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Jama Software is always on the lookout for news and content to benefit and inform our industry partners. As such, we’ve curated a series of articles that we found insightful. In this blog post, we share content sourced from Supply Chain Dive which was originally published on February 10, 2022 by Colin Campbell.

Buyer Beware: 3 Semiconductor Procurement Pitfalls To Avoid

Demand for semiconductors is skyrocketing as companies increasingly incorporate them into autos, appliances and more.

With near-term relief from shortages appearing unlikely, companies looking to buy semiconductors need to shop smart, experts say.

Here are three problems challenging procurement teams, and some suggestions on how to avoid them.

Problem: Fraud and counterfeits

Fraud has emerged as a serious issue in the market, especially amid the heightened demand, said Renato Souza, vice president of business development for Smith, a Houston-based chip distributor.

When desperate customers place orders with unvetted vendors, they risk losing the money and not receiving the promised parts.

“There’s a lot of people taking risks out there just buying from people and hoping that the parts coming into their sites and the manufacturing lines don’t fail,” Souza said.

Solution: Purchase through trusted suppliers and distributors.

Smith and other distributors rate semiconductor vendors, and the company has put its 37 years in the market to use by creating a list of no-trade suppliers who have sold fake or faulty chips.

“We’re kind of that filter on the market,” Souza said.

Customers can also verify a supplier’s legitimacy by checking it against those listed on the original component manufacturer’s website, according to a 2013 report on counterfeiting by the Semiconductor Industry Association.

“If a distributor makes a general statement that they are authorized, be sure to check that they are authorized by the specific OCM of interest to sell that OCM’s components,” the report said.

Problem: Inflated demand and prices

Semiconductor suppliers sometimes face a similar conundrum to ocean carriers’ problem of “ghost bookings,” in which customers purchase space on more than one vessel for the same cargo to ensure it arrives. Such strategies help buffer against disruption, but not without a side effect: falsely inflating demand – and prices.

While procurement teams are tasked with finding the best deals in the market, some are causing demand to falsely inflate by sending their semiconductor order lists to too many brokers, Souza said.

“If you’re sending the requirements to 10 different brokers or independent distributors, everybody’s looking for the same parts in the market,” Souza said. “Suppliers know that there’s huge demand for those parts, and the prices just go up, and up, and up, and up.”

Solution: Don’t unnecessarily ‘heat up’ the market

Avoid looking for parts from too many companies at once, as that practice can affect pricing.

“Share [order lists] with a couple of suppliers for 24 hours, 48 hours, and then switch around to different suppliers,” Souza said.

Customers can track chip makers’ progress in producing and selling more chips. The Semiconductor Industry Association launched a Semiconductor Monthly Unit Sales Dashboard on Tuesday that provides a 3-month moving average of unit sales from before the pandemic to the most currently available data.

Improving data visibility in the industry will be critical to correctly gauging demand, said Vanessa Miller, a litigation partner at Foley and Lardner who focuses on cases related to supply chain disputes.

“There systemically needs to be better transparency into what [order] volumes are real and which ones aren’t,” Miller said.

Related Webinar: Enabling Digital Transformation in the Semiconductor and Hardware Space

Problem: Lack of supply

It’s the biggest issue facing the industry. Buyers’ median semiconductor product inventory has fallen to less than 5 days’ worth from 40 days in 2019, with inventories even lower in key industries, according to the U.S. Department of Commerce.

Solution: Volume commitments

A lack of volume commitments from semiconductor buyers was among the major causes of the shortage, Miller said. Automakers, for instance, slowed their spot orders at the start of the pandemic, only to watch chip suppliers take their business elsewhere.

“Having those volume commitments is going to be critical,” Miller said. “We’ve heard from chip suppliers, ‘We were happy to make chips for you. You just weren’t ordering them.'”

Solution: Joint ventures, buying suppliers

Some original equipment manufacturers are either signing long-term contracts with their semiconductor suppliers, co-investing in joint ventures to add capacity for lower-tier suppliers, or acquiring vendors outright to improve their visibility and control over their supply chains.

“Almost all the OEMs are exploring options for investment and joint ventures, and having more control over the supply of the flow of chip supply,” Miller said.

Directed-buy agreements allow companies to require suppliers to use preferred vendors, providing a way for companies to protect their investments, Miller said.

