Inside the Semiconductor Manufacturing Process

The global semiconductor shortage brought the chip industry into sharp focus, but even now, most outside the sector don’t fully grasp what it takes to turn a grain of sand into the beating heart of every modern device. For procurement professionals, understanding the semiconductor manufacturing process isn’t just about technical curiosity, it’s a commercial necessity.

At Rebound Electronics, we support customers not only in sourcing hard-to-find semiconductors but in understanding the forces that shape availability, lead times and pricing. And to do that, we start at the source.

Why Procurement Needs to Understand Chipmaking

Let’s be clear: the semiconductor supply chain isn’t just complex, it’s one of the most intricate and capital-intensive manufacturing processes in the world. Knowing where pressure points lie in that process helps buyers make better decisions, anticipate delays, and push back on vendor uncertainty with confidence.

And as geopolitical tensions rise, with trade policies, tariffs, and national security concerns disrupting flow, visibility into chipmaking is now mission-critical.

Step-by-Step: How a Semiconductor Is Mad

Raw Material Extraction

It all starts with high-purity silicon, most of which is refined from quartz sand. This stage, often overlooked — is highly dependent on energy availability and regional mining policies.

Procurement insight: Delays or restrictions in mining regions (e.g. China or Brazil) can ripple down the chain months later. Tariffs and export controls on raw materials now play a strategic role.

2. Wafer Fabrication (Front-End)

This is where the real magic begins. Huge foundries (TSMC, Samsung, Intel, etc.) fabricate wafers in ultra-clean environments. Each wafer contains thousands of potential chips, created through:

Photolithography – Imprinting circuit patterns with ultraviolet light
Etching and deposition – Building the microscopic layers
Ion implantation – Modifying semiconductor properties

Each process requires specialist materials (photoresists, gases, metals) and extremely precise machinery. Supply issues at this stage can stall entire product lines.

Procurement insight: Buyers often overlook dependencies on chemicals and photomask availability, but delays here can derail the delivery of entire ‘families’ of chips

3. Testing & Dicing

Wafers are tested for defects, then diced into individual dies. A wafer can yield thousands of chips, but not all will pass.

Yield matters — especially for newer, smaller process nodes. A yield drop at 5nm or 3nm can turn into a market-wide shortage overnight.

4. Packaging & Assembly (Back-End)

Dies are then packaged — connected to substrates and protected from physical damage. This stage typically happens in Southeast Asia (notably Malaysia, the Philippines and Taiwan).

It’s also where bottlenecks showed up during the pandemic: shipping delays, lockdowns, and labour shortages hit packaging and test operations hard.

Procurement insight: Don’t treat back-end manufacturing as an afterthought. Delays here can be just as impactful as the fabrication issues.

5. Final Testing, Labelling and Distribution

Once packaged, chips go through final quality assurance. Only after this are they shipped to OEMs, distributors, or end customers.

Why Manufacturing Complexity Fuels Market Volatility

Each stage above takes weeks, even months. And the capital expenditure to build or expand fabrication capacity runs into the billions. Which is why, when demand spikes or geopolitical conditions shift, the system and supply chain, built up over decades, can’t flex quickly enough.

Take the return of Trump-era tariffs on Chinese semiconductors. These introduce sudden, often steep, cost increases on a huge range of parts, especially from foundries or packagers with Chinese exposure. That affects:

Margins for OEMs
Lead time expectations
Contractual delivery obligations
Supplier viability

Buyers who understand the full journey of a semiconductor are better placed to diversify sourcing, avoid vulnerable SKUS, and plan more realistically with design teams.

Obsolescence and the Lifecycle Clock

Even once a semiconductor reaches the shelf, the clock is ticking. Foundries are constantly shifting to newer process nodes, and support for older chips can vanish quickly. That’s why obsolescence management is now a boardroom issue.

At Rebound, we work with clients to:

Identify at-risk parts before EOL notices are issued
Secure buffer stock and long-term availability
Suggest second-source alternatives across key categories
Advise on compliance risks linked to sanctioned suppliers

A Silicon Supply Chain Built on Precision — and Politics

From raw materials to final packaging, the semiconductor journey is a marathon through some of the most volatile and geopolitically exposed supply routes in the world.

If you’re in engineering or procurement, knowing what lies beneath the surface gives you more leverage, foresight, and resilience. This isn’t just about understanding chips, it’s about navigating the strategic landscape they inhabit.

Rebound Electronics helps customers do exactly that, with global visibility, component intelligence, and proactive sourcing strategies for the components that power embedded systems, industrial machines, and next-gen devices.