What’s The SCOOP – 2022 Predictions – Part two
More from the movers and shakers of the EMS industry, laying out their predictions and insight on 2022.
This is the second part of a three part series, you can read part one here – What’s the SCOOP – 2022 Predictions
Keesjan (Case) Engelen, CEO of Titoma
A lot of design effort will continue to be put into redesigning older products for replacement components. New products will be designed as flexible as possible: multi-footprint compatibility and modularity will be key.
Many Chinese IC’s will gain market share, as they offer a much more resilient supply. Espressif never saw more than 2 months of Lead-time for most of its parts. Companies such as GigaDevice offer replacements for the STM32 series that are almost drop-ins and perform well in many applications. We love STM, but as long as there is no supply you don’t have much of a choice but to go elsewhere.
RISC V will continue to gain traction, mostly due to marketing rather than actual technical reasons, nobody seems to really know why it’s relevant.
China is unlikely to become more popular, but the bulk of the world’s component supply chain will continue to be there for the next 5 years. Especially so for custom(-ized) components such as PCB’s, displays, cable trees and mechanical parts. Nobody can match the completeness of capabilities, speed and value offered.
So electronic design is still fastest done in Taiwan or China, where all the vendors are within a 1-hour drive. Once all issues have been hashed out and production stabilized, kits of components can then be sent for SMT & final assembly almost anywhere.
We have moved quite a few items for our customers from China to Taiwan, and are piloting assembly in Latin America, next to our design center there.
Akhil Oltikar, Founder and CEO at Omnics
In 2022 we will find a way to live with Covid and its variants on a personal and a professional level. Masks, covid tests, travel restrictions, Zoom meetings and shortage of almost everything will continue for most part of the new year but the human spirit will prevail. Supply chains will continue to adapt. This will help accelerate innovation and new business models, products and technologies will emerge. Supply chain footprint diversification will continue in 2022 with companies adopting various strategies like “China + 1”, regional manufacturing and postponement. These strategies are not just to build resiliency against the global pandemic but to mitigate geo-political and trade wars risks, wage inflation and most importantly to build manufacturing economies.
From ‘Data Acquisition’ to ‘Data Reaction’. You cannot predict the future but hindsight is 2020 (pun intended). Supply Chain visibility is still tough but the challenges that we face today are more about what to do with the data and information at hand. It’s no longer about data acquisition; it’s about ‘data reaction’ and this will be a trend going into 2022. When the next disruption starts rearing its head, companies should be ready with tools to make the best decisions for their business. Going forward, there will be more emphasis on rapid what-if analysis, scenario planning, unification supply chain data models and network design or redesign. Additionally, robotic process automation (RPA) of supply chain planning will play a big role so that the supply chain team focuses on value-add activities vs. repetitive, non-value add tasks.
Enrollment in supply chain education and profession continues to grow. When I started my career in this field, someone told me that if you are a supply chain professional then you have a job for life. Well, so far so good, there has never been a dull day at work. The past two years have proven that supply chains are the lifeblood of every industry. Companies are facing shortages of semiconductors, commodities, containers and trucks, but the bigger problem is shortage of supply chain management professionals. 2022 will see accelerated enrollment in this field. Governments, educational institutions and companies globally need to invest in building the next-generation supply chain professionals to plan and operate the digital supply chains of the future.
Rajeev Bhalla, co-founder and CEO of CLIP Automation
For me the biggest trends we are seeing in manufacturing right now are focussed around innovation, digital transformation and automation. It seems that these are the topics high on the agenda in every boardroom and every c-suite. They are even filtering into politics and we see administrations look to automation to drive a more competitive and efficient manufacturing ecosystem, essential to the economic recovery post COVID and to the prosperity of manufacturing in high cost regions.
