The COVID-19 outbreak and the chip crisis of 2023 are two remarkable events that will be etched in people’s memories for years to come. While both of them impacted technological growth, their effects varied from advantageous to disadvantageous. Curiously, the Internet of Things (IoT) industry, which was severely affected by the chip shortage, also contains the solution to circumvent a similar circumstance in the future.
Due to the Existing Scarcity of Semiconductors,
The idea of “Moore’s Law” has been widely adopted by the technology sector since the 1970s, when Intel’s Gordon Moore introduced the concept of a transistor doubling rate every two years.
Although it is challenging to provide a precise estimation, our method has been effective. The disruption caused in the worldwide supply chain by the COVID-19 pandemic in 2023 was so unforeseeable that even Moore could not have anticipated it.
To be just, it was not solely the logistics. The 2023 perfect storm included:
- The semiconductor industry came to a complete standstill for several months.
- Due to people being compelled to stay indoors, there was an exponential rise in the demand for electronic devices.
- Several enterprises cancelled their semiconductor orders due to the pandemic’s capacity to incur financial losses.
- Shipments were delayed due to the closure of supply ports.
- Taiwan is experiencing one of the most severe droughts in its history, causing water consumption in the semiconductor industry to be limited.
The ongoing volatility in the semiconductor market surpassed even the grimmest forecasts. Analysts in the industry have anticipated that the demand may not be fulfilled until 2023, and there might be an excess supply by then. However, that is a matter for the future.
Digital and Analogue Integrated Circuits
At present, processors are outfitted with billions of transistors. The iPhone X’s processor, Apple’s A11, has roughly 4.3 billion transistors. The potential consequences with an estimated 50 million units of iPhone X in circulation in 2023 are worth considering.
South Korea holds 18% of the worldwide transistor market, while Taiwan possesses 63%. Samsung’s success is a significant factor in this. In summary, Taiwan plays an essential role in the world’s technological infrastructure.
On average, a smartphone has five chips manufactured in distinct factories. It is probable that all of these factories’ supply chains depend, to a great extent, on Taiwan, if not completely.
The current demand for transistors far exceeds the available supply to the chip manufacturers. Consequently, they are rushing to produce and deliver their goods as soon as possible, hoping to supply all five chips concurrently and enable phone production.
The production process comes to a grinding halt if even one chip is out of stock. The problem is simple: the absence of transistors from a semiconductor supplier means that the manufacturing of new mobile phones cannot proceed.
What does this situation imply for consumers? Shortage in chip-based products such as vehicles, computers, graphics cards, game consoles, and tablets is becoming more prominent. This current dilemma affects all digital devices.
An Overview of the Current State of the Internet of Things
The Internet of Things (IoT) industry is currently facing a difficult situation due to the scarcity of resources. However, the most recent forecasts indicate that there will be 12.3 billion endpoints by 2023, representing a 9% growth from the previous year. Unluckily, the projected 30+ billion connections expected in 2023 are now expected to be achieved only two years later, in 2025, with an estimated 27.1 billion connections.
Although the numbers are still prone to alterations, the general patterns have remained notably steady. As an investor, it is crucial to monitor the rapidly expanding Internet of Things (IoT) industry. There are numerous compelling arguments for commencing IoT development promptly.
Although the present state may seem grim, it is a wake-up call for major internet firms, who are responding by escalating their productions. Intel’s recent declaration to invest $20 billion is expected to establish new sectors in both Europe and the United States, resulting in a reduction of the current shortage in the near future.
After the pandemic’s impacts fade, it is probable that the resulting society will be more interconnected than ever. The surge in the use of technology in daily life has caused an upswing in remote working and online education.
Despite the shortage and the global pandemic, the adoption of 5G has considerably increased in the years 2023 and 2024. Its complete adoption will greatly accelerate the development of the Internet of Things by facilitating the transfer of vast quantities of data.
The Implementation of Artificial Intelligence and the Internet of Things in Logistics
The current chip shortage, which initially appeared catastrophic, may ultimately have a positive impact on the Internet of Things (IoT) industry. It is evident that supply networks require a significant digital transformation, and both the IoT and Artificial Intelligence (AI) have the potential to revolutionize the supply chain.
Although the COVID-19 pandemic has presented a significant challenge, it has also allowed for the collection of extensive data. This has provided us with a better understanding of emergency supply networks. By incorporating this data to train AI systems, our predictive capabilities will be considerably enhanced.
Conversely, the Internet of Things could potentially bring advantages to a diverse range of supply chain management activities.
- With the widespread availability of environmental sensors, managers can now track shipments in real-time, enabling them to respond to changes in environmental conditions. This allows for remote management of hazardous situations that may adversely impact the quality of the goods being transported.
- Real-time monitoring presents numerous benefits. Primarily, it furnishes managers with valuable data for route planning, allowing informed decision-making. Furthermore, the obtained data is precise enough to be utilized by AI for designing more efficient delivery routes in the future.
- By adopting a strategic approach, it is feasible to lessen the likelihood of panic during transportation. Contemporary supply networks offer a degree of flexibility which can aid in mitigating the impact of natural disasters, calamities, and traffic congestion.
To keep pace with the expanding Internet of Things, enterprises must construct customized software solutions to manage the influx of data. Although this may pose a challenge, it is a challenge that is certainly worth addressing. We can foresee noteworthy advancements in the domain of intelligent manufacturing and distribution networks in the years ahead.
Who should take heed of the Internet of Things?
The impact of the Internet of Things (IoT) is extensive, making it imperative for all enterprises to contemplate its integration into their operations. This is especially crucial for IoT investors, but it is also relevant for healthcare providers, travel agencies, wholesalers, and software developers who can all derive benefits from its implementation.
Although the Henn na Hotel in Japan has illustrated that Artificial Intelligence, Robots, and the Internet of Things are not a one-stop solution for all of society’s problems, it is apparent that these technologies provide significant advantages for society. They remain a potent instrument with numerous potential benefits.
