Tensions between the Netherlands and China continue to rise following the Ministry of Economic Affairs’ decision to intervene at chipmaker Nexperia. The Chinese government calls the move discriminatory. The country warns that the Netherlands should not underestimate China’s determination.

This is reported by De Telegraaf and the FD. The Dutch cabinet took partial control of Nexperia out of concern for national and European economic security. According to insiders, there are signs of mismanagement and conflicts of interest by Zhang Xuezheng, the Chinese CEO of Wingtech Technology, the parent company. This could jeopardize the supply of essential chips.

In early October, the Enterprise Chamber suspended Zhang after European directors of Nexperia reported serious administrative shortcomings. Outgoing Minister Vincent Karremans then used the Goods Availability Act to temporarily influence decisions within the company. This is the first time this law has been applied.

Export ban in response

China responded almost immediately by imposing an export ban on Nexperia. Letters to customers show that the measure has been in force since October 4 and applies to products from the factory in the southern province of Guangdong. The Chinese authorities classify the chips as so-called dual-use products, which can be used for both civilian and military purposes.

The export ban is causing great concern among European customers, especially in the automotive and electronics sectors. According to the German distributor Components at Service, there are no immediate alternatives available for some parts, which could cause production processes to come to a standstill or be delayed for a long time.

The Chinese government claims that the Netherlands is stretching the concept of national security to exclude Chinese companies. According to the Ministry of Foreign Affairs in Beijing, this is a form of economic discrimination and politicization of trade issues. The China Semiconductor Industry Association also expressed criticism, calling out the abuse of security arguments that, according to the organization, threaten the stability of global supply chains.

Tensions are being stoked

Chinese state media is singing the same tune. The Global Times newspaper emphasized that the Netherlands should not underestimate China’s strength and perseverance. Analysts see the export ban as a countermeasure that will further fuel tensions.

Nexperia, once part of NXP and owned by Wingtech since 2019, is one of the largest producers of standard chips for cars, white goods, and consumer electronics. The company is trying to lift the export restrictions in consultation with the Chinese authorities.

Original article by: Mel Dees
14 Oct 2025, 08:49 GMT+1

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In rare move, Dutch government takes control of China-owned chipmaker Nexperia

AMSTERDAM, Oct 13 (Reuters) – The Dutch government has taken control of Chinese-owned computer chipmaker Nexperia, ratcheting up tensions with Beijing as a global fight brews over technology intellectual property, especially around semiconductors.

The government said late on Sunday that it has intervened in Nijmegen-headquartered Nexperia, which manufactures chips for cars and consumer electronics. It cited worries about the possible transfer of technology to Nexperia’s Chinese parent company, Wingtech.

The Hague invoked never-before-used powers under a Dutch law known as the “Availability of Goods Act.” The decision led to a 10% fall in Wingtech’s shares in Shanghai on Monday.

The Dutch government will not take ownership of Nexperia, but it will now have the power to reverse or block management decisions it considers harmful. The company’s regular production is continuing.

WINGTECH SAYS DECISION DRIVEN BY ‘GEOPOLITICAL BIAS’

U.S. President Donald Trump is ratcheting up pressure on Chinese tech firms as part of a broader trade war that saw him threaten 100% tariffs on China’s exports last week.

The U.S. and the Netherlands typically cooperate closely on computer chip industry export controls. A Dutch Economic Affairs Ministry spokesperson, however, said there was no U.S. involvement in its decision regarding Nexperia and the timing was “purely coincidental”.

Washington last month expanded a list of blacklisted firms seen as threats to national security to include subsidiaries.

Wingtech had already been placed on the United States’ “entity list” in December 2024 for its alleged role “in aiding China’s government’s efforts to acquire entities with sensitive semiconductor manufacturing capability.”

Nexperia, which is 100%-owned by Wingtech, said at the time that it would comply with the U.S. rules, though it said its operations were kept at arm’s length from its Chinese parent.

Wingtech called the Dutch government’s intervention in Nexperia, once part of Dutch electronics group Philips, “excessive interference driven by geopolitical bias”.

Wingtech also alleged that non-Chinese Nexperia executives had tried to forcibly alter the company’s equity structure through legal proceedings in a “cloaked power grab” on the company.

A copy of an Amsterdam commercial court ruling dated October 7 and seen by Reuters showed that the court decided on October 1 to suspend Wingtech CEO Zhang Xuezheng from his position as executive director at Nexperia after finding “well founded reasons to doubt” the company was pursuing correct management policy or actions under Dutch civil law. It appointed Dutch businessman Guido Dierick to take Zhang’s position with a “deciding vote”, and transferred control of almost all of Nexperia’s shares to a Dutch lawyer for management. The Dutch state and the company’s labour council had supported the moves, the document showed.

Wingtech could not immediately be reached for comment on Monday outside of normal business hours in China.

Wingtech said in a statement on Sunday that it was consulting with lawyers and seeking government support to “protect the legitimate rights and interests of the company”.

Nexperia, which Wingtech bought for $3.63 billion in 2018, said it complied with all relevant laws and regulations.

COURT ORDERED WINGTECH CHAIR SUSPENDED FROM NEXPERIA BOARD

In its statement, the Dutch government said that administrative problems at Nexperia posed a threat to the company’s “crucial technological knowledge” without elaborating.

“The loss of these capabilities could pose a risk to Dutch and European economic security,” it said.

Nexperia is one of the world’s largest makers of simple computer chips such as diodes and transistors, though it also develops more advanced technologies such as “wide gap” semiconductors used in electrical settings and useful for electric cars, chargers and AI data centres.

Wingtech said in a filing to the Shanghai stock exchange on Monday that its control over Nexperia would be temporarily restricted due to the Dutch order and court rulings, affecting decision making and operational efficiency.

In addition to the United States, Wingtech has had run-ins before with other Western governments over its operations, with Britain ordering it to divest ownership of a facility in Newport.

The Netherlands scrutinised Nexperia’s purchase of startup Nowi in 2023.

Original article by:

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At Evertiq Expo Berlin, market analyst Dieter Weiss (in4ma) and Christoph Solka (IPC, today Global Electronics Association) took the stage once more — not to speak of promise and growth, but of collapse. With data from over 400 companies and biting commentary, the duo unpacked what they claim to be the worst year for Europe’s EMS industry in two decades — and a crisis entirely of the industry’s own making.

“Don’t call it a general global economic slowdown,” Weiss warned the audience. “That’s bullshit.”

The room fell silent.

The European EMS industry contracted by 14% in 2024. Germany saw an even steeper fall of 17.8%, while 28 EMS companies closed their doors entirely. And yet, despite this decline, employment across the sector dropped by only 2%. The result? A dramatic drop in productivity — minus 12.2% across Europe, and minus 16.8% in Germany.