“It ensures that there’s a continuity of supply and the chips without the OEM having to contract directly with its joint venture or subsidiary,” Miller said.

Solution: Increase inventory, warehouse investments

Investments in adding warehousing capacity and keeping more safety stock often pale in comparison to the cascading costs of air freight, line downs, payments under protest and other struggles customers are encountering in semiconductor supply chains, Miller said.

“Suddenly, the cost savings is no longer there,” Miller said.

Like many industries, the semiconductor industry has seen a dramatic change over the past several decades. Simple, single function devices have evolved into complex multi-function devices with firmware, supporting software and, in some cases, full reference designs. While the products that the semiconductor industry sells are still integrated circuits (ICs), in many cases the supporting software, documentation and system-level understanding are just as important as the product themselves. A key example of this are the products produced for the automotive industry that must meet the Functional Safety requirements of ISO 26262.

Early in the days of integrated circuit design, companies generally focused on developing single function products. The development focus was on continuously optimizing for different applications and in many cases improving performance metrics like power, speed, and bandwidth. Later came an increased focus on reducing product size and cost. The common thinking was that if team could build a product with better performance metrics than the previous generation, there would be a market for the product. For these teams the skill of circuit design and the capabilities of manufacturing were the ultimate competitive advantage. A great deal of system-level understanding is not required, although many teams had Applications Engineers with an understanding of the various applications their products would be used for.

For many companies in the semiconductor industry, circuit design and manufacturing are still competitive advantages. For others, an increased focus on integration has encouraged them to think in terms of providing a complete solution, rather than just products. Increasing levels of integration is often driven by a goal to decrease size and cost of the solution but doing so requires a better understanding of the end application and more systems-level thinking in developing the solution. This understanding of the end application leads to a focus on clearly understanding and communicating the requirements to ensure successful product development. While in single function products the requirements are often simple and the circuit design is the challenge, in more complex products the requirements can become quite complex and truly understanding the need is just as critical as executing on developing a solution.

No aspect of integrated circuit development increased functional complexity as much as adding firmware and software to the overall solution being provided. While adding software and firmware to a solution is often done to solve a specific problem, it quickly opens up such a wide range of functional possibilities that the complexity grows rapidly. While there are still teams focused on advancing the state of the art of circuit design, just as many (maybe more) teams are developing full solutions with a semiconductor element as well as firmware, software and even system integration. The ultimate representation of this trend is semiconductor companies providing complete reference designs that contain nearly all the engineering required to produce an end-product.

RELATED: ISO 26262 vs. ASPICE

In the automotive industry, the trend of providing a complete system-level solution has not been as strong as in other industries like IoT or consumer, but another trend has emerged: providing a safe solution. Integrated circuits sold into automotive applications have long had to achieve some of the toughest reliability standards. Now it is increasingly common for vehicle electronics to impact the safety of the vehicle, so not just reliability is required, but also functional safety. Achieving functional safety requires a lot more than circuit design and process technology. It requires understanding of how failures in an integrated circuit can impact the system. It requires robust development processes not traditionally employed in the semiconductor industry.

Nowhere was the need for this more strongly articulated than at the “Guidance & Application of ISO 26262 to Semiconductors” conference held virtually in August 2021. In the first session of the conference, several automotive OEMs joined forces to explain how important it is for semiconductor suppliers to develop pre-integrated, pre-certified and pre-tested solutions that meet the requirements of ISO 26262 and place the minimum burden on system integrators to integrate the solution into their system and safety case. Functional Safety adds a lot of overhead to vehicle development and receiving complete solutions from their suppliers goes a long way toward reducing that burden.

While many semiconductor suppliers have been playing catch up to meet the requirements of ISO 26262, others are turning it into a competitive advantage. These suppliers are winning business on the strength of their functional safety competency. They have developed robust processes featuring robust requirements management, configuration management and safety analysis. As a result, they can provide their customers complete safety cases that save their customers significant time when integrating their solutions. Some are even furthering the state of the art in functional safety by participating in standards development. It is common for multiple suppliers to have technically equivalent products, so in these cases safety competence can become the deciding factor in which semiconductor solution an OEM or Tier 1 supplier ultimately selects.

