Using TechInsights Semiconductor Manufacturing Economics to Ensure Competitive Pricing and Diversify Their Supply Chain

The Challenge

This organization faced critical challenges due to their reliance on a single foundry for the production of 10 key integrated circuits (ICs). This approach increased their exposure to pricing volatility because pricing fluctuations from their partnered foundry could lead to increased production costs. It also meant that they were supply chain dependent on this foundry which increased the risk of operational disruptions and delays in product delivery. Additionally, any supply chain disruptions could delay product deliveries, affecting customer satisfaction and potentially harming the business’ reputation in the competitive semiconductor market.

The Solution

To tackle the challenges posed by their reliance on a single foundry for critical components, TechInsights’ Semiconductor Manufacturing Economics models proved crucial in providing a thorough examination of the pricing structure from the organization’s foundry partner, highlighting any misalignments or potential savings based on key financial metrics such as foundry margin and depreciation.

By leveraging these insights, this business has been able to challenge and renegotiate the costs of specific parts with their foundry.

The Results

This proactive approach has enabled this organization to realize a substantial 5%+ savings on their manufacturing costs. When extrapolated against the volume of pieces produced monthly, this represents significant financial savings, enhancing this business’ overall profitability and competitive edge in the market.