The core explanation? Panic orders, driven by misinformation during the “chip crisis”, Weiss explains — a phenomenon he compared to the toilet paper panic of 2020 during his keynote in Gothenburg last year.

“Don’t talk about a global slowdown of the industry. There was no global slowdown of the industry. Our problems in the electronics industry were homemade,” Weiss said.

Inventory levels, which historically stood at around 15% of annual revenue, shot up to 30% or more. The industry had been building products for demand that never existed — and OEM shelves are still full, Christoph Solka adds.

A shrinking pie, and who’s eating it

in4ma estimates Europe is home to 2,400 EMS companies. But just 136 of them — those with annual revenues above EUR 50 million — now account for 81% of the total market. The other ~1,800 firms share the remaining 19%.

At the same time, Eastern Europe — with fewer companies — nearly matches Western Europe in revenues, thanks to the presence of giants like Flex, Jabil, Plexus, and Foxconn. Labour cost disparities continue to define where large EMS investments land.

Sector breakdown and outlook

The automotive and industrial sectors were hit hardest, with declining orders and severe pricing pressure. Aerospace and defense electronics stood out with 29% growth — though the segment still only accounts for 3.7% of Germany’s EMS output. In other countries, such as France, Italy, the UK, and parts of Scandinavia, the defense share is significantly higher. Consumer electronics and agriculture saw marginal gains.

Looking ahead, Christoph Solka pointed to new data from the Component Distributors Association. After several quarters of falling billings and bookings, the book-to-bill ratio began to climb again in early 2025. By Q1, bookings and billings had finally started to even out — a potential signal of recovery.

The forecast? A 3.1% increase in EMS revenues across Europe this year, with Eastern Europe expected to grow 3.6% and Western Europe 2.7%. Germany, however, is projected to be the laggard, with just 1.6% growth.

But even with cautious optimism, old fears are creeping back.

“What happens at the moment,” Weiss said, “is that there is this guy called Donald Trump who is installing tariffs all the time… Monday, tariffs are high. Tuesday, they are low. Wednesday, they are high again.”

The result: US companies are stockpiling components, hoping to beat the tariffs. Delivery times in Europe have begun to stretch — not dramatically, but enough to raise concern. And Weiss is already seeing the early signs of panic.

“I have to warn you: don’t assume this is the next chip crisis and start hoarding again,” he said. “If we all act reasonably, this will not become a problem.”

But if we let fear take over — again — we’ll repeat the same mistake.

A call for sovereignty — and for urgency

Towards the end, the tone sharpened even further. Weiss argued that Europe must legislate for the domestic production of system-critical electronics — especially PCBs for defence and aerospace. He warned of the national security risks tied to dependence on Chinese production.

He described scenarios where multilayer circuits could be manipulated to fail under specific radio signals — for example, by heating a trace embedded in the inner layers until it breaks like a fuse.

Despite repeated warnings to Brussels, little has changed, he noted.

“We’re so stupid, we think the global economy means buying where it’s cheapest. China doesn’t do that. The US doesn’t. Russia certainly doesn’t.”

Mareike Haass (in4ma) and Christoph Solka will return to share their insights at Evertiq Expo Gothenburg on 4 September 2025, offering attendees the latest updates on the current market landscape and what lies ahead.

Original article: https://evertiq.com/news/2025-08-06-a-homemade-crisis-europes-ems-market-shrank-14-in-2024#:~:text=August%2006%2C%202025-,A%20homemade%20crisis%3A%20Europe%27s%20EMS%20market%20shrank%2014%25%20in%202024,-Editor%3A%C2%A0Dennis%C2%A0Dahlgren

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Economists estimate the overall tariff rate on US imports at around 15% compared to the roughly 2% at the start of the year. This makes it the highest level since the 1930s. However, in a hint that Trump was open to further negotiations, the White House said that the new measures will take effect in a week.

US President Donald Trump signed an executive order imposing tariffs ranging from 10% to 41% on imports from dozens of countries, triggering another round of uncertainty in the global economy as governments around the world grapple with the implications of the new rates.  
 
However, in a hint that Trump was open to further negotiations, the White House said that the new measures will take effect in a week.
The White House announced that the “universal” tariff for goods coming into the United States would remain at 10%, same as it was implemented on April 2. But this 10% applies only to countries with which the US has a trade surplus. 

For countries with which the US has a trade deficit, a 15% rate will serve as the new tariff floor, impacting some 40 countries. Though this will end up being lower for many than the April 2 “reciprocal” tariffs, for some it will be higher. 

Still, the economics and the overall point of it are a puzzle to most economists. 

India’s exports to the US were slapped with a 25% tariff rate; Malaysia’s 19%; and for South Africa the figure was 30%.

Meanwhile, the deadline for a tariff deal with Mexico was extended by another 90 days.

Though Brazil’s tariff rate was set at 10%, a previous Trump order had already placed a 40% tariff on some Brazilian goods.

At 41%, Syria faces the highest tariff rate, followed by Myanmar and Laos, which may be hit by 40% tariffs. So why do these countries in particular face the steepest tariffs? Well, the short answer is, nobody knows!

For some inexplicable reason, a shocked Switzerland faces a rate of 39%. This despite the fact that Switzerland had gone through many rounds of negotiations with the US, and sensed that a mutually acceptable agreement was on the horizon.

According to a report in The New York Times, economists estimate the overall tariff rate on US imports at around 15% compared to the roughly 2% at the start of the year. This makes it the highest level since the 1930s, but it may take a while before it begins impacting households.

Meanwhile, Taiwanese officials expressed cautious optimism despite the new 20% tariff rate set by the Trump administration on goods imported from Taiwan, a major manufacturer of semiconductors.

Rates on semiconductors and other key tech goods are the subject of a US national security probe, under Section 232 of the Trade Expansion Act of 1962. Once that probe is concluded, Taiwan’s negotiating team expects to enter into further talks with their American counterparts.

Original article published 01/07. https://evertiq.com/news/2025-08-01-trumps-new-tariffs-trigger-confusion-across-the-globe

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The European electronic components distribution market is suffering from a declining automotive sector, reports DMASS Europe.

The electronic components distribution industry body represents approximately 85% of the European components DTAM.

DMASS said that European semiconductor distribution sales in Q2 2025 fell 14% compared to Q2 2024. Austria experiencing the steepest drop (36.6%) followed by France (20%), Germany and Ireland both experienced a fall of 17% but the UK fell 10.6% in the period. Iberia alone saw an increase (2.4%).  The total European semiconductor market value is €2.220.00 at Q2 2025.

