Zoll Bought Its Circuit Boards Through Contract Manufacturers. In a Chip Shortage, That Hides You.

A chip supplier rationing parts in a shortage can only favor customers it knows exist. Zoll Medical, which makes defibrillators, spent most of its history outside that circle. It bought finished circuit boards from contract manufacturers, and the manufacturers dealt with the chip suppliers. At AdvaMed’s MedTech Conference in Boston last week, Zoll chairman Jon Rennert said medtech is in another semiconductor shortage this year, as AI data centers bid for the same components. Zoll’s response has been to go to the chip suppliers itself and explain what happens to patients when its devices can’t be built.

Rennert also said Zoll has spent heavily on inventory to buy lead time, and that just-in-time inventory, never much of a fixture in healthcare, is dead there now. Solventum’s chief commercial officer, Heather Knight, described triage at scale: with 30,000 SKUs, a company can’t build redundancy into everything, so it starts with the life-saving products and works backward. A seed-stage hardware company has one product, which settles the triage, and very little cash, which rules out the inventory. A year of parts on a shelf is runway spent on a design that will still change before launch.

What the chip vendor sees

A startup building through a contract manufacturer is where Zoll used to be, at a fraction of the size. Say the board in a startup’s device uses a power-management chip from one vendor. The vendor’s sales team sees the contract manufacturer’s purchase orders, and the startup’s few hundred units are a line inside them, next to the manufacturer’s larger customers. When that chip goes on allocation, the manufacturer decides how its share gets divided, and the vendor never hears the startup’s name. Rennert said the large chip suppliers have little sense of how much patients depend on medtech products. A startup whose orders carry a contract manufacturer’s name gives them even less to go on.

Getting your name in front of the supplier

Start with the bill of materials. Mark every part that has a single source, and next to each one write the name of a person at that supplier, or its distributor, who knows your company exists. Where there is no name, call. Zoll’s argument works at small volume: a defibrillator maker can point to patients, and a company building battery systems for a utility can point to the utility’s delivery schedule. Then keep your own record of quoted and actual lead times for those parts, so a slip shows up as a pattern you can raise with the manufacturer before it becomes a missed build.

Design in a second source while the change is cheap. Before design freeze, an alternate part costs a second footprint on the board and a round of testing. After launch, in a regulated device, swapping that part means rerunning verification and documenting whether the change needs a new regulatory filing, all while builds wait on it.

Zenflow’s distributor deal, on the purchasing side

When Cook Medical became Zenflow’s only U.S. distributor this month, Cook’s reps took over the conversations with urologists, and I argued then that Zenflow needed numbers from its own first sites to judge Cook against. A contract manufacturer that holds your supplier relationships sits in Cook’s position on the purchasing side. The lead-time record does the job Zenflow’s first-site numbers do: it is what the other company’s performance gets measured against, kept by the people whose product depends on it.

Dave Saunders is the founder of Base Reality Group and a Fractional CPO for product companies. He was a founder and operator at Galen Robotics, where the surgical-robotics platform earned FDA De Novo authorization in 2023, and he managed a 35-patent portfolio licensed from Johns Hopkins. He wrote Founders Who Finish and publishes The Build. More about Dave →