Viewpoint: Electronics industry trends & predictions…
01 March 2022
As the year came to a close, Phil Simmonds, CEO at electronics manufacturing services (EMS) provider, EC Electronics reflects on the electronics & technology trends that dominated the electronics industry in 2021 – and looks ahead to 2022.
This viewpoint was originally featured in EPDT's H1 2022 Electronics Outsourcing supplement, included in the March 2022 issue of EPDT magazine [read the digital issue]. And sign up to receive your own copy each month.
After 2020 saw a step change in the use of consumer electronics products to facilitate remote interaction, entertainment and productivity, the market for electronics has continued to grow. COVID-19 remained at the forefront of our minds, and projections suggest that many pandemic-related changes to the way we live and work will continue in the long term…
Enhanced gesture recognition, contactless capabilities, medical equipment and smart home devices are just some examples of digitisation improving our day-to-day lives as we edge towards a post-pandemic world. From lockdowns to remote working, coronavirus has been the catalyst for the next stage of the digital era, advancing technological innovation worldwide. So, what are the main electronics trends we have seen emerge over the past 12 months – and how has the electronics manufacturing industry overcome challenges to manage the rapid proliferation of electronic devices?...
Top 4 electronics developments from 2021
1.The rise of the internet of things (IoT)
As digitisation ramps up, consumers expect their electronics devices to provide uninterrupted connectivity, enhance efficiency and generate accurate real-time data — all of which the IoT facilitates.
The IoT is all around us. And IoT device propagation forecasts suggest there will be 75 billion IoT connected devices in use by 2025 — an almost threefold increase from the IoT installed base in 2019.
Currently, there are six broad categories for wireless IoT tech: low-power wide-area networks (LPWANs); cellular; Bluetooth; Wi-Fi; RFID (radio frequency identification); and various mesh protocols (such as Zigbee). This technology enables connectivity between global networks of devices, sensors, machines, buildings and more via the internet.
The extensive rollout of super-fast 5G will also facilitate superior connectivity to allow us to build a ‘smarter’ world, with IoT features in everything from cars and homes to workplaces and entire cities. Plus, not only will we find IoT in our homes and offices, but it is also becoming a driving force in manufacturing, with data from sensors and IoT-enabled devices being used to optimise factory functions, manage logistics chains and reduce downtime.
2.The popularity of wearable devices
As technology evolves and electronics components become more compact, intelligent and connected, electronics designers and engineers find new ways to digitise everyday items. And with the COVID-19 pandemic continuing to drive demand for consumer electronics, the wearable technology market exhibited strong growth in 2021.
Wearable technology developers integrate physical electronics with mobile apps to create digitally enhanced, portable products that can assist daily activities. For example, as innovators combine the capabilities of artificial intelligence (AI) with the IoT and virtual reality (VR) technology, more and more high-end gaming and mixed or virtual reality products have entered the market. From smartwatches that track fitness activity and biosensors that record medical data to advanced hands-free headsets and ‘smart’ rings, the possible applications of this technology are endless.
There has also been a particular increase in the demand for wearable devices for the healthcare and medtech sector. Digital health technology monitors patients’ health, recording anything from blood oxygen and sugar levels to heart rates, helping to register early warning signs of illness. By providing real-time health data, medical professionals can make more informed diagnoses and treatment decisions, and stay connected with their patients — something which became especially important during the pandemic, when in-person assessment and intervention were limited.
3. The adoption of industrial robotics
Another key area of expansion within electronics in recent years has been robotics development. Thanks to advancements in AI, what was once a novel idea has become a practical reality for many applications, as logistics, manufacturing, construction and healthcare industries have embraced robotics to support operations. For example, drones were used for medical applications in cities during the first year of the pandemic, delivering samples and reagents from hospitals to laboratories.
Robotics is also crucial for flexible automation in manufacturing facilities. Factory robotic automation involves using industrial machinery to perform routine or repetitive manufacturing tasks, such as welding, assembly, quality control and material assembly, freeing up human workforces to carry out other, potentially higher value, more complex tasks.
Not only does this reduce human error and improve productivity, but it also helps to mitigate the skills and labour shortages facing the engineering and manufacturing sectors.
And now that robotics’ overall safety and performance has been demonstrated, 2022 will be the year robot delivery really takes off.
