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Tag: artificial intelligence

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Technology

Does ChatGPT understand semiconductor shortages?

For something slightly different this week, we had a little chat with ChatGPT about the semiconductor industry.

AI has been prolific in recent years, and ChatGPT specifically has been all over the news since its release in late 2022. So we were curious what the AI chatbot thought of the industry we are all so invested in.

So, here’s what we asked:

What caused the semiconductor shortages in 2020?

We specified a year because the scope of simply “semiconductor shortages” is endless.

ChatGPT first responded by saying it was brought on by a “combination of factors”. Possibly predictably, it listed the COVID-19 pandemic as the first cause. People moving to home-working and home-schooling, combined with the factory shutdowns and logistics headaches heavily impacted the industry.

Next, ChatGPT said the trade relations between China and the US affected the market. Restrictions and tensions led to China purchasing less from the US, while American manufacturers moved to concentrate on the automotive industry.

Thirdly, increased demand in electric vehicles (EVs) and other high-tech products was also a factor.

Lastly, ChatGPT said that the industry’s reliance on a “just-in-time” model was only sustainable when demand is stable.

All of ChatGPT’s full responses will be available at the end of this blog for full transparency.

What are the main challenges facing the electronics industry today?

Once again, COVID-19 was at the top of ChatGPT’s list.

According to the chat bot, the pandemic showed the “vulnerability” of global supply chains and risk mitigation is now higher on companies’ priorities list.

Next, the “ripple effect” caused by the shortages continues to affect prices and electronic component shortages.

Increasing labour costs and raw material price increases were also on ChatGPT’s list. The bot additionally, brought up regulatory compliance being an issue for companies, specifically small and medium businesses.

Finally, it said the constant need for innovation and the “growing problem” of e-waste as other challenges facing the industry.

What do you think?

How do you feel about ChatGPT’s responses? Do you think it is accurately representing what is going on in the electronics industry or is there something that it missed?

We’d love to know your opinion on ChatGPT and its perception of the electronics market. Chat with us on LinkedIn and share your thoughts with us!

 

Disclaimer: ChatGPT does not reflect the views of Cyclops Electronics, for transparency all of our questions and ChatGPT’s full responses are listed below.

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Electronic Components Future

Using AI to design microchips

AI to design microchips

Artificial intelligence (AI) is on everyone’s mind right now. With the rise of ChatGPT  and other AI software expanding our potential, every industry is wondering how AI can help them. The electronics industry will not miss out.

The market

One company providing industry insights, Deloitte Global, predicted this year semiconductor companies will spend around $300 million on AI tools.

Granted, in the grand scheme of things $300 million is not a huge amount compared to the entire market, worth $660 billion. However, the return on investment is huge and can’t be ignored.

But staff should not fear, these tools are used to help, not replace, engineers. Chip design tools have been created by companies specialising in Electronic Design Automation (EDA). The tools are usually to help engineers design and simulate chips, without the need to physically manufacture them.

The price of the future?

These AI tools aren’t for everyone – a single license could be very pricey, and well above what smaller companies could afford. This would be a small price to pay for those who can afford it though, since the resulting designs could be worth billions.

It is also possible for companies to create their own AI tools in-house instead of buying from an EDA company. This, however, would need the company to have AI expertise already.

The great thing about working alongside AI is it greatly improves efficiency and size of semiconductors. AI tools can design chips under the 10nm process node to make them even smaller and more efficient.

Staff shortages

Another advantage of using AI currently is to bridge the employment and skill gap. Because of legislation like the US and EU Chips Act, there’s a need for many more highly-qualified and skilled people within the semiconductor industry. But filling those new jobs does not happen instantly, in fact it could take years to fully train people to fill those roles. In this case, using AI in the meantime makes perfect sense, giving current engineers room to breathe.

AI already has some sway in the industry. Approximately 30% of semiconductor device makers surveyed by McKinsey said they were already generating value through AI or ML. The other 70% are still only in the starting stages of implementing the technology.

A learning curve

Within the umbrella term of AI, there are technologies that are used including graph neural networks (GNNs) and reinforcement learning (RL). RL is the repetitive running of simulations and finding a positive result through trial and error. AI can run these simulations at such a high speed, and without the use of a physical version of the electronic components.

GNNs, on the other hand, are advanced in other ways. This machine learning algorithm analyses graphs made up of nodes and edges, extracting information and making predictions. Because the structure of a chip share a similar structure to these graphs, GNNs can be used to analyse and optimise chip structure.