Power and programmable logic distribution sales were hit hardest in this period, both seeing a decline of 21%. MOS micro logic, analogue and memory sales also shrank by 19%, 15% and 13% respectively. Opto also fell by 6% while sensors and actuators rose by 6% and discrete distribution sales also rose (+1.6%).

The interconnect, passive and electromechanical components (IP&E)  rose overall by 1.43% and is worth €1.51bn but Austria, UK, Germany and Switzerland saw falls of 7%, 3%, 4%, and 6% respectively.
In this market, the standout category was circular connectors with an increase of 122.7%. Power supplies also rose by nearly 7%, electromechanical components by 2.3% and sensors increased by 7.6% compared to Q2 2024. The largest decline was in the capacitor market, film capacitors fell nearly 18%, tantalum capacitors dropped 11% and aluminium capacitors declined 10.5%.

DMASS chairman Hermann Reiter said that whiel the European economy remains resilient it faces “increasing pressure from geopolitical tensions and gloabl trade distruptions”. He said extended lead times, inventory volatility and dependence on critical raw materials from Asia all contributed to strains in the supply chain.

He also identified differences in the international market. “While the electronic components supply chain remains global in scope, customer markets are fragmenting rapidly — with AI demand surging in Asia and the US, Europe faces industrial stagnation and must redefine its position to offset a declining automotive sector.”

“Europe is responding with nearshoring strategies, supply chain diversification, and digital transparency measures. The rising demand for semiconductors, IoT devices, and AI applications continues to drive innovation, presenting growth opportunities even amid uncertainty. To remain competitive, Europe must more actively shape these global dynamics in a rapidly evolving electronics landscape,” he said.

Original Article By Caroline Hayes Posted in Electronics Weekly online on 31st July 2025 | Modified on 31st July 2025

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Trump announced countries that had not retaliated against US tariffs would receive a 90-day reprieve and only face a blanket tariff of 10%. But he hiked the tariff on Chinese imports to 125% from the previous 104%.

In an extraordinary U-turn after days of claiming that his sweeping worldwide tariffs were here to stay, US President Donald Trump shelved plans to hike tariffs on most countries, pulling back from days of market mayhem and a potential global trade war amid warnings of dire consequences for the US economy. 

But Trump doubled down on his trade war with one country — China — escalating America’s economic confrontation with the world’s second-largest economy by slapping further tariffs on Beijing that have now cumulatively risen to a whopping 125%.

As for the rest of the world, Trump announced countries that had not retaliated against US tariffs would receive a 90-day reprieve and only face a blanket US tariff of 10%.  

According to reporting by CNN and The New York Times, the turmoil in the bond market convinced the US president to make this stunning reversal after insisting days earlier that his policies would never change. 

“The bond market is very tricky, I was watching it,” Trump said, after his latest announcement, seemingly indicating that the troubling surge in US government bond yields was playing on his mind. “The bond market right now is beautiful. But yeah, I saw last night where people were getting a little queasy.”

Trump’s turnabout came after the most dramatic episode of financial market volatility the world has seen since the onset of the COVID-19 pandemic, erasing trillions of dollars from stock markets.  

But the US president has refused to ease the pressure on China, saying he would hike the tariff on Chinese imports to 125% from the previous 104% level, after China announced additional retaliatory tariffs against the US of its own. The two countries have slapped higher and higher tariff hikes against each other in a tit-for-tat since Trump first imposed wide-ranging tariffs against most countries, including China, on April 2.

“At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable,” Trump wrote in a social media post.

Meanwhile, the head of the World Trade Organization, Ngozi Okonjo-Iweala, has warned that the trade war between the US and China “could severely damage the global economic outlook” and trigger “potential fragmentation of global trade along geopolitical lines.”

Orignal Article: https://evertiq.com/news/2025-04-10-trump-reverses-tariff-hikes-for-most-countries-except-china

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How could the revenues for EMS companies increase so publicly during a semiconductor crisis? That is the question that market analyst Dieter Weiss from in4ma poses to the audience from the stage at Evertiq Expo in Gothenburg.

The floor is silent. completely silent. (Click this link to View youtube video of the event).

He illustrates his point with a stack of toilet paper, arguing that the toilet paper crisis that emerged during the pandemic demonstrates the same phenomenon as the semiconductor crisis. Toilet paper has a relatively constant demand, and the same can be said for semiconductors, Dieter explains. People did not go to the bathroom more often than before during the pandemic; they simply bought more toilet paper. This was after a persistent rumour about a risk of a shortage had taken hold, which he claims also happened within the semiconductor industry.

“Artificial demand is not grounded in reality and will sooner or later backfire,” says Dieter Weiss.

The automotive industry can be blamed to some extent, but not for the reasons one might think. It was not that they stopped production due to a semiconductor shortage; rather, they had simply produced too many cars during the years before.

What he describes is a traffic jam: someone lightly brakes, the car behind slams on the brakes, and another car further back comes to a complete stop. And now we have a queue. Actions always have consequences, and they are not always equal. A light break – or a rumour – can set off a chain reaction.

The European EMS industry grew by 4.9% in 2023. Western Europe saw an increase of 11.2%, while Central and Eastern Europe (CEE) experienced a decline of 1.8%. Despite the growth in 2023, 2024 has so far been a tough year for manufacturers. The question is: Where have the orders gone? 

The answer is unfortunately painfully simple, according to Dieter: they have already been produced, two years ago, and are now sitting on the shelves of OEMs — nothing is reaching the end customer. Only when OEMs manage to clear their overflowing inventories will the market pick up again.

Between 2015 and 2019, the raw material inventory for Europe’s EMS companies constituted about 15% of annual revenues. This has since increased dramatically. In fact, manufacturers in 2022 had EUR 6.4 billion in excess inventory compared to normal levels. And despite the industry’s efforts to reduce these inventories in 2023, Europe’s EMS companies still had EUR 5.2 billion in surplus stock.

A supply chain consists of several different companies working together: the manufacturer, the distributor, the wholesaler (or in this case, the EMS company), and the end customer. Each works independently of one another, but at the same time, they rely on each other for a constant flow of products that allows companies to fulfill their requirements. And that supply chain was totally disrupted in 2020.

Was there an actual shortage? In short, yes, but it was not as widespread as the “artificial shortage” made it seem. Microcontrollers were indeed in short supply during parts of 2021; beyond this, Dieter argues that the crisis the market experienced was a self-fulfilling prophecy. A troubling rumour about an impending shortage created panic among OEMs, who in turn increased their orders with EMS companies, and the dominoes were set in motion.

“For the various markets within the electronics industry, the average growth rate over the past 10 or 20 years has been about 3.6 percent — and there is a very clear rule: the market never jumps,” says Dieter Weiss from the stage. “So don’t think that from one day to the other, the market jumps up by 20-25%, because that doesn’t happen.”

