Protecting the Supply Chain to Serve Integrators and End Users
Supply chains — once solely the domain of product managers and procurement specialists — are now being discussed in the evening news as disruptions impact the availability of a wide range of consumer and commercial goods. Semiconductors, in particular, have been affected by a significant uptick in demand that has not yet been met by a corresponding increase in supply.
Automobiles, mobile devices, gaming consoles, kitchen appliances, AV equipment and more are affected by increased demand for microchips and so system integrators are finding many AV products that used to be readily available are now increasingly difficult to acquire.
The past year has seen a pandemic, a series of severe storms around manufacturing locations, and a major factory fire coalesce to form a unique challenge for manufacturers of technology. The rationing of chips is now being felt by integrators as access to products becomes limited.
Audinate’s OEM customers manufacture a wide range of equipment for the AV industry and we have been hearing from them that they are increasingly challenged sourcing chips. In the worst-case scenarios, chip suppliers have quoted lead time delays of 52 weeks or more, indicating genuine uncertainty around ability to deliver parts over the next year. Opinions vary as to how long the uncertainty will last with most expecting it to continue through 2022, easing in the second half of the year.
Of course, no manufacturer will sit around for such a timeframe and many will have contingency strategies in place to harden their supply chain and engineer versatility into product strategies. At Audinate, we made the decision in early 2021 to begin work on potential replacements for microchips in our product portfolio. This work included sourcing replacements for chips that had many years of life left and while planning more than five years out for a replacement is well beyond the industry standard, we believed the move was crucial to ensuring our supply chain and to minimizing impact from potential chip shortages.
Recently, a major chip supplier significantly reduced the number of certain parts available to the industry. Along with everyone else, Audinate’s allocation of components has been reduced as the available parts are rationed. The impact is industry-wide and Audinate is doing everything it can to help by accelerating the switch to new more available parts and by representing the needs of Dante manufacturers to chip suppliers.
We briefed our OEM partners on the situation and are working closely with them to minimize disruptions as best as possible. We are coordinating with the chip manufacturer and others to acquire inventory of the affected parts, and we are accelerating the in-motion product transitions to platforms with improved long-term availability. We are actively working with our OEM partners to migrate to our next-generation parts, and/or migrate to other parts in our portfolio not affected by this chip shortage.
This a dynamic situation and our efforts are gaining traction and being positively received. We will continue our work to proactively ensure our supply chains are secure, flexible, and intelligent. This situation serves to reinforce the work we are already doing to make this happen, including:
- Expediting chip replacement options ahead of end of life timelines
- Developing drop-in replacements for Dante cards for existing product designs, and
- Investing in the increasingly important software-based offerings such as Dante Application Library and Dante Embedded Platform.
This challenge will be a mission-critical priority for our industry and our community in the years ahead. Professional AV cannot simply wait out these supply chain challenges. We must make strategic, intentional, and purposeful decisions that not only replace current technology but improve upon it — both in terms of technical capability and supply chain resiliency.
We share this story not to say other manufacturers should hit the panic button, but rather to encourage the entire AV industry and the integration community to do exactly what we are undertaking right now: reinvest in, re-imagine and reinforce the supply chain to minimize delays as much as possible.
By strategically and purposefully planning for supply chain disruption, we support our partners — from chip manufacturers to end users — and we ensure a far less tumultuous time for all.