With the automotive industry working toward fully autonomous vehicles, the importance of developing safe products is more critical than ever. It will take the whole industry working together to furthering the state of the art in all areas to achieve the goal of full autonomy. That state of the art includes both skillful circuit design and robust process that ensure safety.

Never has there been a time where it was more critical for the semiconductor industry to adopt new skills. Circuit design and manufacturing will always be the core competency of semiconductor companies, but for those focused on the automotive industry safety, it is increasingly necessary for safety to be a core competency. Developing this as a core competency can lead to increased market share in today’s exciting automotive market.

Companies with globally dispersed teams, complex products, and expanding product lines require a modern, centralized system to manage requirements. Jama Connect is giving Monolithic Power Systems (MPS) newfound efficiencies to manage complexities in product development by simplifying their requirements and change management processes and improving collaboration and visibility across distributed teams.

In this blog post, we take a look at MPS’ top challenges in semiconductor development and why they selected Jama Connect to help.

Managing Complexities Across Geographies with Scalability and Efficiency

Producing the highest quality power solutions for industrial applications is no simple undertaking. Like many other organizations tackling complex projects, MPS’ Automotive and Battery Management groups were facing critical business challenges that Jama Connect is helping them address.

1. Adapting to Increasing Complexities

One of the key issues MPS faced was their ability to address the challenges of developing increasingly complex product tiers. The rapid expansion into new high-value markets called for a matching evolution of the internal requirements and documentation management processes.

At MPS, systems engineers, digital designers, and technical marketing engineers all need the ability to collaborate and exchange massive amounts of information both upstream and downstream using a complex register map. As semiconductor design continues to increase in complexity, the use of traditional documents to accomplish this had become more challenging for the MPS team. The current system in place for revision controls wasn’t functioning well for them; it needed to be synchronized, clearly organized, and scalable.

RELATED: How to Realign Engineering Teams for Remote Work with Minimal Disruption

2. Managing Documentation While Keeping Pace With Emerging Technologies

Each of MPS’ distributed teams is focused on a different stage of the constant research and development (R&D) needed for emerging technologies. In today’s rapidly changing environment, market requirements are constantly evolving, which drives the need for even tighter collaboration between teams. When the sustained growth of the MPS portfolio was also considered, it became evident that a new solution was needed, which would offer increased cross-team visibility over requirements, design reviews, and test results.

3. Collaborating Effectively Across Distributed Teams

When companies are developing complex products, the size of their team grows accordingly, but growth is as efficient as the infrastructure in place to support it. For MPS, that meant moving from an approach where most of the R&D activity was geographically localized in one area to a more de-centralized model with centers located in the United States, Asia and Europe. The challenge of engineering teams working across multiple time zones emphasized the need for a solution that enabled all the contributors to collaborate seamlessly on a project regardless of their physical location.

4. Proving Products Meet Industry Standards and Compliance

Another core challenge that MPS faced was having a system that both enables requirements management tracking and helps demonstrate that functional safety standards and industry regulations have been met. Jama Software is the first SaaS and Agile vendor to be ISO 26262 fit-for-purpose certified by TÜV SÜD.

RELATED: ISO 26262 Compliant vs. ISO 26262 Certified

Complex Information Management and Exchange with Clarity and Efficiency

After implementing Jama Connect, MPS has been able to solve its collaboration challenge, provide a real-time cross-team visibility and engagement, and prove compliance. Jama Connect is helping MPS make an impact in these significant areas:

The Jama Connect platform allows for structured collaboration and information to be accessed seamlessly across globally distributed teams
MPS now has a single source of information and end-to-end visibility throughout the product development lifecycle
Jama Connect is making the path for teams to prove regulatory compliance easier

Jama Connect has helped MPS manage complexities in the development cycle by delivering a structured collaboration platform that allows their engineers to access information seamlessly across teams. To see the incredible results, you’ll have to read the full customer story.

Read the full customer story to see how Jama Connect helps industry leader MPS manage complexities across globally-distributed teams.

SEE THE FULL STORY

Complex development projects are a little like putting together a massive jigsaw puzzle: All the pieces are there, but sometimes how they fit together doesn’t become clear until real progress is already made.

The complexity is magnified when the project in question involves intricate microelectronics, software with billions of lines of code and hundreds of development teams who must work harmoniously to ensure functional safety standards are met. Not to mention hitting moving regulatory targets and the ever-present pressure to quickly deliver a complete, industry-compliant product to market.