On the screen, a chart for 2021 is displayed, showing that the semiconductor industry managed to scale up its production that year.

“During 2021, the semiconductor industry was able to increase the output, and I’m talking not about revenues, I’m talking about quantity, by 21.6%. A quantity that is much higher than what actually the market needs. So you must ask yourself: Why did we have a shortage?”

Dieter rewinds to the automotive industry. It is often said that the automotive industry collapsed due to the semiconductor shortage, but that is not true. According to Dieter, this is actually completely wrong, and the numbers show it. The decline began as early as 2019.

“The problem was that the automotive industry, and particularly two players — Nissan and Volkswagen — were constantly fighting for the number one position in global sales. They were competing hard, and in 2018, Volkswagen manufactured so many cars that they had to store around 800 of them at Berlin’s non-finished airport because they didn’t know where to put them.”

That was the situation. The automotive industry started slowing down as early as 2019 and manufactured fewer cars. Then came the COVID-19 pandemic, which created significant problems for the automotive industry. But apart from that, there were no other major factors. So, why did everything suddenly become scarce?

Dieter paints a scenario where purchasing managers tried to be smart with their planning, and distributors found themselves unable to handle all the orders.

“In response to this, distributors implemented a new rule: no fixed order, no delivery date. So, you could not do any logistical planning anymore, because you had to order the product in order to get the delivery date.”

Then a new problem arose: What happens if a company has the semiconductor but lacks the other parts needed for the PCBA?

The industry responded by starting to order the entire bill of materials and purchasing everything at once. By doing this, they fulfilled exactly what the distributors had planned — to move their stock to the OEM and EMS companies. “And all of a sudden, you build up huge inventories.”

Again, Dieter echoes: There has never been any real shortage of semiconductors. It was merely a self-fulfilling prophecy. False information about an impending shortage caused companies to buy more than they actually needed, and now all that material sits in stock.

Now, in 2024, many wonder: Where have all the orders gone?

“You manufactured those orders to your customers already in 2022. And in the first half of 2023. And they are now lying on the shelves of your customers. And as your customers did not see a jump in the market for their customers, they still have their inventories full. So they pulled in the second half of 2023, they pulled the brakes and said no further deliveries anymore. We don’t need anything. And many also said we don’t need anything in 2024 anymore.” 

That is why revenues for many EMS companies are decreasing by 10-15%, and for smaller companies, they are dropping by 20-25%. This is, by the industry, a self-inflicted problem.

“When you ask me today when the orders will return? The answer is: Forget 2024. Nothing will happen in 2024 anymore. You will have to live with the fact that your revenues will be much lower. Only in the first half of next year, you will see a relief,” Dieter concludes, urging all listeners to look for the right planning tools that can help avert situations like this.

Editor: Dennis Dahlgren

Original article can be viewed at: https://evertiq.com/news/56445

The post Was there ever a semiconductor shortage? appeared first on Connect Electronics.

Though many anticipate chip inventory rebalancing and normalisation come early 2025, the chip supply chain will continue to face challenges and constraints. Infrastructure costs, geopolitical events, increased vulnerability to natural disasters, and both natural resource and talent shortages will all contribute to ongoing challenges, even as semiconductor supply normalises.

The widespread adoption of artificial intelligence (AI) and hyper-scale cloud computing is driving much of the surge in chip demand and has also led to shifting fabrication plant (fab) priorities, which will impact sourcing for certain components in 2025 and beyond.

Though some elements of market recovery are worth celebrating, buyers should remain cautious and proactively prepare for recovery while developing strategies that help minimise risk.

Factors Driving Market Normalization

The semiconductor market should ease into more balanced, predictable supply behavior in early 2025. This will be due to the following factors:

• “Take or Pay” contractual agreements terminating
• Better supply visibility by early 2025
• Surety of product manufacturing
• An improved economic situation, with better capital flow and moderating interest rates
• Semiconductor market growth opportunities related to AI hyper-scaling and high-end cloud computing demand

In 2025 and beyond, the AI, cloud and embedded space is expected to have above-average growth driven by high underlying demand for edge computing, data centers, networking and infrastructure equipment, and the continued proliferation of IoT products. Top semiconductor manufacturers, including TSMC, have seen a consistent increase in demand for semiconductors due to the boom in demand for AI products specifically. The demand in this space will continue — and likely grow — for the next several years at a minimum.

Chip Capacity Constraints

Market recovery does not mean the end of semiconductor shortages. While semiconductor industry insiders now begin to see a normalization of the chip supply chain and anticipate a full normalization come early 2025, this new “normal” will evolve into rolling periods of constraint environments for certain node sizes. 

Semiconductor supply constraints will be exacerbated by fab delays. New fab construction has been continually delayed in the U.S. Many of the fabs that started construction in 2021 and 2022 have been delayed due to a decrease in overall consumer demand, geopolitical events, and high development equipment costs. In the past year, TSMC reported multiple delays to its $40 billion facility in Arizona. The company announced last month that it would receive up to $6.6 billion in CHIPS Act funding to expand the site, but factories likely won’t be operational until 2028.

Given the market fluctuations and uncertainty, semiconductor buyers remain concerned about long-term supply. In order to protect against future disruptions, companies are turning to inventory prepayments to secure required components for their end products. For example, Micron announced it received $600 million in customer prepayments during fiscal Q1 2024 alone. In December 2023, AI leader NVIDIA made a total of $775 million in upfront payments to multiple chipmakers to secure cutting-edge high-bandwidth memories. 

Of course, prepayments can place significant financial strain and pressure on organizations. Most companies will not be able to prepay for all necessary chips. To protect balance sheets, prepayments are best made on components that are in the highest demand.

Node-Size-Specific Supply and Demand Considerations

After next year’s inventory rebalancing, wafer supply across most semiconductor manufacturing node sizes is expected to be outpaced by demand through 2027. Buyers should work to understand how supply for the chips they need for their end products will be affected by market shifts.

Next Generation, Sub-11nm: Next-generation chips (components smaller than 11nm) power high-growth advanced technologies such as AI and high-end cloud computing. New fabs will continue to prioritize next-generation chip investments as AI and markets grow. Sub-11 nodes remain the most profitable, which limits the number of companies willing to invest in the larger node sizes.

Mature Nodes, Greater Than 28nm: The automotive sector typically uses chips with mature nodes greater than 28nm. Supply may soon be trending in a positive direction for mature nodes. In the midst of a slowdown in consumer demand for electric vehicles (EVs), electric car companies have ramped up production of partial hybrid vehicles. Partial hybrids require fewer chips than pure EVs and some different types of components.

As auto manufacturers de-emphasize pure electric vehicles in favor of PHEVs, it will free up semiconductor supply for those remaining in the market. Specifically, there will be increased availability of chips with mature nodes greater than 28nm.