I Robot

One thing you don’t need artificial intelligence for is knowing that Cyclops is your best choice. When you’re looking for electronic components, whether obsolete or everyday, call Cyclops for the best prices and delivery time for your components. Get in touch today at sales@cyclops-electronics.com, or call us on +44 (0) 1904 415 415.

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Component Shortage Electronic Components Technology

What is causing the surge in semiconductor and passive components?

As the world becomes smarter and more connected, the components used in electronic circuits are seeing a surge in demand.

Semiconductors and passive components (resistors, capacitors, inductors, transforms) are seeing a surge in demand as chip-heavy vehicles, consumer electronics and smart, Internet of Things devices are produced in larger quantities.

This demand is creating a shortage of semiconductors, integrated circuits and passive components. The situation today is that the factories that make certain components can’t make enough of them. This squeezes supply chains and ramps up the price, creating a high level of inflation passed down the supply chain.

The surge in semiconductor and passive component demand has reached an inflexion point. Demand has outstripped supply for many components, leading to car manufacturing lines shutting down and companies delaying product launches.

Tailwinds fuelling demand  

  • Smart vehicles
  • Consumer electronics
  • Military technology
  • Internet of Things
  • Data centres
  • 5G
  • Satellites
  • Artificial intelligence and robotics

At no other point in history has there been so many exciting technologies developing at the same time. However, while exciting, these technologies are putting strain on the electronic components supply chain.

Passives surge 

Passive components include resistors, capacitors, inductors, and transforms in various specifications. There are thousands of makes and unit models. They are essential to making electronic circuits. Without passives, there are no circuits!

Cars, electronics, satellites, 5G, data centres, Internet of Things, displays, and everything else powered by electricity, depends on passives. As devices get smarter, more components are needed, creating a cycle that will only go up.

Passives shortage 

Certain diodes, transistors and resistors are in shorter supply than in 2020. This is partly because of the coronavirus pandemic, which impacted manufacturing lines. Still, many manufacturers also shifted manufacturing investment to active components with a higher margin, creating a supply imbalance.

Even without these significant bottlenecks, the supply of passive components is downward while demand goes up. For example, a typical smartphone requires over 1,000 capacitors and cars require around 22,000 MLCCs alone. We’re talking billions of passive components in just two sectors.

Semiconductor surge 

Semiconductors (chips, in this case, not the materials) are integrated circuits produced on a piece of silicon. On the chip, transistors act as electrical switches that can turn a current on or off. So, semiconductors and passives are linked.

Chips are effectively the brains of every computing device. Demand for chips is increasing as circuits become more complex. While chips are getting smaller, manufacturing output is only slowly increasing, creating a supply shortage.

Semiconductor shortage 

The semiconductor shortage was years in the making, but things came to a head when the coronavirus pandemic hit.

At the start of the pandemic, vehicles sales dived. In response, manufacturers cancelled orders for semiconductors and other parts. Meanwhile, electronics sales exploded, filling the semiconductor order book left by the automotive sector. When vehicle manufacturing ramped up again, there weren’t enough chips to go around.

Manufacturing limitations are confounding the problem. It takes 3-4 years to open a semiconductor foundry or fabless plant, but investment in new plants in 2018 and 2019 was low. So, new plants are few and far between.

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Electronic Components

Communications including 5G will drive the components market

Communications including 5G will drive the components market

According to IC Insights, the communication sector’s share of integrated circuit sales reached 35% in 2020 and is expected to grow to 36.5% by 2025. For perspective, the automotive sector’s share of integrated circuit sales was 7.5% in 2020 and will grow to 9.8% by 2025 – significantly less than communications.

Industry tailwinds

What’s driving such high demand for ICs in the communications sector?

There are four big tailwinds:

  • 5G
  • Edge computing
  • Internet of Things
  • AI (artificial intelligence), MI (machine learning) and data analytics

5G

5G is the main driver for components demand, with 5G infrastructure rollout happening slowly, but surely. We are nowhere near a complete version of 5G, and networks are in a race against time to deliver a reliable service.

The first step for networks is replacing low-band 4G spectrum, followed by mid-band spectrum that uses 2.5, 3.5 and 4.5 GHz, enabling faster data speeds. The final step is the rollout of millimetre wave, which enables true 5G speeds. Millimetre wave also happens to be a precursor for next-generation 6G.

On top of 5G infrastructure rollout you have more 5G-enabled devices coming to market, such as smartphones, tablets and laptops. Smartphones, in particular, are leading the way for 5G adoption, putting faster data in our hands.

