Chip Relief for S&T Customers?

One of the supply chain problems that has challenged simulation and training industry companies in the past three years has been maintaining reliable sources of semiconductors. A long-term fix for this acquisition obstacle will emerge from US President Biden’s recent signing into law of the CHIPS and Science Act of 2022. The act’s underlying legislation will help bolster emerging technology thrusts vital to S&T in defense, commercial aviation and other safety critical industries, including quantum computing and artificial intelligence. The new law will boost American semiconductor research, development, and production. While the US produces about 10% of the world’s supply of semiconductors, it derives the majority of this content from a currently stable but potentially fragile East Asia.

The Basics: Semi-Conductors for S&T

Brandon Naids, CEO/Co-Founder at Talon Simulations, took MS&T on a ‘deep dive’ into this technology realm, first pointing out semiconductors play a critical role in the communication between simulation software and high-fidelity hardware. “They make up the control boards that communicate data to our motion platforms and replica flight controls, output visuals to the virtual reality head-mounted displays, and they make up the graphics cards that process the software simulations,” he explained, and then quantified the importance of this content: “Most of our components have dozens of semiconductors installed in each of them.”

While S&T suppliers have grappled with labor shortages, developing hybrid workplace models and the like during the last 30 or so months of the pandemic, they have also faced supply chain issues. The executive noted his team always had a culture of striving to avoid single points of failure during product development, deployment, and the overall supply chain of our products; however, “it has become more difficult post-pandemic to have several reliable vendors for specific items.” He continued, “Power supplies and graphics cards are two items that we continue to have the need to find various sources for, so we try to maintain inventory in house to prevent delays in fulfilling orders.”

Long-Term Relief

To be clear, aside from the passage of the CHIPS and Science Act of 2022, and other concurrent industry activity, semiconductor sector stakeholders do not see any quick relief for customers. Indeed, following a September 2021 announcement that Intel broke ground on two new semiconductor fabrication facilities (fabs), the Office of Arizona Governor Doug Ducey noted in a press release that the fabs will be “fully operational in 2024.”

On cue, Talon Simulations’ Naids concluded, “We don’t foresee too much of an impact short-term of this new US legislation due to the time required to ramp up manufacturing capabilities. Long term, however, this should provide increased access to these crucial components on a more reliable basis and at a lower price point. This will allow us to reduce the overall lead times for delivery of our systems and pass the cost savings down to the customer.”