4. Innovation in automotive electronics
Despite what has been a challenging year for the automotive industry, in the wake of supply chain disruptions and component and labour shortages, the demand for electric vehicles (EVs) and autonomous self-driving cars is rising, and the automotive industry is evolving fast.
According to reports on the market outlook for EVs in 2021 and beyond, the industry was expected to grow 66% in the past year. And since leading automotive companies and governments have committed to removing fossil fuel cars from production lines by the end of the decade, experts predict that EVs will represent 48% of all new vehicles sold by 2030.
The automotive industry has continued to face crippling shortages of semiconductors and other essential electrical components in 2021. As such, automotive electronics manufacturers have shifted their focus to ensure they can provide a reliable supply of printed circuit boards (PCBs) and meet the demand for enhanced entertainment, navigation and safety features in cars in the future.
A smarter world: what role will electronics play in 2022?
There has been a sharp increase in technology and devices designed to make our lives simpler, faster and more productive in recent years.
Industry 4.0 is taking the digital revolution of the late 20th century one step further, combining cyber-physical systems with the power of IoT to automate computerised decision-making and enhance efficiency. As a result, intelligent technology has surpassed the simple tools and gadgets people enjoy using every day; it has become a driving force for innovation and problem-solving for businesses worldwide.
The first generation of ‘smart’ technology products provided enhanced connectivity, allowing people to stream video on smart televisions or communicate wirelessly between devices. But with the development of artificial intelligence (AI) and machine learning (ML), our devices do more than simply talk to each other; they collect and interpret data to inform user experience and automate processes that would typically require human guidance.
From watches to phones, building controls to medical equipment, we are heading towards a ‘smarter’ world at lightning speed. So, in 2022 and beyond, technology will continue to evolve and improve its capabilities to deliver personalised, mechanised solutions that will optimise functions and enhance our day-to-day lives.
How will smart tech change our way of life?
The pandemic has significantly impacted global technology trends, with lockdowns contributing to heightened levels of activity within the consumer electronics industry.
Demand for gaming consoles, smart televisions and other entertainment devices led to an 18% increase in the global consumer electronics market in the first half of 2021, reflecting pandemic-related behavioural changes and consumers’ growing expectations for premium electronics. Following the outbreak of COVID-19, the public is also more conscious of their health, and the limitations of our health services, than ever before. Wearable technology such as smartwatches — which can remotely monitor and record physical health data — is, thus, becoming increasingly appealing.
And as more and more businesses embrace remote working models, employees are enhancing their homes with innovative home technology, too. Demand for devices such as mobile stereo headsets and headphones spiked in the wake of lockdowns. Organisations are also embarking on digital transformation efforts to secure online networks and optimise energy efficiency in modern offices.
The future of the electric vehicle (EV) market also looks bright. With governments facing mounting global consumer and political pressure to reduce carbon emissions, major automotive manufactures like Jaguar Land Rover, Volkswagen and Audi have pledged to cut fossil fuel cars from their product portfolios by 2030. And despite the pandemic-related semiconductor shortage that crippled the automotive industry, UK EV sales jumped 186% in 2020.
How will the electronics industry meet demands?
In a digital world, technology is embedded in everyday objects, and ubiquitous computing connects devices through continuous networks of sensors and servers — all of which must be carefully designed and produced by electronics manufacturers. As a result, the future of electronics engineering will depend on the industry’s ability to address the technical and logistical considerations for delivering these advanced systems and equipment.
From smart grids to intelligent lighting, IoT has the potential to revolutionise the way we live. With technology permeating so much of our lives already, local governments are investing in ‘smart cities’ that will harness data collected through the IoT and cloud-based technology to tackle social issues and improve urban life, sustainability and transport. However, the IoT will also be essential to developing new electronics.
Brexit, the pandemic and subsequent labour shortages have impacted supply chains and threatened to stunt the industry’s ability to keep up with ever-increasing demand. But embracing IoT can streamline processes, provide accurate real-time data to mitigate supply chain disruption and improve the overall quality of printed circuit boards (PCBs) and other core components within electronics. Plus, as sustainability is a core focus for businesses across sectors in 2022, developments in AI and ML will be crucial to ensuring systems are operating with the minimum energy output.