We’ve been talking about the fourth industrial revolution and the role of automation and data in the smart factory for some time, and whilst we’ve managed to extract data, we haven’t done enough to extract insight and value. I am expecting this to change in the coming years and more solutions like CLIP start to provide an operating system that provides factory wide connectivity, hyperawareness, the ability to aggregate data to use to plan, predict and react.
Technologies like machine learning, artificial intelligence, cloud storage of big data, and 5G communications are all enabling technologies that are maturing to a level where real incremental value can be delivered by the smart application of automation. I am convinced 2022 will be a big year for automation and the twenties will be a transformative decade for manufacturing.
Juergen Thurner, Founder and Principal Consultant at xprts4xlnc.com
When I look back on the year 2021 and the topics that defined industry and the economy in that year, the question that automatically comes to mind is what the defining topics will be in 2022. From today’s perspective, I can identify three areas:
- Supply Chain shortages (especially for electronic components)
In the industry, 2021 was characterized by supply bottlenecks for electronic components, which led to significantly reduced production and long delivery times for products and goods in many sectors of the industry.
I believe that these supply bottlenecks will settle in 2022. However, the increased supply capability of components manufacturing is also offset by very high orders from customers. There is a great risk of a bullwhip effect kicking in here, which could last for the next two years. This calls for cautious action by the players involved and maximum transparency and open communication along the entire value chain.
- Sustainability / Strive for Climate Neutrality
With legislative initiatives or already passed laws such as the European Green Deal or the German Supply Chain Act, all companies will sooner or later face new requirements. For example, the German Supply Chain Act comes into force on Jan. 1, 2023, which means that the companies initially affected will have to define, initiate and implement all measures in 2022 to meet the requirements from Jan. 1, 2023 onwards. This also has a direct impact on the entire value chains of these companies.
- Cyber-attacks increasing
In 2023, cyber-attacks – especially so-called ransomware attacks – on medium-sized companies will continue to increase, as this no longer requires greater technical expertise on the part of the attackers. According to the German Federal Criminal Police Office, ransomware attacks can be purchased as a service from organized crime, which is now professionally structured, for USD 360-500 per week. CCaaS – Cybercrime as a Service is the new normal.
Dave Evans, co-founder and CEO, Fictiv
2022 will be the year of enterprise digital transformation for supply chain and manufacturing.
Prior to the pandemic, many smaller organizations were pursuing digital manufacturing plans or engaging on-demand manufacturing platforms as a way to improve efficiency and save on time and cost. A handful of enterprise companies were evaluating it or instituting 10-year digital priority plans, but most had taken a “wait and see” approach or made little headway because of higher quality and security requirements.
That slow adoption curve was blown up by the pandemic and its resulting work stoppages, raw materials shortages, and supply chain snarls. Many enterprise companies had to dive headlong into accelerated digital transformation efforts over the last two years just to mitigate fallout from these factors. They were aided by new offerings, including our own Fictiv Enterprise that delivers on the promise of on-demand manufacturing but with the necessary enterprise-level quality and security support.
These early adopters experienced significant returns from their digital efforts, defined by improved time to market, reduced capex investments and expenditures, and streamlined team workflows. Now, as we round the corner into 2022 and it becomes increasingly clear that the virus and supply chain issues are here to stay for the foreseeable future, we will see these large enterprise operations double down on digital manufacturing at scale throughout their organizations. At the same time, those that have remained on the sidelines but are seeing their competitors outpace them will also engage in their own digital transformation initiatives.
John Mitchell, IPC President and CEO and Shawn DuBravac, IPC Chief Economist
The rate of supply chain dislocation is slowing after months of progressively deteriorating conditions, but long lead times, parts shortages, and higher costs across the board are unlikely to improve meaningfully until the second half of 2022 and in some instances not until 2023.
Orders should remain firm in 2022, driven in part by weak inventory levels that customers will be looking to replenish to better align with historical levels. At the same time, prices for key inputs will stay stubbornly high in 2022. The entire supply chain will be working to improve margins in an environment where higher prices have hurt short-term profitability.