Legacy Components, >=65nm: As fabs move away from producing legacy components and larger node sizes, OEMs will find it increasingly challenging to source legacy parts through manufacturers and traditional distribution networks despite global CHIPS Acts.The most significant supply/demand imbalance will be in the >=65nm node size, where OMDs (original design manufacturers) are best positioned to fill gaps in supply.

After the inventory correction in 2025, supply and demand imbalances for legacy and current-gen components are expected to continue as there is limited new supply expected, despite a consistent demand outlook.

Building A Resilient Supply Chain

Market recovery may be on the horizon in early 2025, but it won’t be smooth sailing from there. To be best positioned to fulfill future demand, OEMs must build robust, resilient supply chain strategies now.

Here are three strategies that OEMs can employ to mitigate risks and prepare for potential constraints:

1. Building a supplier network: Supply chains are more interconnected than ever. Building a network of resilient suppliers (globally and close to base) gives OEMs options when shortages arise and lowers the risk of disruption if an unexpected event occurs where the bulk of their components are produced.
2. Be proactive: Being proactive by recognizing supply chain disruptions and adapting quickly, rather than waiting for issues to build, is critical to a resilient supply chain strategy.
3. Leveraging advanced analytics: Choosing reliable, up-to-date sources for market forecast information and consulting with multiple players in the industry—partners, suppliers, customers, and even competitors—helps OEMs gain a holistic approach and keeps them ahead of the curve.

By keeping a finger on the pulse of market shifts, adapting strategies when necessary, and preparing for constraints proactively, buyers can take on challenges that may arise after the market normalises.

Original source August 31, 2024 by Frank Cavallaro from A2 Global Electronics

The post What to Expect in the 2025 Semiconductor Supply Chain? appeared first on Connect Electronics.

While China is in the lead for critical minerals production, the nation is losing its dominance. For example, the United States and Australia have increased their production of rare earths from 2010 onwards and most recently, Myanmar and Thailand have started to mine far more than before. Global production of cobalt, graphite and lithium set to increase nearly six-fold between now and 2050 (World Bank).

Originally created by By David Manners Posted on 2nd August 2024 | Modified on 2nd August 2024.

The post China’s Grip On Critical Minerals appeared first on Connect Electronics.

Key segments of the EU’s electronics manufacturing industry are set to decline – undermining Europe’s security, industrial resiliency, and global competitiveness.

A recent analysis by IPC reveals Europe’s increasing reliance on foreign regions for electronics manufacturing in critical and strategic sectors such as aerospace and defence. Even with the adoption of the European Chips Act, the report – Securing EU’s Electronics Ecosystem – shows that the EU’s market share in critical electronics components other than chips, such as PCBs, electronic manufacturing services EMS, and advanced packaging, will fall to 15% by 2035. Evertiq has previously reported on the challenging situation the European industry is facing – especially the PCB industry.

Over the previous two decades, the PCB industry in Europe has seen a severe decline, one could even call it an erosion. In passing the Chips Act, the EU made a strategic, but narrowly crafted commitment to the electronics industry – but rebuilding a robust and sustainable European electronics ecosystem requires revitalising and expanding electronics production beyond chips.

According to the IPC, a “silicon to systems” strategy is required – even necessary – to support ongoing EU technological leadership and achieve strategic objectives.

As previously reported, US and European PCB manufacturers have been outcompeted and outpaced over the last couple of decades by Asian PCB manufacturers. In 2000, Europe’s domestic PCB manufacturing accounted for 16% of the global total; by 2022, this figure had dropped to 2.3%. Back in 2000, Europe had 555 PCB manufacturers, in 2015 this number had been reduced to 247 – in 2021 it had dropped to 171.

Given the current trajectory of the European PCB industry, Evertiq has invited Alun Morgan, President of EIPC, to participate as a keynote speaker at the Evertiq Expo in Berlin, Germany on June 20, 2024, to talk about the dire situation that the industry faces.

IPC’s investigative report examines just how reliant Europe is on non-EU manufacturing in eight strategic sectors including aerospace/defence, automation, mobility, healthcare, and renewable energy – and the picture it portrays is far from pleasant.

According to the IPC research, for each of these eight strategic sectors, several similar storylines emerge. First, without strategic initiatives and policies, the EU’s total share of electronics systems manufacturing is expected to drop by 2035. Second, the EU continues to rely heavily on overseas suppliers for critical inputs and processes such as PCBs, advanced packaging, and IC substrates. Third, without intentional and strategic interventions, these dependencies are bound to intensify by 2035.

According to the IPC’s data, the EU’s share of the global PCB industry is 2.8% as of 2024, and by 2035, the IPC projects it to be 1.7% – assuming nothing is done to slow current development.

A comparable scenario for electronics system manufacturing and assembly (OEM/ODM/EMS) may be drawn. The EU now has a 16.6% global share, but as previously indicated, if nothing changes, the IPC predicts this proportion will be 15% in 2035.

The study’s findings echo growing calls for strategic investments and broad policies to boost the EU’s competitiveness. If the EU truly wants to “reduce its strategic dependencies in sensitive sectors” it needs to look beyond chips.

The industry now calls for action, global PCB production has more than doubled since 2000 with European demand today at an estimated EUR 7.87 billion – while at the same time, the PCB production in the EU is valued at roughly USD 2 billion, or around 2% of global production.

The IPC states that despite soaring demand for PCBs, European PCB production is projected to satisfy only 11% of European demand for PCBs – down from 17.5% today.

The answer, according to the IPC, is a Strategic Electronics Manufacturing Act (SEMA), building on the model of the European Chips Act and broadening the approach to include the full electronics manufacturing value chain.

As mentioned earlier, Evertiq has invited Alun Morgan, President of EIPC, to participate as a keynote speaker at the Evertiq Expo in Berlin, Germany on June 20, 2024, to shine the spotlight on the European PCB industry.

Additionally, Evertiq has assembled industry professionals for a panel discussion where we will delve deeper into the challenges and opportunities of the European electronics industry. The aim is not only to discuss critical topics but also to share insights and solutions that can help the industry as a whole thrive in this dynamic environment. By fostering a collaborative dialogue, we hope to inspire innovation, resilience, and a shared vision for the future of the European electronics industry.

Editor: Dennis Dahlgren.
Original Article: https://evertiq.com/news/55877

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RECORD 2023 GROWTH FOR EUROPEAN EMS MARKET

In this article, IPC Electronics Europe presents purchasing professionals with the key takeaways from in4ma’s Annual Survey of the European EMS Industry 2024.

As revealed by an annual survey conducted by in4ma and sponsored by IPC Electronics Europe, the European electronics manufacturing services (EMS) industry experienced a robust 11 percent growth last year.

