Top 5 Things in Supply Chains to look out for in 2023
January 3, 2023
2023 is here and it’s a good time as any to look at some of the trends and events that will have an effect to our industry. Some may have affected the semiconductor industry directly while others, not so much. Let’s jump in and take a look, shall we?
Soaring oil prices and its effects
Although the prices of oil have been on the rise prior to this year, supply chain problems and tensions in various nations certainly contributed to skyrocket prices into record highs this year. What used to be around $76 per barrel in January 2022 soon shot up to a staggering $110 per barrel by March 2022 (Source: GEP.com). This hit the rest of the world in a wave of higher consumer prices and later, inflation rates. Just look at the prices of goods the next time you hit the groceries.
Prior to this conflict, the industry was already working hard to mitigate the effects of the ongoing global chip shortage. Tech and manufacturing giants were allocating huge amounts of investments to improve capacity and production, in an effort to decentralize a supply chain that was precariously at the brink of collapsing. One that this conflict further exacerbated by choking the capacity of many manufacturers to meet the rising demands of consumers. In short, demand far exceeded the available supply in the market. Of course, as oil prices started to shoot up, logistics became increasingly difficult and expensive. Later, those increases in costs would reflect on the goods consumers purchase. Even outside the semiconductor industry, prices for common goods were starting to shoot up. All of these, had an unwanted domino effect from a series of unfortunate events.
The proliferation of A.I.
Advancements in technology and the demand for them is still increasing. One such technology is in the realm of Artificial Intelligence. Many advancements in this field have progressed quickly and is still expected to continue growth in the years to come. In fact, the IDC is forecasting that the A.I. market will boom to hit the $100 billion mark by 2023 and will only continue to double up until 2026.
Today, more and more solutions have A.I. or machine learning embedded in them, spanning various industries across the board. In fact, A.I. has reached the shores of the art world even.
Just watching your social media feed shows you this trend, have you seen people upload A.I. generated versions of themselves? This recent popular trend is from LensAI, an app that generates rendered photos of the user using selfies that they upload and A.I. to generate unique photos.
However, many have clamored against A.I. image generators like these, claiming it infringes on the works of many other artists around the world.
Despite this hiccup, one thing is for sure – A.I. is here to stay. Although some of the use cases available today may be questionable, there are still many advantages to utilizing this technology to improve the status quo. Just taking a look into logistics and supply chain, for example, shows how this advancement can help logistics providers identify precisely in which steps within the supply chain can improvements in efficiency and productivity be made.
In turn, this helps to improve profits and costs down the line. Imagine, A.I. can now help these businesses analyze previous and current trends, helping the supply chain be more flexible especially when there are external global events that cannot be avoided (i.e. COVID 19, geopolitical conflicts, natural calamities). In fact, a study done by McKinsey shows improved logistic costs by 15%, inventory levels by 35% and service levels by 65%.
In a world that is driven by advancements that are so quick, that any company that wants to survive simply needs to be agile and flexible. However, this is just one in a sea of use cases. Many other industries have started to adopt the use of A.I. already. Whether it’s in the chatbots that consumers engage with or with a service they take part of. More and more, A.I. is already integrated into our daily lives more than we know. Just take a look at the services available to you through your smart phones or in the smart devices around us. Can you say, “Alexa, tell me a joke.”?
Speaking of smart devices, this remains to be a strong driver in the industry still. With many tech companies developing new chips that target applications in the 5G and IoT spaces, our world is getting smarter by the nanosecond. According to Statista, many major cities around the world are adopting 5G technologies for their local consumers. Topping the list is China with 356 cities, next is the United States with 296 and in third, is the Philippines with 98 cities currently running 5G networks.
Of course, as a result of more and more consumers having access to faster speeds, tech companies are frothing at the mouth to offer their own complementary devices that embrace this technology. Many consumers today would jump in line simply to own the latest offerings of their smart phone brand of choice, what more the accessories and gadgets that are capable of connecting to their smart phones.
5G also goes hand in hand with advancements in IoT (Internet of Things). Did you know that the number of IoT devices available in the world is expected to reach 14.4 billion by the end of this year? That’s an 18% growth versus 2021 alone.