The industry is facing very tight labor markets. IPC estimates there are more than 115,000 open industry jobs in the United States and many hundred thousand more around the world. Nearly three-fourths of global electronics manufacturers report rising labor costs and 57% of companies report the ease of recruiting workers has worsened in recent months. As a result of this disequilibrium, companies will look increasingly towards automation and the factory of the future to address some of these labor issues. In other instances, companies will rely on training to help develop the workforce they need.
Our customers are increasingly focused on sustainability and the challenge of achieving net zero emissions. These directives are being driven by changing consumer preferences and regulatory mandates and will require the industry to adopt greener management practices. It will also require us to report our progress to our customers as they in turn incorporate that information into their own ESG reports and required filings. This is a multi-decade initiative that will gain time and attention in 2022.
The industry is being increasingly tasked to develop, design, and build the most complex and cutting-edge electronics we’ve ever seen. This will require advancing both our capital and labor capabilities. While lingering uncertainties will exert pressure on 2022, the future is bright with opportunity.
Michael Ford, Sr. Director Emerging Industry Strategy, Aegis Software Corporation
With origins in 2011, Industry 4.0.2022 takes on more modern, mature responsibilities. Software-automation for Lean, flexible, defect-free manufacturing, has become established, but there are increasing responsibilities in terms of sustainable manufacturing, the security of Intellectual Property, and not least, the sanity of manufacturing executives coping with enduring turbulence within the market and supply-chain.
Though varied across segments, the most important challenges coming out of 2021 have become clear:
- Sustainability: Whether to appear ‘green’, to save money, to comply with regulations, or simply, ‘to do the right thing’.
- Data Utilization: IPC-CFX and associated solutions help access and share key production data, but how to turn this into value?
- Artificial Intelligence (AI): How will AI become a part of our business, what are the applications?
- Planning: How can we manage the incessant unpredictability in every possible arena of our business?
- Apps or platform: For factory digitization, do I go the route of ‘app’ vendors’ ‘productized customizations’, that appear as ‘easy to build’ point solutions for each ‘MES orientated’ function, or do I go with a flexible, IIoT-driven holistic platform?
- Security: How can I assure trust throughout the supply-chain?
Smart Industry 4.0.2022:
Adoption of the IPC-CFX IIoT-based, ‘plug and play’ standard further drives interoperability of shop-floor machine and factory-based software automation and Human 4.0 innovation. AI-driven automated adaptation to daily opportunities starts replacing existing planning applications. Digitalization facilitates adaptive surgical control of variation, providing visibility, control, and managed execution, optimizing on the fly, enabling companies to rapidly “hunt” in new markets, as opportunities develop.
Solutions with live contextualization and proven manufacturing ontology within a single holistic MES platform will yield increasingly practical AI-based value, in contrast to initially attractive manufacturing ‘apps’, based on hidden, internal, complex and proprietary data exchange relationships, which limit ongoing value without extraordinary unanticipated investment on behalf of the customer.
Secure Industry 4.0.2022:
Complex security issues surrounding the theft of design and manufacturing data lead to increasing cheap clones and counterfeits appearing quickly in the market and supply-chain. To ensure trust, secure data exchange becomes a requirement, as well as exact traceability of materials to products that limits the scope and identifies the source of counterfeit materials and products, including those potentially affected by OT-side cyber-intrusion.
Sustainable Industry 4.0.2022:
Sustainable manufacturing innovation becomes essential, utilizing for example, energy management messages within CFX, allowing factories to eliminate energy waste, and benefit from time-based tariff incentives, establishing solid business reasons for ‘being green’ and ‘doing the right thing’.
Dr. Bill Cardoso, CEO of Creative Electron
Nostradamus I am not, but if I had to make a couple of predictions regarding 2022, I’d guess the following: Resiliency will be Merriam-Webster’s word of the year, and the trend toward automation in manufacturing will surge.
