Semiconductors are an essential component in everything from computing, consumer electronics, and healthcare to automotive manufacturing, telecoms, space, and defence. And global demand for them is only poised to increase. In 2022, the worldwide market for semiconductors was estimated at $618 billion. By the end of the decade, that figure is expected to reach $1 trillion per year.
The rising demand for semiconductors stems from a mixture of technology trends, from IoT and 5G to the precipitous rise in generative AI. However, organisations attempting to meet this demand are presented with a growing number of challenges, as geopolitical tensions, economic uncertainty, and the climate crisis conspire to delay and disrupt supply chains around the world.
“The current global situation is challenging, no doubt, but it presents an opportunity for procurement to rise to the many challenges we face. Procurement needs to evolve, gain strategic importance within the organisation, and implement more efficient processes,” says Sylvain Aguirre, Head of Procurement at United Monolithic Semiconductors (UMS).
Meet UMS
Founded in 1996 from the combination of Thales and Airbus Defence and Space III-V semiconductors activities, UMS designs, manufactures, and assembles RF & millimetre-wave Integrated Circuits products and solutions. UMS operates its own foundry specialising in GaN (gallium nitride) and GaAs (gallium arsenide) technology. “We develop electronic components for RF applications, providing unique, high-performance solutions for highly demanding applications” Aguirre says. “Our customers, often from the defence, space, automotive, telecom, medical, and industrial sectors, come to us to meet their specialised needs.”
Providing critical technology solutions to high security, high stakes industries like defence, space, or automotive makes avoiding disruption and delays especially critical for UMS. As a result, the company’s procurement function is a key enabler of its broader growth strategy. “Today, procurement plays a crucial role in our company,” says Aguirre, recalling the process of transforming some years ago the company’s purchasing function into something that would “efficiently support UMS’ business growth.”
He explains: “Supporting growth means ensuring timely delivery of goods and services, preventing shortages, and fulfilling our commitments to customers. Establishing strategic partnerships with suppliers to secure favourable conditions and enhance competitiveness is another key aspect of our contribution to the company’s growth. This leads us to develop partnerships — driving the evolution of relationships with third parties from simple supplier to partner, and pursuing win-win outcomes that benefit both parties.
The result, several years later, is a radically reshaped procurement function that has moved beyond “tactical purchasing” to embrace “strategic procurement.”
From Tactical Purchasing to Strategic Procurement
When he joined UMS, Aguirre faced the complex challenge of taking a traditional purchasing function and turning it into an organisation capable of meeting both the evolving needs of the business, and the growing number of challenges of the semiconductor sector as a whole. “I was tasked with reorganising the structure and scope of the procurement organisation in order to take it from a tactical purchasing organisation to a strategic procurement one,” he recalls.
UMS is an international company with two main sites: one near Paris, France, and another in Ulm, Germany. In order to boost the procurement cross-border effectiveness, Aguirre introduced a global, transversal approach where buyers manage purchasing categories across all locations, not just within individual countries, with standardised procurement processes and the introduction of new digital tools. Now UMS’ procurement team operates under the same standards and guidelines, with harmonised practices wherever they are—in France or in Germany.
Click here to read the full story in the latest issue of CPOStrategy.