Printed circuit board assembly (PCBA) production by EMS companies achieved record revenues of 57.3 billion Euros in 2023, underscoring electronics manufacturing’s vital role in the European economy and industrial base.

The survey’s lead architect and in4ma’s founder and president, Dieter Weiss, stated that 306 legal entities contributed data to this year’s survey, which represented a 50 per cent expansion in participants in just three years.

Key year-over-year industry takeaways from the survey data included:

• Eighty-one percent of EMS companies had higher revenues than the previous year
• Employment in the EMS industry increased by approximately 14,000 to just over 254,000 total, which represented employment growth of 5.9 per cent
• EMS production of PCBAs represented only 43 per cent of the total market of European PCBA production in Europe, so long-term growth potential still exists
• The market remained very top heavy: Less than four percent of the total EMS companies in Europe represented over 70 per cent of revenue
• Excessive raw materials in inventory were calculated to be 5.2 billion Euros
• Market consolidation will continue in 2024 as witnessed by 12 merger and acquisition (M&A) deals completed just in the first two months of the new year
• Overall prognosis for 2024 is that the European EMS market could contract by up to one percent

The full report titled Annual Survey of the European EMS Industry 2024 authored by Dieter Weiss and Mareike Haass can be purchased directly from in4ma.

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Gen AI sparks IC boom, says Yole

Datacentre GPU and AI ASIC revenue could reach $156 billion by 2025 and $233 billion by 2029, says Yole Developpement.

The massive growth that the data center GPU and AI ASIC market experienced in 2023 is expected to continue in 2024 before stabilising in 2025.

Generative AI’s rise since late 2022 has boosted demand for high-speed memory technologies, including DDR5 DRAM, GDDR6 DRAM, etc., as well as HBM .

Thanks to strong momentum in GPUs and ASICs for AI computing, the HBM market is booming. Bit shipments are expected to keep growing vigorously in the next five years, with a 48% CAGR between 2023 and 2029.

Generative AI’s explosion also impacts the packaging market segment: according to Yole, it will grow to $333 million in 2029.

Datacenter processor shipments for AI acceleration were growing strongly in 2023, and this trend is expected to continue in 2024 and 2025. Yole expects the datacenter GPU market to grow to $162 billion in 2029, representing an almost 26% CAGR between 2023 and 2029.

Among these datacenter GPUs, the flagship segment with GPUs such as Nvidia H100, B100, and AMD MI300, which are mainly used for generative AI training and inferences, is expected to grow.

AI ASICs are also growing strongly to a $ 71 billion market in 2029, representing a 35% CAGR.

“The decision to investigate the effect of AI in depth was triggered by the unprecedented investment from major hyperscalers in GPU and AI ASIC, which far exceeded our initial projections,” says Yole’s Emilie Jolivet, “this surge in investment was reflected in the remarkable revenue growth, with 2023 figures more than double those of 2022. At Yole Group, we anticipate a comparable growth rate for 2024, indicating a potential sustained trend that is likely to continue to reshape the industry.”

The impact of this trend extends beyond the financial aspects, significantly influencing the semiconductor supply chain. The increased demand for advanced chipsets optimised for AI workloads is impacting the existing supply chain, leading to potential bottlenecks and shortages.

Moreover, the shift towards AI-specific hardware is driving a need for new manufacturing processes and technologies, further challenging the industry.

Nvidia is the frontrunner in the generative AI market, propelled by its flagship GPUs and experiencing substantial growth in its datacenter business line.

Meanwhile, AMD’s MI300 is gaining traction in the field. Major players like Google, Amazon, and Chinese BATX are forging ahead with the development of AI ASICs tailored as custom chips for internal use and cloud services. Their goal is to lessen dependence on datacenter GPUs from fabless companies, reduce costs, and harness processors designed specifically for their requirements.

This emergence of AI ASICs presents significant competition for Nvidia. Intel’s Gaudi and several startups with varied approaches are also entering the market.

“Samsung, SK hynix, and Micron are expanding their wafer capacity for HBM production to capitalise on opportunities in the AI market,” says Yole’s Adrien Sanchez, “while SK hynix currently leads the HBM market, competition is intensifying with Samsung’s involvement.”

In the advanced packaging field, Intel, Samsung, and TSMC are at the forefront of innovation in the high-end packaging market.

Despite challenges faced by IC substrate makers, optimism stems from recent investments, capacity expansions, and advancements in glass core substrate technologies.

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Semiconductor Lead Times Drop and Passives Rise

Can you believe we’ve already made it through the first half of the fiscal year? Time flies when you’re having fun. The summer sun is heating up, the temperature is rising, and so too is the chip war. Sanctions between the United States and China have partially derailed the global electronic component supply chain’s recuperation. China’s latest export restriction on gallium and germanium, two elements that are critical in semiconductor manufacturing, could further amplify the raw material shortages affecting PEMCO market segments. Advanced digital components, such as CPUs, are expected to come out of a longlasting gallium and germanium drought unscathed. Still, it would affect peripheral components such as LEDs and fiber optics.

Macroeconomic pressures continue to impact consumer demand. There was hope that orders would pick up during the shopping festival in China to mitigate some of the excess
electronic component inventory. This did not happen.

Excess inventory continues to impact the semiconductor industry, with DRAM and NAND experiencing some of the worst drops. However, memory giants, Samsung Electronics and SK Hynix, believe that Q3 2023 will be the beginning of a revival in the memory market.

By David Manners 11th September 2023 I. Electronicsweekly.com

Download the full pdf report here>

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The US has also extended the ban to over 40 countries which are seen as likely to buy the chips for re-sale to China.

“Today’s updated rules will increase effectiveness of our controls and further shut off pathways to evade our restrictions. These controls maintain our clear focus on military applications and confront the threats to our national security posed by the PRC Government’s military-civil fusion strategy,” said IS Secretary of Commerce Gina Raimondo.

The ban is seen as particularly affecting Intel, Nvidia, Xilinx and TSMC. Nvidia has told investors its A100, A800, H100, H800, L40, L40S, and RTX 4090 products could cone under the ban.

“The US needs to stop politicizing and weaponizing trade and tech issues and stop destabilizing global industrial and supply chains,” said China’s Foreign Ministry spokesperson Mao Ning.

“Overly broad, unilateral controls risk harming the US semiconductor ecosystem without advancing national security as they encourage overseas customers to look elsewhere,” said the SIA.

By David Manners 18th October 2023 I. Electronics Weekly

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Harwin has created a range of retro-fittable 360° anti-interference back-shells for its Kona high-power connector series.