Okay, so maybe it won’t be the word of the year, but perhaps resiliency should be. If we are to benefit from what we have learned during the pandemic, we must act on those lessons by making our enterprises more robust and resistant to disruption. It will take both strength and creativity to establish greater resiliency. Strength is requisite to resist the pressure to get back to “normal” and dust off the old play book of chasing the lowest cost suppliers, just-in-time inventories, extended global supply chains, and lean manufacturing. We must reevaluate these approaches throughout our operations, and while there will be added cost there will also be value. Creativity is needed to imagine the unimaginable, and even greater creativity to identify meaningful change. Resiliency isn’t just a benefit in the face of disruption, it’s a competitive advantage that also conveys to our customers. I can’t help but see this as a huge opportunity.
Through 2021 we’ve seen more clients choosing automated over manually operated equipment. It’s a trend I see accelerating, in part because it ticks a couple of boxed for those seeking resiliency. Automation helps address labor concerns in two important ways. Of course, it reduces demand on labor, which is a real benefit in an increasingly tight labor market. In addition, it helps overcome the skills gap among the available labor pool. A more highly automated facility also has the benefit of allowing for greater social distancing among remaining staff, should we experience another pandemic disruption. The move to industry 4.0 is accelerating.
Raymond Goh COO Elmatica.
2021 is coming to an end, another year with challenges due to the ongoing pandemic, economics and supply chain disruptions. Looking into the coming year, there are three main trends we think will impact the industry.
- The ongoing electronic components supply chain will continue in 2022, and grapple with lead time delays, availability issues, and pricing fluctuations throughout the coming year.
Due to the impact from the pandemic, predominantly on manpower, raw material supplies and worldwide logistics, planning and prioritizing has been key this year. Having a reliable and experienced Printed Circuits supplier will help customers navigate through the various challenges of material availability and manufacturing priority.
There will be more focus on export compliance, transparency and traceability in the supply chain. With a strong desire to reshore manufacturing capacity to improve supply chain security, not least in light of last years’ unprecedented global situation, governments and corporations have recognized the importance of protecting their local and independent manufacturing base to secure their future demands.
With increasing globalization, export control is on everyone’s lips. Efficient export controls are only possible on the basis of an intensified international and European co-operation.
“China +” – a closer look at manufacturing bases. There will be a stronger desire for manufacturers to relocate or to set up new manufacturing bases in addition to China. Customers will have more priority to focus on sourcing and procuring from outside China, either in Asia or another manufacturing base nearer to themselves. Dual source approval would be one of the key factors to mitigate supply chain risk.
Randall Sherman, President and CEO of New Venture Research
We expect to see more activity in the area of photonics/optical technologies and in electric vehicle production. Market leaders in optical products will increasingly offer a full range of foundry services supporting product development and system-level integration of opto-electronic and opto-mechanical process technologies. These processes often require submicron-level tolerances to support 5-axis active alignments within macro system-level integration. Companies like Universal Scientific Instruments, Fabrinet. Jabil, Flex and even Foxconn have made a considerable investment in RF and digital components, lasers and system-in-packages and sub-module integration that are beginning to bear fruit. End customers in photonics include Lumentum, Oclaro, Qualcomm and many others.
The emergence of the electric vehicle that is expected to account for approximately 50% of all vehicles sold between 2025-2027 and EMS companies are hoping to achieve in EV what they once did with PCBA. End customers include Toyota, VW, BMW, Daimler, Audi, Ford Motor, Tesla, and possibly Apple, Amazon and Google. EMS companies like Foxconn Technology Group, Pegatron, Jabil, Flex, Wistron, BYD Auto have invested heavily in EV motors, reducers (transmission), batteries, on-board chargers and electronic control power units. While OEMs will continue to mainly develop next generation products in-house, they are realizing that EMS/ODM companies can often do it better, cheaper and faster. Subsequently, we see a big rush to create corporate alliances, partnerships and investments to capture this exciting new market.
More next week!!