One overarching theme from the InfoComm show last year in Orlando was that the industry is at or near the end of its collective supply challenges, and hopefully, that’s true. It’s certainly true for Audinate – for the first time, we shipped over 1 million units in a year and achieved 40 percent year-over-year (YOY) growth.
The root of the global supply challenges was two-fold. On the demand side, consumer purchasing during the pandemic shifted from leisure and travel to consumer electronics and electric vehicles, which dramatically increased the demand for the chips used in these products. And on the supply side, in addition to semiconductor companies not being able to quickly ramp up production, the pandemic impacted supply with everything from factory shutdowns/slowdowns to transoceanic shipping to local truck driver shortages.
Many of us learned during the chip shortages and shutdowns that the AV industry is a small fish in a big pond when it comes to backfilling orders for certain chips. Auto and consumer electronics manufacturers wielded their significant buying power to move to the head of the fulfillment line, and AV was forced to get creative.
Audinate dealt with many of the same challenges and utilized some creativity to minimize delivery impacts to our OEM partners. The great opportunity that comes with adversity is the need to look at things differently, through a different lens instead of what’s “tried and true.”
Pin-Compatible Replacement Parts
As supply chain challenges coalesced in 2021, we recognized the long-term implications and decided to begin work immediately on potential replacements for microchips in some of our products. This work included sourcing replacements for chips with many years of life left on the development and support roadmap to utilize more readily available parts.
The design philosophy was to, where possible, develop pin-compatible drop-in replacement modules, as evidenced by the release of our Brooklyn 3 module in 2022. Pin-compatible modules share a common footprint with the device they’re replacing, with the same functions assigned or usable on the same pins.
This compatibility allows manufacturers to “drop in” the new chip or module into their designs without completely redesigning circuit boards. Pin compatibility is key to reducing the time-to-market when substituting components and provides an elegant replacement path where the new part fits in immediately with our partners’ product designs.
Negotiating With Suppliers
In tandem with redesigning our products, we had regular and extensive conversations with chip suppliers to mitigate chip shortages, negotiating with them on behalf of our manufacturer partners to provide more inventory for the AV industry. As the recent supply chain crisis showed us, any significant stoppage has a ripple effect downstream, and the customers with the greatest buying power usually take precedence in filling back orders.
When we learned that a major chip manufacturing partner was re-allocating semiconductor capacity away from AV and that Audinate’s allocation of components would be reduced, we briefed our OEM partners on the situation and worked closely with them to minimize disruptions. The shortage accelerated some of our replacement product timelines while we increased our negotiating efforts with suppliers. Our negotiations were effective and allowed us to move up the priority list and secure additional supply.
Instead of creating a hardware-based product, what if you pivoted towards software? That was a significant element of our strategy through the recent supply chain challenges. While we’re not abandoning or lessening our commitment to hardware manufacturing, many of our future endeavors focus on software-based platforms.
The advantages are significant, not the least of which is circumventing supply chain challenges. Embedded software platforms running on commodity x86 and Arm processors gives OEMs more flexibility in their product designs, including in-the-field software upgrades and reduced manufacturing costs.
The recent worldwide supply chain challenges highlighted the unanticipated nature of interconnected product designs. We pivoted on several fronts to meet customer demands, from pin-compatible replacement parts to acting as an OEM advocate with chip companies, to migrating to new software-based products. With the workflow and product enhancements made during the supply chain saga, we believe we’re well-positioned to serve the needs of the AV industry for years to come.