The rapid growth in IC demand in the communications sector also stretches to other components like modems, memory and antennas. 5G isn’t just an IC boon – it’s a boon for all the electronic components needed for 5G. 

Edge computing

Second to 5G we have edge computing, which by a miraculous twist of fate is needed to deliver a 5G experience (and needs a whole lot of components).

Edge computing puts compute capabilities relatively close to end users and/or IoT endpoints. In doing so, it reduces latency, while 5G delivers faster data speeds, providing a seamless experience on certain devices.

Internet of Things

IoT describes a network of connected smart devices that communicate with each other. For example, a vital sign monitor in a hospital could communicate with medicine dispensers and automate medicine dosages for doctors.

The Internet of Things has been talked about as a trend for several years, but we now have real applications that are useful.

AI (artificial intelligence), MI (machine learning) and data analytics

AI (artificial intelligence), MI (machine learning) and data analytics require enormous, powerful data centres to power them. These data centres require significant investment in chips, memory and other electronic components.

Also, AI, MI and data analytics need cloud computing, edge computing and in some cases 5G to deliver a real-time experience.

The future

By 2025, the communications sector is forecast to have a 36.5% usage share of integrated circuits, making it the biggest consumer of semiconductors.

Demand for integrated circuits, discrete circuits, optoelectronics and sensors will grow to an all-time highs thanks to the industry tailwinds in this article. The future is bright, but to stay ahead, a robust supply chain will be needed.

Electronic components distributors like Cyclops are helping supply meet demand, while the communications sector battles to secure chip orders. Call us today at +44 (0) 01904 415 415 or email sales@cyclops-electronics.com 

Categories
Electronic Components

Component Prices Rise 10% to 40% – But why?

component price rise

While component price rises are expected when demand outstrips supply, the scale of recent increases has come as a shock to many businesses.

In its Q3 Commodity Intelligence Quarterly, CMarket intelligence platform Supplyframe reports that some electronic components have seen prices rise by as much as 40%, making it uneconomical for products to be made.  

In particular, semiconductors, memory, and modems are seeing 10 to 40% price increases, exceeding what most analysts envisioned for 2021.

Why are prices rising?

Price rises start with materials. There are long lead times for many raw materials, causing shortages. Add rising commodity prices and difficulties transporting products and you have a disrupted manufacturing economy.

You also have to factor in the impact of the coronavirus pandemic, which has caused labour shortages and disrupted the manufacturing economy with shutdowns.

Logistics is also a big fly in the ointment for electronic components. The industry is recovering from COVID-induced shutdowns and travel restrictions are causing problems at borders, creating delays that ripple through the supply chain.

Supply and demand

The bulletproof economics of supply and demand also rule the roost for electronic components, and demand is higher than it has ever been.

We are in a situation today where most electronic components manufacturers are running at 99-100% capacity and can’t keep up with demand.

Demand is outstripping supply for chips, memory and communications components like integrated circuits, discrete circuits, optoelectronics and sensors, creating a bidding war as manufacturers scramble to get what they need.

Growing demand for new technologies

Emerging technologies like artificial intelligence, machine learning, virtual reality, augmented reality and edge computing are fuelling demand for smarter chips and data centre modernisation, while technologies like 5G and Wi-Fi 6 are demanding infrastructure rollout, which requires significant investment.

Across the board, technology is booming. Manufacturers are making more products for more people, and they must do so while balancing costs at a time when component prices are rising – no easy feat even for established businesses. 

Pressure relief

Everyone is raising prices in line with their own cost increases, from semiconductor manufacturers to outsourced fabs and suppliers. At 10 to 40%, these increases are putting pressure on supply chains and businesses.

How many price increases will target markets absorb? How can we sustain production without significant margin pressure? These are the challenges facing manufacturers, who are stuck between a rock and a hard place right now.

There are a few solutions:

  • Equivalents: Source equivalent components from different brands/makers/OEMs that meet size, power, specification, and design standards.
  • Use an electronic components distributor: Distributors are the best-connected players in the industry, able to source hard-to-procure and shortage components thanks to relationships with critical decision-makers.

Prices will fizzle down, eventually

Although research published by Supplyframe says pricing challenges will remain through early 2023, they won’t last forever. Price rises should fizzle out towards the end of 2021 as manufacturers catch up to orders and reduce disruption.

If you are experiencing an electronic component shortage, we can help. Email us if you have any questions or call us on 01904 415 415 for a chat with our team.

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