In 2020, the average household in the UK had 10.3 connected devices, a 26% increase in the past three years. IoT devices were highly popular during the pandemic due to the shift towards remote work, resulting in an increase in the purchase of smart devices, wearable devices, home computers, and mobile phones. But this growth in demand has also exacerbated a problem in the industry - a global shortage of computer chips or semiconductors. As you might expect, computer chips are an extremely important component of all electronic devices. The chip, known as the 'brain', essentially controls most device processes, such as executing mathematical equations, making decisions, creating instructions, and serving as the storage unit for the entire computer. So, how will this global chip shortage affect the Internet of Things? Is there a solution?
Why is there a shortage of microchips?
Firstly, let's return to the origin of this crisis. Due to the absolute complexity of technology, chip manufacturing issues can be traced back to before Covid-19. The answer is simple, making computer chips is extremely difficult. This process takes months, sometimes years, and the more advanced the technology, the longer it takes for developers. Making chips also requires specific conditions. For example, chip manufacturing machines must go through a 'clean room' before placing any silicon into computer chips. This allows them to ensure that there are absolutely no dust particles entering the chip, which may damage very expensive circuit structures. However, it is undeniable that the pandemic and its accompanying lockdowns have exacerbated chip shortages, starting with the temporary closure of factories when Covid-19 first attacked. However, the current shortage is more related to changes in habits during the pandemic, during which the demand for intelligent technology has sharply increased.
For example, a recent study by electronics company Xiaomi showed that since March 2020, 70% of its customers have reported that they have renovated their homes after spending more time at home during the pandemic. More than half of the people also reported purchasing at least one smart device during the lockdown period.
In order to pass the new free time at home, consumers have been purchasing new televisions, game consoles, smartphones, wearable devices, smart home products, and laptops so that they can work remotely.
How does this affect the Internet of Things?
Although the industry hardest hit by the crisis is the automotive industry, unfortunately, the global chip shortage is having an urgent impact on the IoT industry. Approximately 80% of global manufacturers face challenges in producing digital products, many of which use the Internet of Things.
The most direct impact caused by this is the delay in the software development cycle, which leads to delays in the production of IoT devices. In the long run, this will affect the progress and improvement of technology, which will make it difficult to expand software across different hardware platforms. Last year, production delays even led to Apple delaying the release of its famous iPhone 12.
Some analysts also point out that the global chip shortage is seriously affecting practitioners in the IoT industry, and developer fatigue has become a real concern. If this concern turns into a shortage of developers, it may also exacerbate the problem of chip shortages.
Is there a solution?
Okay, the bad news is that this shortage may continue for a while. According to laptop manufacturer Acer, technology companies may be affected by global chip shortages until at least 2022. Other predictions suspect that this issue may continue to cause serious damage until 2023.
However, at the same time, technology companies can try the following solutions to bundle themselves:
Prioritize cross platform software libraries to reduce developer workload.
Change the production plan to reflect realistic expectations.
Adjust the order book and prices to accommodate supply chain disruptions.
Other more radical ideas include:
Redesign printed circuit boards (PCBs).
Find other commercially viable components.
Is the Internet of Things helpful?
Some industry experts suggest that the IoT industry can provide creative solutions for the shortage of semiconductor chips. In fact, IoT devices can help predict supply chain disruptions in the electronic consumer equipment industry, making them better prepared in times of adversity. For example, real-time data sharing and analysis functions can also help manufacturers improve their adaptability to supply chain changes.
Just as IoT devices can collect data to prevent interruptions, they can also collect data to analyze supply chain performance and identify problems, ultimately solving inefficiencies in future supply chain processes. With the help of IoT data, supply chain managers can be more proactive in solving industry problems, rather than reacting when it is too late.
Facing the growing demand for devices that require microchips, waiting for the supply chain to replenish shortages is not an option at all. Currently, due to a global chip shortage, the Internet of Things industry is being disrupted, but it is likely to be the solution to the problem.
To achieve this goal, great patience, creativity, and hard work are required.