Turning Chaos Into Order

By Jack Harding
It would be unthinkable to begin this article without recognition of the disaster the Japanese people are enduring, even as this is written. My friends and colleagues are as safe as they can be, so far; thousands are lost. But it takes no imagination to appreciate the psychological and very real overhang of nuclear toxins changing a society for a decade.

The sad irony of the current situation that plagues America’s, perhaps, closest ally is that the last comparable Japanese experience was delivered to them by the very country that, today, is prepared to do most anything to assist them. We’ve all come a long way and it’s within that notion that we can find hope the world will rally to aid a nation that has contributed enormously to our high standard of living, and our appreciation for tradition in both work and friendship.

We wish our Japanese friends every good fortune to repair their country and move forward, once again.

I am told the two Japanese characters for the word crisis translate to chaos and opportunity. My guess is it is now in the Japanese tradition to move the discussion from crisis to opportunity; from tragedy to productivity. The world is watching an orderly, disciplined Japan rebuild capacities, craft new supply chains, re-qualify new sources for key raw materials… conserve, repair, improve, perfect; Japanese style.

eSilicon, like every other member of the semiconductor industry, has evaluated dependencies, availabilities and alternate plans to accommodate the needs of our customers. As a Value Chain Producer (VCP) we have published nearly daily reports to our customers, identified critical risks to their production, proposed alternative solutions to minimize those risks and, otherwise, tried to keep them informed as we untangle the web of impact from this natural, now commercial, disaster. I, for one, believe we will keep the chips flowing, manage some delays and keep the supply side under control.

I do worry about demand. I can easily imagine major Japanese industrial companies deciding to manage their G&A expense by not buying items, such as servers and routers, which in turn slows the demand for those system components…another off year for semis? We’ll see. The good news is that the total demand won’t go away. More likely, we’ll just see some delays.

So, here’s our counsel to our customers: Stage your product at the CMs. That is, carry some extra inventory and have it as available as possible for when the system demand returns to normal (if it dips at all). The worst that could happen is inventory is managed down, then system demand returns and you, our customers, are facing ASIC type lead times to re-engage.

The CMs will go for this as well. They need to protect their revenue stream, which means every component needs to be ready and available for the inevitable ramp. Don’t be the long pole in the tent. The VCP model can help with die bank inventory, managing the supply chain with the benefit of the ability to make trade-offs with suppliers over a large portfolio, report progress in Japan, qualify new sources…and so on.

Japan will bounce back mostly because of the tenacity of the Japanese people. In the meantime, an efficient distribution and usage of its goods and services by the rest of the semiconductor world is required for revenue and repair. I am proud of the contribution all VCPs are making in these challenging times, and to assist Japan in attaining its goals. There has never been a better opportunity for us to serve our customers, suppliers and the Japanese people, than right now. Let’s see this through.

–Jack Harding is chairman and CEO of eSilicon