[News] RECALL THREAD-- IMPORTANT PHILIPS DREAMSTATION & SYSTEM ONE USERS

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The New York Times

How the Supply Chain Upheaval Became a Life-or-Death Threat

A maker of medical devices can’t keep up with customer demand as the shortage of computer chips puts it in competition with bigger companies with more clout.

https://www.nytimes.com/2021/12/09/busin...tages.html

[Sleeprider]

Please do not link to NYTimes. I will not support their pay-wall. If you can summarize the article it would be more helpful.

[LindanHotAir]

Summary of NY Times article: Resmed was supply constrained on critical chips to build CPAPs. Their chip vendor was supply constrained on raw silicon wafers. Medical device makers are a very small part of the chip customer base, with automotive and phone manufacturers consuming the bulk of the chips. Resmed was able to source a small quantity of wafers elsewhere so their chip vendor could start some chips for them. All of these issues result in increased costs and lead time.

[Sleeprider]

Thanks! This makes me Wonder if the recalled machines are being salvaged primarily for chips?

[btreger]

Please do not link to NYTimes. I will not support their pay-wall.  If you can summarize the article it would be more helpful.

Roger that.......

[btreger]

Thanks!  This makes me Wonder if the recalled machines are being salvaged primarily for chips?

That could account for the delays in getting DS2's. It could also mean Philips will use this as an excuse for not getting you a DS2 because your 5-year window has expired.

[pholynyk]

OTOH, it's a good reason to stuff new foam into rebuilt DS1s, which already have all their chips...

[jas32]

.... and some people who have received replacements refuse to return their recalled machines to Philips.  I think this behavior is being selfish and childish.  Philips could replace the foam and turn those around to people like me who are still waiting for our replacement DS (new or refurbished).

[WakeUpTime]

[The New York Times]  "How the Supply Chain Upheaval Became a Life-or-Death Threat"

Good article.  Thanks for that.

Additional details for those that might not be able to see the whole article:

[ResMed]  “Medical devices are getting starved here,” the company’s chief executive, Michael Farrell, said in an interview. “Do we need one more cellphone? One more electric car? One more cloud-connected refrigerator? Or do we need one more ventilator that gives the gift of breath to somebody?”

ResMed has struggled to buy enough chips, Mr. Farrell said, constraining its ability to make a range of vital equipment — from ventilators used by Covid patients to breathing devices that sustain premature infants.  The company is “producing less than 75 percent of what our customers need,” Mr. Farrell said.

Mr. Farrell has found himself in an uncustomary role: beseeching his suppliers to allocate more of their goods to him so that his company can work through a growing backlog of orders.  By the time global industry figured out that demand for chips was surging, it was too late. Adding chip-making capacity requires as much as two years of lead time and billions of dollars.

In North America, Europe and elsewhere, medical device manufacturers are governed by strict product safety standards that limit their flexibility in adapting to trouble. Once a company like ResMed gains regulatory clearance to use a supplier, it cannot simply seek out a new one that might have a ready stock of chips without first going through a time-consuming approval process.

That meant that ResMed had to figure out how to squeeze more chips out of its existing supply chain.  Far from simple components, computer chips come in enormous varieties, each made with multiple parts that are typically made in multiple countries.  Faced with the prospect of getting shut out, Mr. Farrell rooted through his supply chain, identifying the suppliers of his suppliers, in the hopes of persuading them to prioritize ResMed’s factories.

Mr. Farrell soon realized that a primary reason that his chip supplier could not meet his demand was that — five levels up the chain — a Taiwanese manufacturer of silicon wafers had exhausted its inventory.  ResMed’s orders amounted to barely 1 percent of the wafer company’s output. A mere fraction of 1 percent in additional wafers was enough to satisfy ResMed’s needs.

A massive recall of the devices by a big manufacturer further reduced supply.

In essence, automotive and mobile phones significantly geared down future production estimates in 2020/21 when they really didn't need to do that to such a degree (if at all).  The giants have squeezed those suppliers to produce significantly higher quantities.  In our little industry, the Philips Recall came along too.  Philips may carry more weight as a result of its overall size rather than merely by the power of its ventilator division.  That's unfortunate for ResMed, who could be shipping substantially more ventilators.

Not only can the dominant industries use their size/money to control chip production, they can reach out to any other chip supplier for new supplies.  ResMed can't respond similarly due to their needing pre-approvals for all suppliers (medical supply standards).

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The Class Action Lawsuit Starts Today

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