“These back-shells will prevent unwanted EMI leaking out from the connector-cable assembly into the surrounding system,” according to the company. “The two-part construction of the Kona backshells enables engineers to up-grade their existing cable assemblies with 360° EMC shielding.”
Kona connectors come in 2, 3 and 4 contact versions with an 8.5mm pitch, and can carry up to 60A per contact. As well as cable end versions, board and panel-mount versions are available – the latter allowing complete shielding with metal enclosures.

Cable end shell types are designed to accommodate flexible metal braiding (left), and are supplied with tie-bands to attach the braiding to the shell, and the back-shells install with simple tools.

Construction is 6061 aluminium aerospace alloy, nickel-plated for corrosion protection.
Use is foreseen in space, unmanned aerial vehicles, robotics and electric vehicles.
“In situations where power connectors are situated near a dc-dc converter, such as in vehicle charging infrastructure, the high currents being transported can cause distortion waves that will place stress on the converter,” said Harwin v-p of products Ryan Smart. “By having a back-shell shielding option we’ve added an offering that can address problems of this kind.”
Kona connectors have 2mΩmax contact resistance and are rated for 250 mating cycles and 1.5k dc (or peak ac) at sea level. Max voltage is 3kVac (1minute), or 500Vac at 70,000ft (21km/44mbar).

Harwin products are manufactured in the company’s facility in Portsmouth, England.

Original article published on: https://www.electronicsweekly.com/news/products/connectors/emi-back-shells-for-harwin-mini-power-connector-2023-07/

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After nearly two years of severely constrained supply conditions, electronic manufacturers are finally reporting improvements in the delivery of some components, shortening lead times and reduced pressure on average selling prices across the industry. The situation remains fluid and uneven, though, and restoring the procurement environment to a state of balance is still months away, according to industry executives.

Clearly, conditions are still not optimal in the electronics manufacturing business, or even in the larger global economy where enterprises across multiple industries are reporting weakening sales and either freezing hiring activities or cutting the workforce. 

In the electronics sector, many OEMs and electronics manufacturing services (EMS) providers are still struggling with lack of clarity about actual end-customer needs and the ability of suppliers to meet their procurement requirements. Automotive OEMs, for example, remain in a quandary, unable to source sufficient quantities of critical components like microcontrollers. As a result, automakers like Toyota Motor Corp. have been cutting vehicle forecasts for even 2023.

“We have seen a high production plan of 9.7 million units and worked hard with the suppliers and production sites in order to deliver as many cars as soon as possible to our customers who have been waiting for a long time for their cars to be delivered,” said Masahiro Yamamoto, the chief accounting officer for Toyota, during a call with analysts to discuss the company’s fiscal 2023 second quarter financial performance. 

He added: “However, it’s still difficult to predict the future due to risks such as procurement of semiconductors. Therefore, we decided to revise our plan to 9.2 million units, which is down by 500,000 units from the previous forecast. We intend to continue to consider all possible countermeasures and make every effort together with our suppliers and production sites.” 

All segments of the economy have been exploring innovative ways to resolve sourcing challenges like the one Toyota faced during its recent quarter but solutions have proved elusive, according to industry executives. As the procurement problem worsened in the electronics industry at the beginning of this year, it pitched OEMs against OEMs, created rifts in the relationship between chip suppliers and some of their top clients, resulted in double-ordering of components and spot hoarding, which is now showing up in higher inventory levels at distributors and semiconductor vendors. 

Avnet Inc., for example, closed its fiscal 2023 first quarter ended October 1 with inventory worth $4.65 billion, up from $4.24 billion, in the preceding quarter, and 42 per cent above the year-ago level of $3.28 billion. Pricing have risen over the last year, accounting for a portion of the increase, but stocks have risen also as companies demanded greater buffer inventories and as distributors ordered more parts to meet demand. 

“We are more deeply engaged with our customers and suppliers than ever before, which enables us to maintain the necessary expertise and capabilities to help them navigate today’s supply chain complexity,” said Phil Gallagher, CEO of Avnet, late in October after announcing the company’s financial results. “With the structural and organizational changes we made to our business over the last two years, we are well positioned to continue serving as control tower for our customers and suppliers. In the quarter, demand remains strong globally in key vertical segments like transportation, industrial, and aerospace and defense. And we have continued to invest in inventory to meet this demand.” 

New phase

Component distributors have long been in the vanguard of helping to smoothen out wrinkles in the electronics supply chain. Adding to their traditional procurement functions, the top distributors have beefed up their supply chain management functions in recent years and actively monitor inventory levels across the industry to gain better visibility into actual requirements and production activities.

They monitor demand-supply conditions and provide just-in-time inventory management services that have helped to optimize production operations at OEMs and their contractors. The information gleaned is typically shared with customers and suppliers as well as disseminated via distribution websites to other interested parties. 

In one such publication recently, Avnet shared the result of a survey conducted about engineering and procurement activities that confirmed anecdotal reports of a non-linear recovery within the industry. It painted the portrait of an industry struggling with uneven demand-supply conditions, indicative of the early phase of a downturn. The report also confirmed closer working relationships between procurement professionals and engineers, according to Avnet. 

“Relationships between engineers and distributors are continuously evolving and cyclical, and right now, we are seeing an increased understanding of the value that distribution, and its associated services, can add in the midst of prolonged uncertainty,” said Peggy Carrieres, VP of sales enablement and supplier development at Avnet, in the Avnet Insight report. “Engineers and product designers who lean into distribution’s design and supply chain services will not only be prepared to succeed in the current environment, but also be well positioned to navigate any potential future disruptions the industry—and technology—­may face.”

The current industry cycle is in many ways unique. It emerged from a confluence of factors, including the Covid pandemic, the tech Cold War between the United States and China, other geopolitical disturbances, including the Russia-Ukraine war and amidst weakening global economic conditions. The result is a market marked by numerous imbalances, including component shortages and rising oil prices, all of which make prognostications about the direction of the industry difficult.

The disruptions are even more challenging for companies that are trying to divine the direction of the technology manufacturing supply chain. The supply shortages the industry was grappling with is unraveling but in a highly unusual format where certain segments have completely returned to normal operating conditions while others remain stuck in an unyielding or even worsening condition. 

It is a phase that is fraught with problems for components suppliers and OEMs as well as EMS providers faced with uneven supplies, rising inventories, demand opacity, and other sourcing issues. Demand, which appeared robust only a few months ago, has petered out, except in a few sectors, leaving the industry contemplating the possibility of mountainous loads of components booked at the top of the latest upcycle but that are now no longer needed at manufacturers. 

The disparity in supply availability is mindboggling. Lead times have eased back completely in some markets, including for memory products. In fact, memory manufacturers have more than sufficient supplies to meet customer requirements. They are reporting excess inventories, which has in turn forced down ASPs as OEMs and EMS companies sharply pare down orders. 

