Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554
In the Matter of ) ) WTB Seeks Comment on the Impact of the ) WT Docket No. 21-195 Global Semiconductor Shortage on the ) U.S. Communications Sector )
COMMENTS OF MAVENIR SYSTEMS, INC.
Mavenir Systems, Inc. (“Mavenir”) submits these Comments in response to the Federal
Communications Commission’s (“Commission”) Public Notice in the above captioned proceeding.1 Mavenir commends the Commission’s efforts in joining the whole of government
approach in reducing the impact of the present semiconductor shortage.2 The current shortfall in
the global supply of semiconductors is affecting the United States communications industry,
including the deployment of next-generation technologies like fifth generation (5G) wireless
services. The shortage’s impacts include increased lead times, delays in Communication Service
Provider network deployment, and increased cost.
I. Shortage in the Communications Sector
The Commission seeks comment on whether the semiconductor shortage has reached the
communications sector, lead times, costs, and industry trends.3 The shortage has absolutely
1 See generally Wireless Telecommunications Bureau Seeks Comment on the Impact of the Global Semiconductor Shortage on the U.S. Communications Sector, WT Docket No. 21-195, Public Notice, DA 21-550 (WTB May 11, 2021) (Semiconductor Shortage Public Notice). 2 See, e.g., Semiconductor Industry Association, Senate Passage of USICA Marks Major Step Toward Enacting Needed Semiconductor Investments, https://www.semiconductors.org/senate-passage-of-usica-marks-major-step- toward-enacting-needed-semiconductor-investments/ (last visited June 9, 2021). 3 Semiconductor Shortage Public Notice at 2.
1
reached the communications sector. Increasing demand for 5G handset and communications
infrastructure, automotive, industrial and other consumer markets, and overstocking by untrusted
suppliers to avoid technology controls, exceeds the available capacity.4 One Mavenir supplier,
Kontron,5 has informed Mavenir that this demand corresponds to component costs of up to a
three-fold (3x) increase, and extension of lead times from 6-8 weeks to more than 1 year.
II. Length, Nature, and Extent of the Shortage
With respect to the length, “nature and extent of semiconductor shortages or shortages of
other components that are critical to the communications sector,”6 market data suggests that at
best, capacity will improve at the end of 2021, but many in the industry have indicated that the
capacity challenges will deepen toward the end of 2021 and into 2022. Intel for example, was
widely quoted in May 2021, as predicting that the semiconductor shortage will take “years” to
resolve.7 Others concur, predicting that “[b]ecause demand will remain high and supply will
remain constrained, we expect this shortage to last through 2022 and into 2023.”8
The communications sector is transitioning or has transitioned to general purpose
CPUs—as opposed to specialized CPUs—meaning that communications systems now share
semiconductor components with other mass market products such as automobiles, which now
4 See, e.g., Cheng Ting-Fang & Lauly Li, Huawei in 'survival mode' as suppliers race to beat US deadline, Nikkei Asia (Aug. 25, 2020, 16:03 JST), https://asia.nikkei.com/Spotlight/Huawei-crackdown/Huawei-in-survival-mode-as- suppliers-race-to-beat-US-deadline (stating “The leading Chinese smartphone maker is stockpiling 5G mobile processors, Wifi, radio frequency and display driver chips and other components from key chip developers.”). 5 “Kontron is a global leader in embedded computing technology (ECT).” Kontron, Company Overview, https://www.kontron.com/en/company-overview (last visited June 10, 2021). 6 Semiconductor Shortage Public Notice at 2. 7 Patrick Seitz, Semiconductor Stocks Face Up To Chip Shortage As U.S. Government Plots Investments, investors.com (June 4, 2021 12:06 PM), https://www.investors.com/news/technology/semiconductor-stocks- confront-chip-shortage-as-feds-plot-investments/. 8 Glenn O'Donnell, The Global Chip Shortage Won’t Ease Soon, Forrester (Apr. 21, 2021), https://go.forrester.com/blogs/the-global-chip-shortage-wont-ease-soon/ .
