The semiconductor market is humming: The world is experiencing another digitalization surge due to the pandemic and chips are in short supply. Our network of around 2,000 suppliers lets us manage the ramp-up.
Increasing processing power is a team effort
When the Apollo 11 mission landed on the moon in 1969 it had two computers onboard. In them were microchips with around 10,000 transistors. A current iPhone has around 15 billion transistors that together add up to a gigantic amount of processing power. And it even fits in your pocket. Impressive, isn't it? We owe this progress to optical lithography, which allows the application of ever smaller structures on microchips. You might be asking yourself what this has to do with supplier management. When it comes to considering who actually made the progress possible, many initially think of the large semiconductor manufacturers. But the manufacture of extremely powerful chips is a team effort of the customers with their suppliers, who in turn have many other suppliers.
Suppliers from 35 countries
The value chain of the ZEISS Semiconductor Manufacturing Technology (SMT) segment only works thanks to a large network of domestic and international suppliers. If it wasn't for more than 2,000 partners from 35 countries, no system would leave our factory – whether lithography optics, photomask systems or process control solutions. We are supplied with special components by everyone from Asian and American global corporations to Germany family-owned companies and European start-ups. For ZEISS SMT, it is essential that we receive deliveries of the highest quality, at the agreed time and with an optimized cost structure. That's why we select our suppliers on the basis of the highest standards. It is the only way to ensure that our customers also receive top performance from us. Procurement is therefore one of the key processes contributing to our long-term success, and is essential for our competitiveness.
High tech for the semiconductor industry is a team effort of ZEISS SMT and our international network of suppliers.
An international network
It's no wonder that we no longer talk about "purchasing" but instead "supply chain management." However, even "supply chain" falls a little short. It's actually a network, with constant exchange between us and our suppliers as well as between the suppliers themselves. Part of this close cooperation also includes strategic, i.e. forward-looking, technological developments that we are implementing with our suppliers. We continually develop the supply chain in this way, starting with the coordination of technology road maps with our partners, through to the development and assignment of complex modules, and also ensuring high quality requirements in series production. All this is a team effort, with our suppliers forming a critical success factor for our business in general and also in the current ramp-up, which is a new experience for SMT and is also taking place in a period of immense raw material and general supply shortages.
Both a reason for joy and a challenge
Global megatrends and the COVID-19 pandemic both gave digitalization another huge boost and thus also led to the current chip shortage. The increasing demand for semiconductors due to artificial intelligence, remote service, home office and home schooling, as well as long evenings on the couch watching Netflix, have led to a doubling of incoming orders for us. On the one hand it's a reason for joy, but it also needs to be managed. The increase in production is not only a challenge for us, but also for our suppliers who are also going down this road with us.
A highly motivated team with a single goal
The belief in a common cause has also led us and our suppliers to the goal in extreme ultraviolet (EUV) lithography. Incidentally, the former ZEISS CEO Dr. Michael Kaschke once described this as being on par with the NASA space program in terms of complexity. It took more than 20 years before an EUV wafer scanner equipped with SMT optics was able to expose the first microchip. That's why the effort was honored with the German Future Prize by the German government in 2020. This award applies equally to the SMT supplier network, because many of our suppliers have accompanied us for many years and we have worked on technological solutions together. The technology absolutely wouldn't have become a reality without this highly motivated team. The successor technology to EUV, High-NA, is now already on the starting blocks.
Fast, flexible and top quality
Even though we have no direct competition for EUV technology yet, we have the same high level of responsibility to our customers to deliver high performance systems on time as if we had competitors. This is where our reliable supplier network, which impresses with its ability to adapt quickly and flexibly to changes while still delivering excellent quality, comes into its own. It allows us to invest in both additional manufacturing capacity and safety. A strong network allows us to solve problems quickly and master ramp-ups together so that the development of new processors and smarter end devices can continue and our competitors don't have the opportunity to enter the market.
"We can only win together" is a motto that applies equally to cooperation within SMT and the ZEISS Group as well as with our suppliers. After all, we are naturally familiar with the aforementioned demands from our own experience, because ZEISS SMT is also a supplier for semiconductor manufacturing with its key components and systems. We are certain that our supplier network, which we are constantly improving, will help us continue our success in the future.