The critical role of semiconductor logistics in the global supply chain

The semiconductor industry is an integral part of modern technology, powering various electronic devices such as smartphones, computers, and automobiles. Advanced innovations such as virtual reality (VR), 5G connectivity, and artificial intelligence (AI) also rely heavily on semiconductor chips for their processing power. And as demand for these devices become mainstream, the semiconductor industry is expected to skyrocket. According to Statista, the global semiconductor market was valued at US$580.13 billion in 2022 alone, with a year-on-year growth rate of 4.4%.

However, the industry faces unique challenges in its supply chain and logistics operations. Ensuring a secure and efficient global semiconductor supply chain is thus crucial to meet not just the demands of the industry itself, but the global network of devices and applications that rely on semiconductors to work. Read on to explore the critical role of semiconductor logistics and how logistics companies can help address pressing industry-wide challenges.

Why semiconductor logistics are crucial for the global supply chain

Semiconductor logistics is a crucial component of the global supply chain. It encompasses a wide range of activities, from managing the fabrication of raw materials to delivering finished products to customers. Maintaining efficient semiconductor logistics is essential to meet the global demand for electronic devices of all types, ranging from mundane smartphones and personal computers, to specialised medical and industrial equipment. Even the slightest blow to the supply chain can thus have far-reaching impacts with potentially severe consequences, particularly in a world that’s become so dependent on technology in our everyday lives.

The semiconductor industry is also characterised by complex supply chains that require careful management. This often includes coordinating the production and shipment of semiconductor chips and components across multiple locations and countries, including Singapore. The quality of shipments can also be impacted by factors such as temperature and humidity during transportation, making it critical to have a reliable logistics partner who can safely and securely transport semiconductor chips and components without causing any significant damage.

Common challenges in semiconductor logistics

Despite its importance to our everyday lives, semiconductor logistics is not without its challenges. DHL Express recognises the importance of improving the operational capabilities of semiconductor-related operations, and consistently works closely with our customers to improve the resilience and reliability of their supply chains. Four key trends, in particular, shape our approach to this complex industry: accelerated digitalisation, stronger collaboration, robust product and inventory strategy, and sustainability.

1. Complex global supply chains

One of the main challenges is supply chain complexity, as the semiconductor industry is made up of multiple suppliers and manufacturers across the globe. This can make it difficult to coordinate shipments and ensure timely delivery. Accelerated digitalisation can help to overcome these challenges through better real-time visualisation of shipments, inventories, transport assets, and other key aspects of the entire supply chain. Leveraging data analytics can also help semiconductor companies gain a more accurate view of their operations, leading to improved coordination and optimised logistics processes.

2. Complicated transportation and customs requirements

Transportation requirements are another challenge in semiconductor logistics. Semiconductor chips and components are often high-value and fragile, requiring specialised transportation services to ensure their safe and secure delivery. DHL Express is able to provide specialised transportation services, such as air freight and temperature-controlled shipping, which are key to ensuring the safe and secure delivery of semiconductor shipments.

3. Need for consistent and precise stock management

Smart supply chain management is also critical within the industry, as overstocking can lead to excess costs and stockouts can impact production schedules. Small delays can quickly snowball into larger gaps in shipments, with the potential to significantly disrupt global supply chains in other sectors. Advanced planning tools that allow companies to visualise inventory, anticipate demand, and account for delays are thus important in making the semiconductor supply chain run as smoothly as possible.

4. Vulnerability to supply chain shocks and disruptions

DHL Express’s global network of couriers and delivery providers also allows our customers to remain flexible and adaptable in the face of unexpected challenges or supply chain shocks, increasing their overall resilience. Add-ons such as increased warehouse capacity and inventory analytics further streamline the entire shipping process for our semiconductor clients.

5. Difficulty in achieving sustainability goals

As the semiconductor industry depends heavily on resource extraction and global shipping routes, semiconductor companies are highly aware of the need to ensure a sustainable supply chain. DHL Express employs an array of measures including electric vehicles, alternative fuels, closed-loop logistics, and circular economy initiatives to help companies balance high-volume production with meeting sustainability goals. Our GoGreen Plus eco-friendly shipping service uses sustainable aviation fuel (SAF) as a carbon insetting measure, further enabling businesses to bring down their Scope 3 emissions. This in turn helps companies keep up with the increased consumer demand for sustainable development, enhancing their brand profile.

Ensuring a secure and efficient global semiconductor supply chain with DHL Express

International logistics and last-mile delivery companies such as DHL Express play a critical role in ensuring a secure and efficient global semiconductor supply chain. With decades of leadership in the sector, DHL Express has the expertise and capability to manage the complex logistics operations involved in the semiconductor industry.

Our specialised DHL Semiconductor Logistics is specially formulated to address common obstacles and issues faced by semiconductor companies in Singapore and worldwide. This includes everything from streamlined inbound logistics to flexible final mile logistics, ensuring that your semiconductor shipments are handled safely and securely from start to finish.

Moreover, our expertise in navigating global shipping regulations and customs requirements across different countries can help companies further expedite their processes, especially since many semiconductor components and products are subject to export controls and other regulations.

Create a business account today to find out more about our specialised solutions for the semiconductor industry, and how we can help your company overcome supply chain challenges to ensure efficient and secure logistics operations.