Analysis of Disruption in Supply Chain Networks of Semiconductors and the Automobile Industry: Using SAM Model

Introduction

There have been significant advancements in the automobile sector over the last few decades. Electric vehicles and development of autonomous and smart vehicles with intelligent systems are the future of this industry (Javaid et al., 2021). With the availability of efficient semiconductor-based devices, automobile manufacturers are now able to produce enhanced cars with better safety and ergonomic features (Ignatius & Khan, 2022). To help realise these advanced features, automobile manufacturers require semiconductors. Since the 1990s, the dependence of automobiles on semiconductors has increased due to the development of control systems, feedback systems and other secondary features (Chung & Kim, 2020; Kalsoom et al., 2020). However, the relationship between automobile and semi-conductor industry has not been smooth (Fatorachian & Kazemi, 2021; Rahim et al., 2021). On observing the trend closely, we can infer that the disruptions in the semiconductor market have led to a shortage of chips that affected the automobile sector severely. This paper aims to give an insight into the past disruptions and predict possible future disruptions and their consequences using data analysis techniques, with an intention to obtain strategies that both the automobile and semiconductor industry can employ to ensure smooth supply-demand balance. We use the Source, Assessment and Mitigation (SAM) framework to identify potential threats to the automobile sector and propose strategies for the organizations to mitigate these risks. The SAM framework was created by Kleindorfer and Saad to manage disruption in the supply chain by specifying the Sources of risks and vulnerabilities (S), risk Assessment (A) and Mitigation (M) to generate actions and steps that could be taken to minimize the effect of disruption (Jasiński, Meredith, & Kirwan, 2021; Kleindorfer & Saad, 2009).

The dependence of automobile sector on semiconductor industry can be traced to the increasing requirement for electronics in the automobiles, and the improvements in technology in the semiconductor sector. Around 8 per cent of the global semiconductor produce is used by the automotive industry (Statista Report, 2022). To provide better, efficient and safer vehicles, automobile developers started incorporating electronic devices and tools that enhanced the vehicle’s ability to cope with environmental, safety, comfort, and convenience issues (Ammal et al., 2021; Noda, 2000). In the late 1990s, around 700 million automobiles were registered worldwide. During this time, a luxury car used more than 40 microprocessors for various subsystems (Ziebart, 1992). The dependency of automobile companies on the semiconductor chip manufacturing companies started growing in this period (Nonomura, 2020).