We’re talking about a technology that not long ago was the stuff of science fiction; autonomous vehicles, systems for which code failure can lead to actual tragedy.

Bringing Teams (and Data) Together

When developing for a system with so many moving parts, every member of the development team using the same processes and platforms is a must to ensure safety compliance. To hedge against mistakes, teams must also be in sync, irrespective of core skill set or geography.

For companies whose businesses are based on constant innovation, getting all of these ducks in a row is a challenge.

As we detail at length in our recent paper, Driving Compliance with Functional Safety Standards, a Fortune 100 semiconductor company recently faced many of these hurdles, and deployed Jama Software to help clear them.

The semiconductor company knew this, and put together an integrated ALM solution supporting ISO 26262 compliance with Jama Software at its core.

Simplification as a Productivity Booster

Standardization of processes includes reducing oversized sets of tools and applications into a manageable roster of best-in-class solutions. Eliminating cumbersome or unnecessary apps enhances process efficiency for development teams at every stage.

The ALM solution they deployed enabled end-to-end requirements, functions, implementations and tests throughout the life-cycle process, as well as providing support for new functional safety and quality regulations, ensuring development teams can pass product audits and avoid costly delays due to rework.

The result was a well-oiled development machine. By hitting requirements the first time, the semiconductor company was able to accelerate its development cycles, delivering better finished products while achieving higher customer satisfaction.

Incorporating the proper toolsets to track development and document product safety compliance— a necessary step to avoid being buried by the challenges in a complex development project— further facilitated the process.

The standardization of toolsets and platforms meant that with each handoff on the developer chain, the teams could see their counterparts were all following processes as laid out by functional safety requirements.

Projects of this magnitude inherently put pressure on developers to keep their eye on the prize without being distracted by the countless shiny objects drifting across their line of sight. By simplifying processes, homing in on the best tools for the job and facilitating communication with partners and consortiums, development teams can tend to their own gardens.

When developing software for industries with rapidly changing regulatory environments, it’s critical that the platforms used are reliable, but also flexible and rigorous enough to remain compliant as requirements and standards evolve.

Of course, delivering a quality product that comports to current functional safety requirements quickly and efficiently is a big plus, which is why a Fortune 100 semiconductor company recently enlisted Jama Software to be at the core of its integrated application life-cycle management (ALM) solution.

With Jama’s help, this semiconductor company was able to completely transform its development process and streamline its operation, removing many obstacles to development along the way.

Putting Trust in Jama’s Proven Platform

Jama is certified by internationally recognized testing body TÜV SÜD for developing safety-related products to ISO 26262 (up to ASIL D) and IEC 61508 (up to SIL 3) standards. With such a rigorous development environment in place, the semiconductor company knew Jama’s platform would help it meet all necessary safety requirements.

Jama’s solution provides built-in attention to process, decision-making and change analysis in real time. Using actionable traceability, device-related developers and manufacturers, including semiconductors, can work faster without compromising on safety or quality. Jama provided the semiconductor company’s team with workflows for defining, building and testing automotive-related products that met their required functional safety standards.

Critically, Jama helps accelerate product design by enabling companies to reuse requirements across design teams and different generations of platforms — a critical part of the semiconductor company’s business strategy. The resulting integrated ALM solution brings together the best processes and tools, providing a single portal for accessing and analyzing a master data repository.

Standardizing processes and helping the semiconductor company reduce its massive toolset down to the most relevant ensured requirements were met the first time. This helped the company accelerate development cycles. And, at the same time, resulted in better end products and higher customer satisfaction.

Improving Processes Let Engineering Teams Focus on Engineering

The improved productivity and efficiency across teams and business units also reduced the overall cost of product development. Jama enabled teams to create a set of development-related assets once and reuse them across projects. This avoided the need to reinvent the wheel with each new iteration and reduced the likelihood of inconsistencies.

Effectively managing requirements also eliminated a large percentage of product defects. This saved time and money by detecting potential issues early — when issues are cheaper and easier to fix — rather than going back to the drawing board if they’re discovered too late in the game or in the finished product.

The resulting integrated ALM solution, with Jama at its core, seamlessly incorporated quality and compliance into existing workflows and best practices, when before it was a time-consuming, manual process. This enabled teams to spend more time engineering and less time fretting over compliance processes and documentation. Product are designed more efficiently and enter the market more quickly.

