semiconductor manufacturers left in the world and geopolitical tensions between China and the U.S. are further fueling the crisis.

All not so bad for development, you might think, since the crisis is primarily a purchasing and procurement issue. By the time today's developments go into production, component producers would have rearmed and the crisis should hopefully be over again.

But unfortunately, we are now faced with the situation of not being able to supply our customers from one day to the next because of a few chips. This means that developers must quickly find a remedy, redesign existing products and incorporate new components with better availability. Redesigning means not only replacing individual chips, but also adapting software drivers, extensive testing, approval efforts and certifications.

This gnaws away at a product's contribution margin and the motivation of developers who would rather work on new products.


What do we learn from this?

In the future, developers will pay even more attention to redundancy, will become less dependent on individual vendors, and many companies will outsource the development of the hardware-software base to service providers in order to focus their own resources on customer value and USP. In addition, longer-term forecasting, inventory management and forward-looking procurement will once again become more of a focus.

 

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