2
use an estimated 3,000 to 8,000 semiconductors.9 To meet demand, Mavenir supplier Kontron
has informed Mavenir that semiconductor fabrication plants, aka “fabs” or “foundries,” and impacted suppliers are taking measures to increase capacity through fab tooling changes—going from 8-inch wafers to 12-inch wafers—building new fabs, and focusing on building mainstream
components that cover the broadest market need. Notwithstanding those measures, re-tooling
and even starting up new fabrication plants take time. Shifting production to build more
mainstream/highly demanded components introduces significant lead time, and risks placing
those semiconductor components not broadly used into obsolescence. The return to normalcy in
semiconductor fabrication capacity is difficult to predict and the key to the communications
industry to stay on track will be flexibility and the ability to quickly adopt and pivot to using the
more readily produced semiconductor chips.
III. Affected Technology Nodes
Addressing which technology nodes are most affected,10 foundry-related issues affect old and legacy generation and new components alike. Legacy and older generation nodes impacted
include: 110 nanometer (“nm”), 180nm for generic microcontroller unit (“MCU”) (intelligent
component with a processor, memory, communication interfaces); power management integrated
circuits (“PMIC”); Analog / Mixed Signal products; old and older generation Field
Programmable Gate Array (“FPGA”); 90nm for generic MCUs; and 40nm and 65nm for older
9 See Jack Ewing & Neal E. Boudette, A Tiny Part’s Big Ripple: Global Chip Shortage Hobbles the Auto Industry, N.Y. Times, Apr. 23, 2021, https://www.nytimes.com/2021/04/23/business/auto-semiconductors-general-motors- mercedes.html#:~:text=One%20big%20reason%20automakers%20can,have%20more%20than%203%2C000%20ch ips (3,000 semiconductors per automobile); David W. Price, et al., Solid State Technology, Process Watch: The (Automotive) Problem with Semiconductors 1 (2018), https://www.kla- tencor.com/documents/01_ProcessWatchAutomotive_2018_01.pdf (8,000 semiconductors per vehicle). 10 See Semiconductor Shortage Public Notice at 2 (asking “Which semiconductor technology nodes in particular have been impacted or are expected to be impacted by the shortage? Which technology nodes are important to the short- and long-term needs of the communications sector?”). 3
generation SoC (“System on a Chip”), including Wi-Fi. Mavenir believes that foundries’ re-
tooling away from old and legacy nodes to newer technology to meet higher demand will
exacerbate the scarcity of old and legacy components, pushing customers toward more available
end products made with newer generation components.
Nevertheless, newer generation communication semiconductors are also affected.
System integration and assembly impacts are seen across all subcontractors and product
segments in final test and assembly. Advanced communication components are affected by
substrate shortages for complex, newer generation node devices11 with high pin-count in both
ball grid array (“BGA”) and wafer-level chip scale packaging (“WLCSP”), which are used for
mounting components on a circuit board. Mavenir’s manufacturing supplier Jabil indicates that
key mmWave Radio components have long lead times of up to 9 months—including memory,
logic processors, resistors and capacitors—and that sub-system suppliers providing major
systems components are also impacted, including Broadcom, Xilinx, Qualcomm, NVIDIA, and
Marvell.12
IV. Key Factors Affecting Supply
Key factors “impacting the supply of semiconductors and other manufacturing
components which are critical to the communications sector”13 include accurate estimation and
proactive forecasting to adequately plan supply, and support manufacturers and suppliers in
producing the components and systems based on that forecast: these controls help prevent large
swings in supply and demand and resulting shortages. Because critical communications
11 E.g. Commercial Off the Shelf (“COTS”) servers used for cloud and on-premises communications systems. 12 Jabil “is a manufacturing solutions provider with over 260,000 employees across 100 locations in 30 countries.” Jabil, Investor Relations, https://investors.jabil.com/overview/default.aspx (last visited June 10, 2021). 13 Semiconductor Shortage Public Notice at 2. 4
infrastructure must be properly secured, and new technologies rolled out in a timely manner,
other factors include the level of commitment to the U.S. 5G program, and funding for rollouts to
allow vendors to jump start programs and allocate/reserve capacity which enable rollouts.