For a deeper dive into the semiconductor company’s use of Jama in achieving its goals, don’t miss our new report, Driving Compliance with Functional Safety Standards for Software-Based Automotive Components.

Semiconductors are surging. Recently, the Semiconductor Industry Association (SIA) announced that worldwide sales of semiconductors hit $107.9 billion for third quarter 2017, making it the industry’s highest-ever quarterly sales and soaring to an increase of 10.2% over the previous quarter.

“The global market is poised to reach its highest-ever annual revenue in 2017,” John Neuffer, SIA president and CEO, said in a press release. “Standouts among semiconductor product categories included memory products like DRAM and NAND flash, both of which posted major year-to-year growth in September, as well as logic products, which enjoyed double-digit growth year-to-year.”

The boom in semiconductor sales this year is being partially attributed to tight supply and higher selling prices in the memory chip market, but there are also other promising trends.

The growing expansion of electronic systems in cars, for instance, as well as the billions of dollars being invested in autonomous vehicles, are expected to continue contributing to this semiconductor rally.

As research firm IC Insights reports, automotive is shaping up to be the fastest-growing electronic system market for semiconductors through 2021, beating out others like medical, industrial and communications.

“Automotive electronics is growing as technology becomes more widely available on mid-range and entry-level cars and as consumers purchase technology-based aftermarket products,” IC Insights notes. “For semiconductor suppliers, this is good news as analog ICs, MCUs, and a great number of sensors are required for many of these automotive systems.”

Check out how a Fortune 100 semiconductor company is accelerating development cycles, balancing functional safety and reducing cost for software-based automotive components.

As autonomous vehicles sharing the nation’s roadways with driver-controlled cars moves closer to reality, a host of obvious safety concerns are being raised.

How will these cars react in the event of an imminent collision? How will they compensate for a sudden, unexpected lane departure? Ensuring passenger safety and reducing road fatalities will make or break this nascent technology, and software will be the brains behind it.

Self-driving car software must work correctly in any situation thrown at it, no matter how outlying. This fact presents unique challenges for developers charged with building and maintaining this complex software, as well as meeting new and changing compliance standards rolled out by regulatory bodies.

A Fortune 100 semiconductor company recently transformed its business relying on modern development solutions to manage and navigate the added complexity.

In Elaborate Systems, Efficient Communication is Key

It’s no small task building from scratch the software inside a car that will transport living, breathing humans on crowded roadways at high speeds. This means heavy collaboration on requirements is necessary to bring together experts of the various disciplines required for successful deployment. By bringing disparate groups together to communicate on requirement details and decisions, the semiconductor company ensured the right hand was always talking to the left.

To meet these challenges, software developers must strike a balance between functional safety and efficient, streamlined product development. We’re talking about billions of lines of code in self-driving vehicles, supporting complex microelectronics and software. The more complex a system, the more chances there are for errors, and in this case, the margin of error is virtually nil.

Overcoming challenges development teams face to ensure successful, timely deployment of their product while being flexible enough to adjust as regulations evolve is dependent on a common understanding of what’s being built and why.

Facing new ISO safety standards, the semiconductor company enlisted Jama Software’s development platform knowing it would help it meet its functional safety requirements.

Modern Tools Systematize Complex Challenges

This particular semiconductor company successfully incorporated standardized development processes and application lifecycle management (ALM) tools, which supported the development process from the initial planning stage through product retirement, tracking application changes along the way.

Modernizing their entire development process involved heavy standardization, so they honed in on a small set of best-in-class solutions from a sprawling list of more than 50 tools and applications.

To ensure development teams could pass product audits with minimal delay, the company also added support for new functional safety and quality regulations, avoiding the roadblocks associated with failures.

These same methods are necessary for other development teams looking to go to market with autonomous vehicle software that meets safety and product quality standards.

Equally important is ensuring disparate teams are working with the same compact set of tools, and carefully tracking every change and improvement along the way.

We may be a few years away from sharing the road with fully autonomous vehicles, but the work to ensure their safety and regulatory compliance is already well underway.

For a more in depth look at the challenges organizations like that Fortune 100 semiconductor company face, read our paper, “Driving Compliance with Functional Safety Standards for Software-Based Automotive Components.”