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Electronic Components

Supply chain adaptability

Connectivity within our supply chain is a positive thing. It has given us access to resources from all over the world, boosting production and sourcing. However, covid and other factors have highlighted the risk that comes with having a globally connected supply chain.

If covid was the only concern, though, the supply chain would have recovered by now. The general increase in supply and demand has also left the industry struggling to catch up.

If there is a disruption to one area of the supply chain, this is then passed down the line to customers. At every step of the supply chain, the delays are exacerbated and impacts the economy.

Connectivity and interdependence have always been essential in the electronics industry, whether it is relying on other countries for materials or working with international foundries on production.

Certain countries had, and some still have, covid-related restrictions in place to stop the potential spread. This means that plants in those countries have had difficulty keeping up with demand. As one of the biggest exporters of electronics is also in this position, some countries are choosing to transition away from working with them.

Some large companies have already made the decision to move their base of operations to mitigate this risk in the future. This has the potential to massively shift industry dynamics and encourage other businesses to make similar moves.

Funding is being allocated by some governments to facilitate nearshoring or reshoring of companies, which would bolster the supply chain. Many countries, including the US, UK and India, are increasing the budget and support of domestic chip production. There will be several ongoing effects from this, including an increase in skilled workers, R&D and more in-house production.

Although this would be beneficial there would still need to be materials sourced from countries including places in turmoil. Even relocating a percentage of the supply chain will not resolve these sourcing conundrums. However, it would reduce shipping times and customs charges for the finished product, especially if production is closer to customers.

As much as it would be beneficial to reshore or nearshore production, it comes with certain risks. The cost of labour varies largely depending on location, as does the number of skilled workers. Additionally, the delay or difficulties associated with moving production halfway around the world will also be numerous.

Many countries have put measures and funds in place to encourage moves, but financial aid will only reach so far.

More than a long-term static solution, the supply chain needs to be flexible and adaptable. Supply, demand, and the world in general is very volatile right now. As such, suppliers and manufacturers will have to alter their ways of working accordingly.

Cyclops has the rare advantage of being able to source electronic components from all over the world. This, combined with our keen eye and careful inspection processes, means we can find and supply the components you need.

Call today on +44 (0) 1904 415 415 to speak to a member of our sales team, or contact us at sales@cyclops-electronics.com

Disclaimer: This blog is meant purely for educational or informational purposes and is in no way instructional.

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Electronic Components Future Supply Chain

India increasing chip manufacture

In recent years India has been increasing its share in the electronics industry, planning to become a hub in the future.

Currently India has a lot of dependence on imported chips, heavily relying on the Chinese supply chain. One of its goals is to be, in part, autonomous in its chip production. The supply chain issues brought about by covid and other global factors really highlighted this.

But it is not easy to just move production of something so complicated to another country. It would require massive amounts of funding to reshore production.

Make in India

In 2021 the Indian government announced funding equal to $10 billion to improve domestic production over the next 5 years. Several companies have put in bids for the funding, including Vedanta, IGSS Ventures, and India Semiconductor Manufacturing Corp.

The funding is part of the Government of India’s ‘Make in India’ plan, encouraging investment and innovation in the country. Prime Minister of India Narendra Modi announced the initiative in 2014, focusing on 25 sectors including semiconductors and automobiles.

Domestic reliance

One of India’s goals is to move away from reliance on imports, on which they currently spend $25 billion annually. Only 9% of India’s semiconductor needs are met domestically. If production is reshored in part, this would increase local jobs and income for the country.

As it stands, India currently has more of a focus on R&D but don’t have fabs for assembly and testing. The nearby Singapore and manufacturing powerhouse Taiwan provide most of its current stock.

A change in the air, and in shares?

The recent approval of the Chips Act in the US means there may be a shift in industry shares. At the moment America has a 12% share, but if production is re-shored this may impact the Asian market.

However, India and the US, alongside the UAE and Israel plan to form an alliance. With financial aid from the bigger players, the alliance plans to focus on infrastructure and technology.

India was the US’s 9th largest goods trading partner in 2021, with $92 billion in goods trade in 2019. India is also the EU’s 10th largest trading partner, but with domestic semiconductor industry growth this might change.

India’s end equipment market revenue was $119 billion at the end of 2021. Its annual growth rate is predicted to be 19% in the next 5 years.

India is aware of the importance of the semiconductor industry, and set up an India Semiconductor Mission (ISM) in 2021. Its goal is to create a reliable semiconductor supply chain, and to become a competitor against giants like the US.

Relish the competition

India’s potential in the semiconductor industry is increasing, and there is likely to be more investment in the future. It is difficult to tell how much further down the line it would be before India becomes a competitor, but the coming years are sure to be interesting.

Categories
Electronic Components Future Semiconductor Technology

The effect of AI on the electronics supply chain

AI and machine learning technology is improving all the time and, consequently, the electronics industry is taking more notice. Experts predict that the application of AI in the semiconductor industry is likely to accelerate in the coming years.

The industry will not only produce AI chips, but the chips themselves could be harnessed to improve the efficiency of the electronic component supply chain.

What’s included

In an AI chip there is a GPU, field-programmable gate arrays (FPGAs), and application-specific integrated circuits (ASICs) specialized for AI.

CPUs were a common component used for basic AI tasks, but as AI advances they are used less frequently. The power of an AI depends on the number and size of transistors it employs. The more, and smaller, the transistors, the more advanced the AI chip is.

AI chips need to do lots of calculations in parallel rather than sequentially, and the data they process is immense.

Think about it

It’s been proposed by some that designing AI chips and networks to perform like the human brain would be effective. If the chips acted similarly to synapses, only sending information when needed, instead of constantly working.

For this use, non-volatile memory on a chip would be a good option for AI. This type of memory can save data without power, so wouldn’t need it constantly supplied. If this was combined with processing logic it could make system on a chip processors achievable.

What is the cost?

Despite the designs being created for AI chips, production is a different challenge. The node size and costs required to produce these chips is often too high to be profitable. As structures get smaller, for example moving from the 65nm node to the latest 5nm, the costs skyrocket. Where 65nm R&D cost $28 million, 5nm costs $540 million. Similarly with fab construction for the same two nodes, price increased from $400 million to $5.4 billion.

Major companies have been making investments into the R&D of AI chip infrastructure. However, at every stage of the development and manufacturing process, huge amounts of capital are required.

As AI infrastructure is so unique depending on its intended use, often the manufacturers also need to be highly specialized. It means that the entire supply chain for a manufacturer not yet specialized will cost potentially millions to remodel.

Beauty is in the AI of the beholder

The use of AI in the electronics industry could revolutionize how we work, and maximize a company’s profits. It could aid companies in supply forecasts and optimizing inventory, scheduling deliveries and so much more.

In every step of the electronics supply chain there are time-consuming tasks that AI and machine learning could undertake. In the sales stage, AI could assist with customer segmentation and dynamic pricing, something invaluable in the current market. It could additionally prevent errors in the manufacturing process and advance the intelligence of ICs and semiconductors manufactured.

Artificial intelligence

We’re not quite at the stage where AI has permeated throughout the industry but it’s highly likely that it will in the coming years. That said, this blog post is all speculation and is in no way to inform decisions.

Cyclops can provide all types of electronic components, no matter what you’re building. See how we can help you by getting in touch today. Contact us at sales@cyclops-electronics.com, or use the rapid enquiry form on our website to get results fast.

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