COVID-19 pandemic-related impacts are increasing in major software development manufacturing centers in India and other countries. Mavenir has seen that recent movement control orders in India, Malaysia and other countries are impacting hardware and back-end assembly firms. The impact on both manufacturing and logistics will continue to increase due to ongoing fabrication capacity issues. For example, computer memory shortages are driven by fabrication capacity issues with multiple memory chip components, including the DIMM and
DRAM parts—The Dual In-line Memory Modules (“DIMM”) require Dynamic Random-Access
Memory (“DRAM”) subcomponents. Even after the DRAM shortage improves, there will remain a long period for the DIMM suppliers to catch up. Additionally, as one Mavenir supplier has relayed, increasing demand for shipping, packing materials and other related items are resulting in longer air and maritime transit times, and higher shipping and packaging costs.
V. Shortage Impact on Different Semiconductor Uses
Mavenir sees supply constraints causing an impact on different semiconductor uses.14
Specifically, Mavenir has observed an acceleration of End of Life (“EOL”)15 for older generation
technologies. Customers are moving more quickly to request the design of newer products with a
healthier supply chain: Mavenir is observing rapid movement to container-based solutions
which can be hosted in either cloud or in customer on-premises data centers with our U.S. and
14 See id. at 3. 15 EOL “is commonly used in information technology to describe a product that is no longer maintained or supported. It may refer to either hardware or software.” EOL, Tech Terms, https://techterms.com/definition/eol (last visited June 9, 2021).
5
E.U. customers.16 While this evolution is not necessarily bad in and of itself, the fact that the
demand for wafers continues to far exceed wafer fabrication capacity means that all markets and
semiconductor components are impacted. Mavenir’s suppliers have advised us that CPUs,
memory, custom components (application-specific integrated circuits, “ASICs”), and even capacitors are impacted by fab capacity issues.17
Intel, Samsung, and Texas Instruments are among the few suppliers who currently have
their own fabrication. Most integrated circuit (“IC”) suppliers rely on the 5 largest foundries
globally.18 Based on discussions with our suppliers, Mavenir predicts that these 5 foundries will
focus on supplying their major customers, resulting in some niche component suppliers and
lower tier volume components receiving little or no wafers and key components. Relatedly,
Mavenir believes that customers deploying Open RAN solutions will benefit from flexibility in
hardware and component use, versus proprietary implementations which are tied to a few select
suppliers. Because open architecture hardware is by definition open, its hardware is available
from a large number of manufacturers. In contrast, proprietary equipment RAN solutions are
dependent on components available from a select few manufacturers—again, by definition—and
are thus more sensitive to supply constraints, including semiconductor chip shortages. Ericsson
which has a closed RAN system has gone on record to state that the semiconductor chip shortage
16 As Mavenir explained in its Open RAN Notice of Inquiry Comments, “Containerization is a type of virtualization strategy that emerged as an alternative to traditional hypervisor-based virtualization. As with the latter, container- based virtualization involves creating specific virtual pieces of a hardware infrastructure, but unlike the traditional approach, which fully splits these virtual machines from the rest of the architecture, containerization just creates separate containers at the operating system level.” Techopedia, Containerization, https://www.techopedia.com/definition/31234/containerization-computers (last visited June 10, 2021). 17 See also generally, e.g., Avnet Abacus, The global MLCC shortage: What are your options?, https://www.avnet.com/wps/portal/abacus/solutions/technologies/passive/capacitors/the-global-mlcc-shortage/ (outlining capacitor shortages). 18 See 5 Fabs Own 54% of Global Semiconductor Capacity, EPSNews (Feb. 10, 2021), https://epsnews.com/2021/02/10/5-fabs-own-54-of-global-semiconductor-capacity/
6
will impact its ability to meet customer demand through 2022.19 Nokia has indicated that it will
be impacted through at least 2023.20 Accordingly, the Commission should encourage adoption
of open architecture hardware to mitigate supply constraints through diversification of the
domestic manufacturing base.
VI. Shortage Impacts on Consumers and Industry
Semiconductor shortages are already having far-reaching impacts.21 Suppliers are being forced to select which systems and which customers will get priority, as well as deciding what
systems will ship or be made obsolete. In some cases, new systems are being held in favor of
legacy systems if the legacy uses available materials—spare parts for repair of older proprietary
hardware servers may not be available, forcing the move to new solutions supporting newer
hardware. More commonly, based on customer input, Mavenir has learned that system suppliers
are deciding to instead prioritize new solutions, accelerating some legacy systems’ EOL. In
many cases, these decisions are accompanied with increased prices to end customers to
accommodate these changes.
