Managing Die Bank Inventory

When managing a semiconductor supply chain, the die bank serves as a critical pivot point. This is because:

  • Front-end lead times are long. Particularly, except for some very specialized chips, the customer expects delivery in less time than the front-end lead times, so front end manufacturing is almost always planned and executed to forecast.
  • 1.Customers are willing to wait long enough for the manufacturer to execute their back-end processes, so inventory is often held at the die bank in anticipation of an order.
  • 1.A single die can often be packaged into multiple finished chips, so maintaining die inventory reduces inventory risk through the pooling effect.

In short, build-to-die is a common strategy used in managing semiconductor supply chains.

Die banks provide another, often overlooked, advantage. If managed properly, they give the manufacturer the ability to respond quickly to late “surprises”, both in demand and in back-end capacity.

Using Die Bank Inventory to Avoid Capacity "Surprises"

Back-end capacity is flexible, so capacity can be increased with relatively modest effort. Often, changes are made in the factory in order to align capacity with demand. These changes are made after consultation between factories and the Global Supply Chain Organization.

A decision to increase back-end capacity at short notice can quickly deplete the die bank. Because of the relatively long lead times in the front end, this could result some of the newly available back-end capacity going unused unless the front end had foreseen such an eventuality and suitably pre-built die in anticipation of such an increase.

The objective of this project was to compute the right quantity and mix of die to prepare for such possible increases in back-end capacity.

Improving Reliability of Revenue Targets through Die Bank Buffer

Like any public company, On Semi announces a revenue target at the beginning of each quarter and then executes toward it. The revenue target is based on a forecast for that quarter. If the forecast for some products "softens", On Semi can recover by increasing sales of products whose demand responds most readily to actions such as pricing, promotion, etc. Given that front-end lead times are very long, On Semi needs an adequate stock of die for such products.

The objective of this project was to identify such products, compute die inventory targets that reflect the special nature of these products, and execute to that plan.