The recent global IT outage is causing significant global supply chain disruptions as a result of major closures and delays at ports and air freight facilities worldwide. Heavily reliant on air freight, the semiconductor supply chain is especially vulnerable and faces challenges as operations strive to return to normal.
This outage highlights the fragility of interconnected global supply networks and the importance of supply chain risk management, especially in the semiconductor industry
Who is Crowdstrike?
CrowdStrike is a leading cybersecurity company providing cloud-based solutions for endpoint security, threat intelligence, and incident response to approximately 29,000 customers worldwide. Their services aim to safeguard against cyber threats using a cloud-native platform, delivering real-time protection and swift risk identification.
The Global IT Outage
One key advantage of CrowdStrike’s service is its ability to enhance defenses quickly as new threats emerge. This includes continuous and automatic updates to the Falcon Sensor software on customers’ machines. However, a single content update for Windows PCs crashed Microsoft operating systems, affecting almost every major business sector across the world.
This single faulty update containing buggy code was not detected until it was downloaded on many of CrowdStrike’s clients’ machines. It then began interfering with the PC’s core functions, causing Microsoft’s blue error screen. The IT outage affected everything from Starbucks mobile ordering to grounding flights and sending TV stations off the air.
CrowdStrike identified the issue and issued a fix relatively quickly. However, industry operations will take some time to return to normal.
Global Supply Chain Disruptions
The IT outage significantly affected global supply chains, causing major closures and delays at ports and air freight hubs worldwide. Thousands of flights were grounded or delayed at the world’s largest air freight hubs in Europe, Asia, and North America. These hubs are critical in the international logistic network and handle large quantities of cargo daily. Because of this, cargo is not where it is supposed to be and will likely take days or weeks to be fully resolved.
On the shipping front, ports worldwide reported IT issues, causing delays in managing shipments and affecting delivery timelines for international cargo. The International Maritime Organization noted significant delays in cargo handling, leading to longer wait times for ships and increased operational costs.
Most rails are recovering after early disruptions, with major freight operators reporting minimal or temporary impacts. Union Pacific was the only major U.S. freight railroad to report issues from the IT outage, experiencing varying levels of impact and some processing delays in customer shipments.
According to an in-depth analysis on the IT Outage by Interos, a ripple effect on the supply chain remains likely even as networks return to normal.
Disruptions to the Semiconductor Supply Chain
The grounding of flights has particularly affected the semiconductor supply chain, which relies heavily on air freight to transport finished products from manufacturing centers in Europe and Asia to markets in the U.S.
This challenge arises amidst increasing global demand and prices, fueled by the ongoing conflict in the Red Sea and the effects of climate change on trade routes. Additionally, shipments rose by 13% year-over-year in June, yet air freight supply grew by only 3%, leading to higher costs for shipments due to limited capacity. As airfreight companies will likely take days or weeks to restore their systems fully, the semiconductor supply chain will only be further exacerbated.
Managing Supply Chain Risk
The CrowdStrike outage emphasizes the vulnerability of interconnected global supply chains and the long-term economic repercussions. According to Interos, ongoing supply chain disruptions cost companies an average of $100 million in annual losses. This demonstrates the critical need for anticipation and speed when it comes to global supply chain disruptions.
At Microchip USA, we recognize the critical need to remain prepared when it comes to the semiconductor supply chain, and we are committed to supporting you. Through our extensive network and industry expertise, we can help you navigate supply chain obstacles and provide customized solutions and cost savings to keep your projects progressing smoothly.