The semiconductor shortage’s short- and long-term impacts include a shift by mobile
operators towards open architecture, non-proprietary solutions utilizing more readily available
general purpose hardware and components. Mavenir anticipates that stakeholders will drive for
better supply planning and proactive forecasting, including encouraging vendors to build on
19 Yanitsa Boyadzhieva, Ericsson tips continued surge in online service reliance, Mobile World Live (Jun. 9, 2021), https://www.mobileworldlive.com/featured-content/home-banner/ericsson-online-usage. 20 Kati Pohjanpalo, Nokia CEO Says ‘Fight’ for Semiconductors May Drag On Until 2023, Bloomberg (Apr. 29, 2021, 5:03 AM), https://www.bloomberg.com/news/articles/2021-04-29/nokia-ceo-says-fight-for-semiconductors- may-drag-on-until-2023. 21 See Semiconductor Shortage Public Notice at 3 (asking “What are the impacts of shortages of semiconductors or other critical components on the communications sector, including on consumers, enterprise system users, private network operators (such as critical infrastructure), and service providers? To what extent are these shortages driving changes to stakeholders’ plans and priorities and resulting in changes to the communications industry more broadly?”). 7 existing partnerships with Tier 1 communication system suppliers and manufacturers.
Stakeholders will also seek initiatives to encourage innovation and implementation, including funding of system rollouts which allow vendors to jump start the 5G programs and allocate/reserve the capacity needed to enable rollouts.
VII. Public Interest Impact
The Commission seeks comment on impacts on the public interest.22 The shortages, without intervention, will delay the rollout of next-generation networks and technologies. United
States national security will be affected if U.S. suppliers and communication systems operators fall behind global competitors, and governments and lack the advanced knowledge and technology required to identify emerging vulnerabilities and threats required to protect U.S. interests and systems.
Mavenir predicts that 5G—available only through the advancements in semiconductors— will especially benefit communities of color, economically distressed business, and small business due to more cost-effective connectivity (as compared to cable, DSL, and other technologies). Some rural communities will be provided with their first economically viable and effective internet connections via wireless hardware. The semiconductor shortage poses a threat to delay significantly or even stop 5G and next generation hardware and software deployment in its tracks, harming all communities.
VIII. Effects and Impacts on Distance Learning, Online Services, and Sustaining Reliable Access
22 See Semiconductor Shortage Public Notice at 3.
8
As to the effects on distance learning, telehealth, and other services that moved online
due to the pandemic,23 although it is difficult to accurately predict, these areas are likely less impacted by the shortage, but they are impacted nonetheless. Distance learning, telehealth, and
other online services exploded during the COVID-19 pandemic’s peak, as companies and
individuals established a remote work and home technology environment—demonstrating
broadband’s potential for the first time en masse, and creating a dependency that the public likely
will not give up. This demand will only increase, and as such, the shortage’s impact on these
areas will only cause unmet need on distance learning, telehealth, and other services that moved
online due to the pandemic.
The Commission asks about the impacts of failing to sustain reliable access to
semiconductors on the communications industry.24 Because semiconductors are basic to nearly
all communications products, wafer capacity shortages will impact lead times and cost—thus
impacting the ability to deploy end systems when requested. Mavenir predicts that Tier 1
operators will get preferred access and lead times over Tier 2 & 3 operators, but at a premium.
IX. Conclusion
Mavenir once again appreciates the opportunity to contribute to the Commission’s efforts
to improve the domestic equipment manufacturing market, this time, by ascertaining how it can
mitigate the impact of the semiconductor shortage. The semiconductor shortage amplified
weaknesses in the U.S. supply chain and downstream impacts on critical infrastructure—
including communications infrastructure. To address these challenges,25 the Commission should
encourage adoption of open architecture communication systems solutions, as those solutions
23 See id. 24 See id. 25 See id. 9 utilize COTS hardware and common components that are available from a larger number of manufacturers, which provide flexibility in the availability of components not available with proprietary implementations. To the extent possible, the Commission should prioritize and support 5G development and deployment, to ensure scarce semiconductors first flow to U.S. networks.
Respectfully submitted,
/s/ Pardeep Kohli Pardeep Kohli, President & CEO Mavenir Systems, Inc. 1700 International Parkway Richardson, TX 75081 [email protected]
Dated: June 10, 2021
10