Opportunity
Widespread Chip Shortages Exposed
During the Pandemic consumers became aware of late-gen chip shortages, a problem that manufacturers in multiple sectors of the economy have struggled with for decades.
Auto manufacturers still produced vehicles but without crucial semiconductor chips, those vehicles could not be completed, frustrating manufacturers, dealers and buyers. Ford parked tens of thousands of nearly completed F150s at the Kentucky Speedway while dealerships across the country stood nearly empty of inventory. Pandemic-induced chip shortages prevented the completion of 7.7 million vehicles in 2021, costing the automotive industry an estimated $210B in lost revenue.
This market dynamic was painfully obvious during the pandemic, but this exposed only the tip of the iceberg. Leaders across every industrial and commercial sector of the economy have been confronted with this issue for years.
Out of Sync Production Cycles
In order to take advantage of rapidly changing consumer spending cycles, semiconductor design and production is on a fast 12 month cycle.
- While new vehicle design is on a 5 year cycle.
- Even larger capital equipment is on a 10 year design cycle.
- And aerospace and defense is on a 20-year design cycle.
The mismatch in cycles can mean that product designs are outdated before production even starts. This costs American equipment manufacturers millions of dollars in lost productivity, time and resources and takes them out of the driver's seat in their own go-to-market strategies.
Lifecycle Mismatch
The Lifecycle Mismatch is the delta between the production lifecycle of a chip and the new products designed around them, as well as the chips required to keep major capital equipment investments working.
This mismatch has been plaguing the chip supply chain, and our entire economy for years.
$1.6B
is the annual out-of-cycle redesign cost for DoD
70%
of electronic components in military systems are obsolete prior to system fielding
40%
is the average shortfall of supply vs demand for a discontinued chip
Our Target Industries
Who Benefits with Phoenix's Technology?
Sectors of the economy that invest in systems that are intended to be in production for decades are most acutely impacted by the scarcity of parts.
Nearly every sector would benefit by having a reliable supply of mature chips, but Phoenix is focusing on the following industries who have already demonstrated a willingness to solve this issue.
- Aerospace & Defense
- Oil & Gas
- Medical Equipment
- Industrials
- Transportation Systems
- Automotive
“Legacy chips are involved in the production of most automobiles, aircraft, home appliances, broadband, consumer electronics, factory automation systems, military systems, and medical devices. These devices have a central role in the U.S. manufacturing economy, meaning disruptions in the availability of legacy chips negatively impact U.S. manufacturing and downstream economic activities.”
Industry Sectors Desperate to Find Solutions
With few mitigation strategies available, OEMs and other industries are often left with costly and time-intensive out-of-cycle redesigns or the reseller market as the only options.
Primarily operating abroad, non-authorized reseller networks are complex, opaque, and risky.
The safety and security risks posed by counterfeit and tampered chips from non-authorized reseller networks are massive and growing. In 2022, counterfeit chips cost manufacturers approximately $7.5B up from $5.4B in 2019.