The boom of both 5G and IoT does go hand in hand; one supporting the other. Even our vehicles today are becoming smarter as we saw in Qualcomm’s announcements earlier this year at CES 2022.
Simply looking at some of the top IoT devices sold today, we see A.I. driven assistants such as Google Home and Amazon’s Echo, smart home security devices that allow homeowners to remotely view who is at the door or if their home is breached, smart thermostats, smart wearables and the list goes on and on.
One thing is for sure, both 5G and IoT are helping create new business models and revenue streams for many companies today. Combined with machine learning, these technologies are able to help increase productivity and efficiency all while enhancing customer experiences.
Electric Vehicles are on the rise
Many progressive countries have already begun to adopt electric vehicles as a response to the Paris Climate Accords in mitigating the effects of climate change due to the global carbon footprint of industries today. However, there are still some barriers that affect its adoption on a global scale.
These may change depending on the geography and the different markets. China, for example, has taken the lead on adopting EV’s. In fact, they bought more EV’s in 2016 alone than the rest of the world combined. As of 2021, China boasted of 3.5 million units in sales out of 6.8 million total units sold globally.
Second to China is the U.S., but not by a small margin at all. While China covers 51.7% of global sales, the U.S. is bought a mere 9.3%, a total of roughly 630 million units sold within the United States alone. 40% of those U.S. sales are reported to be Tesla units between the periods of 2010 and 2019.
Why the quick adoption in some but slower in others? It starts with the ecosystem. A charging infrastructure is needed before consumers are comfortable shelling out a premium to purchase an electric, or even, a hybrid.
This is driven by developments on charging speeds, costs, charging variants across vehicles and accessibility. There is still a lot of developments happening in this space, however. It will be a matter of time before offerings become more viable for the common consumer and the ecosystems around the world start to take off with EV. Buildings and public parking spaces need to have charging facilities as well as highways and other key areas in cities.
There are other factors too, like the availability of EV offerings, affordability and of course, the performance. In an effort to stimulate adoption, some governments have started initiatives to provide consumers with tax breaks and benefits when purchasing an electric vehicle. One thing is for sure, the demand for EV is here and manufacturers are clamoring to provide solutions to add into this ever-growing ecosystem. The developments in this space are definitely worth watching out for.
Although this is not a technology driven trend, COVID-19 has left this world with a huge ripple to deal with. Since this global pandemic hit the world, many industries were put on a standstill with COVID restrictions, lockdowns and quarantines were placed all around the world.
Many countries closed their borders and asked their residents to stay at home. Many factories had to halt productions simply because infections rates were so high in their localities. Today, we are seeing more and more of the world re-opening their borders and easing up on restrictions. As COVID seems to be more controlled today, some are able to report of zero COVID cases for four weeks in a row.
Nonetheless, as borders open, so do economies. In many other countries, infections have been better controlled and are no longer as dire as the world saw. Safe to say, governments are better equipped to deal with COVID-19 today. Lockdowns, hopefully, are now a thing of the past and somewhat normalizing the supply chain as well.
A great sign in this space though is that due to advancements in this area, driven by a great need, makes COVID-19 the most sequenced and tracked organism on Earth. What this means is that scientists and medical experts are now able to identify, track and react quicker to any new variants that may pop up at any time. Hopefully, the era of COVID is nearing its end soon and the rest of the world can recover from the many losses incurred.
These trends, although not definitive, are just some to watch out for. Exciting and hopeful horizons ahead as the world tries to collectively recover from the last few years. One thing is for sure, technology will always be in demand.
Question is, how soon can we supply the rising demand for all this? If the last 3 years have taught humanity anything, it’s that we can hope for the best but still be prepared for the worst. Whatever difficulties come our way in 2023, the ability to adapt and survive will always be the way forward. As technology advances, companies like Chip 1 Exchange ensures that the solutions they provide their customers are attuned to the demand of the times.
We make sure you get what you need, when you need it. Visit www.chip1.com to learn more.
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