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Electronic Components

The effect of AI on the electronics supply chain

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.

Lantek 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@lantekcorp.com, or use the rapid enquiry form on our website to get results fast.

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Charity/Global Electronic Components

How the electronic supply chain has been divided by COVID-19

How the electronic supply chain has been divided by Covid-19

 

Amidst doom and gloom predictions of global economic fallout from COVID-19 and further human and social ramifications, the electronics industry is quietly confident that demand for products will not stall this year or shortly.

This makes for a morale-boosting headline, but underneath the battle lines, there is a trade war raging as a result of a divided supply chain.

Equipment manufacturers are struggling to get a hold of components and component manufacturers are struggling to make enough new components. This, the result of a virus that has thrown the world into unchartered territory and forced elected leaders into making profound decisions that have affected our way of life.

The electronics sector is healthy for now, but keeping it going has required change and intelligent thinking. This is how the electronic supply chain has been divided by COVID-19:

The battle for stock

With the production capacity for electronic components down as a result of COVID-19, it is no surprise that the components’ supply chain has been impacted. Fewer components are being made, creating a shortage of stock.

As a result of this, we are now seeing a shift in behavior from manufacturers, who are component hoarding and paying over-the-odds for stock to meet demand. This has reduced the number of components available on the open market, creating a shortage, and the issue is compounded by a lack of new production.

Supply moving away from China

As a result of the coronavirus in China, which has devastated the workforce and adversely impacted the country’s social reputation, manufacturers are beginning to seek alternatives to meet the demand for electronic components.

Taiwan, South Korea, Singapore, Malaysia, the United States, Japan, Vietnam, the Philippines, and Germany are all rich manufacturers of electronic components. We are now seeing greater diversification in supply chains. This is good news for the global economy, but not so much for China and Hong Kong.

Changes in supply chain planning

COVID-19 has forced manufacturers to pivot their supply chains to boost efficiency. From being more flexible with transportation to estimating capacity and accelerating production, manufacturers are doubling up on decision-making processes.

The optimization of production and distribution capacity are key areas, so that production can continue to meet demand while managing health. Available inventory has now become a more important factor than ever too – no longer can manufacturers rely on a steady supply of components. Orders must be planned.

Closer partnerships with electronic component distributors

Pre COVID, manufacturers typically kept the procurement of electronic components in-house with a slick and efficient operation. Inventory would be automatically updated with component orders placed electronically between supplier and manufacturer.

If COVID has taught manufacturers one thing, however, it is that you can never rely on one single supplier to deliver. One failure breaks the system.

This has led manufacturers to partner with component distributors who can deliver the stock they need. The sourcing of components is being increasingly outsourced, which brings some inefficiencies, but is necessary to keep things ticking over.