Toyota, for instance, remains unable to meet customer demand because of the continuing shortage of some components despite its famous JIT manufacturing system and recent efforts to work with semiconductor suppliers and others to assure supply of critical components, according to company executives who said, “it is difficult to predict the future due to rapid changes in the business environment.”

The industry must work together to resolve many of these challenges. Auto manufacturers are directly signing procurement agreements with semiconductor suppliers, working in tandem with their tier-1 partners but also collaborating with third-party service providers. Distributors are also being tapped for their expertise in supplier and inventory management by OEMs that have in the past purchased components directly from manufacturers. 

This is because no single player in the production process can solve the current problems, many of which start much earlier in the manufacturing supply chain and sometimes even in the raw material procurement phase.

“These tremendous changes, including the semiconductor procurement situation and other factors, are occurring concurrently and for the broadly based auto industry, these changes could have a significant impact in the future,” said Kenta Kon, chief financial officer at Toyota. “We have been constantly discussing with suppliers without drifting away from our focus of enhancing competitiveness over medium and long term. Toyota and each and every one supplier [must] work as one to implement competitive measures to address these things.”

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Manufacturers and suppliers of electronic parts, no matter how big or small, all their inventories and productions had been sucked out of the market. The lead time for highend manufacturers such as AKM, TE, STM, and NXP, and others, has doubled from 18 weeks up to 36 weeks.

Chip 1 Exchange’s Expert Solutions

We are already in the last quarter of 2020 and no one could ever tell when this pandemic will end. Even experts cannot predict how long we will experience these challenges. Fortunately, Chip 1 Exchange has the supply-chain expertise to resolve your component shortages.

Chip 1 understands the importance of shortage elimination and our team of highly qualified salespeople are ready and capable to quickly source electronic components from around the world.

The post NEVER GO SHORT – SHORTAGE MITIGATION SOLUTIONS appeared first on Connect Electronics.

Counterfeit parts often have inferior specifications and quality. They may be a hazard in a critical system such as an aircraft navigation and life support equipment or space vehicle. The sale in consumer markets of electronic components making it easier for counterfeiters to integrate inferior and counterfeit goods into the market.

The Global Chip Shortage has affected our lives more than you think, and it’s not solely due to low supply. One of the main reasons is very high demand. The demand for electronic products that use microchips like computers, smartphones, tablets, and even vehicles has skyrocketed in recent months.

The increased demand from distributors, the manufacturing sector, suppliers, and other legitimate businesses increased activity for the proliferation of counterfeit components.

Because of the steadily growing demand for such products, criminals have more opportunities to sell these fake chips with less risk of detection.

WHY THIS MATTERS

Imagine a defibrillator sending incorrect high voltage electric shocks to a patient? How about a missile made of counterfeit parts was launched and missed its target?

The counterfeit electronic parts industry is a 75 Billion dollar money machine. Counterfeit parts are said to be integrated into 169 billion dollars worth of electronic devices. The fake semi industry has infiltrated many markets, disrupted operations of component manufacturers, and has been a supply chain problem for a while now.

In a WSJ report, counterfeit parts are found about three times a year. In 2010, the U.S. military bought an astounding 59,000 counterfeit chips, counterfeit electronic parts, and integrated circuits. Limited resources and poor quality control measures resulted in the defense industry finding fake chips seven times in five years.

A SOLID SUPPLY CHAIN IS NEEDED

Paying attention to the supply chain is essential for companies to reduce counterfeit components and electronic parts. Improving the process by identifying where fake chips enter the supply chain will help lessen future incidents and improve service quality.

The process of finding a counterfeit chip or counterfeits is not easy. We have listed a few methods to help you determine the authenticity of an electronic component, and hopefully, these methods will avoid unfortunate incidents with your company in the future.

5 TECHNIQUES TO IDENTIFY COUNTERFEIT PARTS

Visual inspection is not enough.

1. READ THE LABEL

Have you seen a genuine chip before? If you aren’t working in the semiconductor industry, likely, you don’t. These semiconductors are usually so small that it’s hard to see the spec parts on them.

Legitimate, high-quality electronic components have clear part numbers and clear markings that can validate their authenticity. Counterfeits upon inspection will have a compromised surface, a grainy part number, and other incorrect information that will need further inspection.

Counterfeits are unlikely to impact the giants of the industry who bought their components directly from chips foundries. These fake electronic components are felt more by companies acquiring parts from distributors at any point down the supply chain.

2. DO AN X-RAY INSPECTION

Doing an x-ray inspection on electronic components will show you what’s under the hood so you can identify a real one from a fake.

Here are the signs to look for:

• Missing or inconsistent die sizes
• Mismatched part numbers and date codes
• Broken or missing wire bonds
• Visible Delamination
• Inconsistent indents

3. USE A SCANNING ACOUSTIC MICROSCOPE

It might sound over the top but using a Scanning Acoustic Microscope (SAM) is the best way to find laser etching under blacktopping. Once etching is found, resurfacing was likely done to replace the original markings.

Of course, you can use acetone wash, but that method pretty much destroys the counterfeit chip it’s used on, thus preventing you from using it if it passes inspection.

4. LOOK FOR SIGNS OF RESURFACING

Counterfeiters are becoming quite good at avoiding detection these days. One of the most common techniques for creating counterfeit chips is a “resurfacing” technique called blacktopping.

They sand off the original markings and put on a polymer coat to cover up the effects of the sanding. Sometimes, however, there are noticeable signs of blacktopping. For example, indents on the chip might be partially covered by the polymer.

5. BE ON THE LOOKOUT FOR PHYSICAL DEFORMITIES

To make money, many counterfeiters use cannibalized parts from scrap electronics and sell them as new. Physical wear and tear will be visible on the material upon visual inspection.

Counterfeit components have bent leads and pins, unnecessary markings on the surface, and scuff marks on the corners. These visual cues on the surface or the use of a magnifying lens will help you determine if the electronic component is legitimate or not.

Why Buy Genuine Chips?

Counterfeit chips are twice more likely to malfunction than the real ones. Counterfeiting is not interested in having a long-term business. Their methods are based on deception, exploiting resources, and quick profit.

The purchase of a genuine chip from a reliable company ensures safety, service quality, and peace of mind. Counterfeiters don’t have this in mind when they sell counterfeit parts.

DESPERATE TIMES CALL FOR TEMPERATE MEASURES

People who sell fake electronics would love nothing more than to take advantage of people who don’t know any better.

Chip 1 Exchange has been at the forefront of ensuring that our customers do not fall victim to counterfeiting. When they purchase electronic parts from our company, we have the proper equipment and testing methods to detect counterfeit parts and ensure what our customers are getting legitimate electronics all the time.

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