From remotely controlled wire cutters to industrial robotics performing monotonous tasks in factories, investing in robotics will also be crucial for electronics manufacturing services (EMS) providers. While the industry focuses on training the next generation of engineers, adopting robotics will reduce the likelihood of human error that might affect manufacturers’ abilities to continue delivering high quality electronics products at scale.
Supply chain predictions for 2022
Pandemic-related factory closures, national lockdowns, fluctuating demand and labour shortages have wreaked havoc on supply chains and lead times across various industries — particularly those which rely on supply from China and the Far East, where the impact of the virus was first felt.
And COVID-19 is not the only thing that has rocked global supply chains. Accelerating climate change has increased the frequency of extreme weather events that threaten to disrupt already fragile interdependent shipping networks. Plus, Brexit legislation came into force on 31 January 2021, prompting the mass exodus of EU workers and causing further bottlenecks at borders as companies navigate additional customs requirements.
Experts predict that the consequences of recent events will continue to impact global supply chains into 2022. Still, so long as the COVID-19 pandemic does not worsen significantly, things should start looking up…
An end in sight for the semiconductor shortage
The recent chip shortage — triggered by COVID-19 and increased demand for electronics — has caused problems for several industries, especially consumer electronics and automotive manufacturers.
According to the Semiconductor Industry Association, chip sales were up by 26% in May 2021 compared to the previous year, as more organisations underwent digital transformations, and businesses and consumers invested in technology to facilitate remote working.
However, the majority of chip production happens in Taiwan, China and South Korea. As coronavirus first gained a foothold in East Asia, the pandemic has caused ongoing delays in chip production, significantly increasing lead times for suppliers and end-consumers.
Although it may be some time before we begin to see significant improvements in the semiconductor shortage, organisations and governments are planning to boost chip manufacturing capacity regionally and globally to help manufacturers meet growing demands.
Taiwanese semiconductor giant, TSMC is investing $100 million (around £72.5 million) in additional capacity to address the chip shortage over the next three years. And the European Commission announced plans to introduce a ‘European Chips Act’ as part of efforts to improve ‘tech sovereignty’ in the region earlier this year.
Price hikes will begin to soften
The cost of materials, components, labour and transportation have continued to rise with inflation and the demand for electronics throughout 2021.
Due to unprecedented competition for containers and reduced capacity, freight prices have spiked, further compounding price hikes along the supply chain. Plus, businesses face the additional administrative costs of Brexit paperwork and logistics — all while managing the labour shortages affecting almost every sector.
Hapag-Lloyd AG, a German international shipping and container transportation agency, placed a record order of 75,000 shipping containers to help ease shipping congestion, and Chinese container factories are working flat out to keep up with demand.
Still, prices are not likely to come back down until 2022. However, there are hopes that the incline in shipping rates will slow during the post-pandemic period. Factories will begin to ramp up their output, more materials will be extracted, and transportation backlogs will ease and shorten lead times.
Shortages and disruptions also revealed the flaws in western nations’ dependence on resources from China and other eastern distributors for supply chain security. As such, governments and organisations are looking to strengthen local manufacturing and infrastructure to support supply chains in the modern world.
In the UK, for example, a brand new ‘gigafactory’ is set to bolster local production of electric vehicle batteries, and the government has also announced £53 million funding to promote digital tech in the region. And in the EU, the European Investment Bank (EIB) signed a $350 million loan agreement in 2020 to support a new gigafactory in Europe. Northvolt Ett is located in Sweden and will harness clean energy to produce lithium-ion battery cells with an 80% lower carbon footprint than those made using traditional methods.
Mitigating threats to supply chain security
Electronics manufacturers depend on global shipping and transport networks for essential materials and components. So, preparing to weather the upcoming supply chain crunch has become a crucial consideration for every business.
Encouraging sustainable manufacturing is a massive part of this. Natural resources are in finite supply, and ever-increasing human activity worldwide is only making the situation worse. Manufacturers must refocus on sustainability to align with net-zero targets, which will, in turn, have a positive impact on supply chains.
Many OEMs (original equipment manufacturers) and EMS providers are taking steps to improve sustainability, including becoming more energy-efficient, reducing waste, embracing digitisation and automation, and optimising supply chains — all of which reduce costs and diminish carbon footprints.
Labour shortages are also causing problems across most sectors, as businesses experience the knock-on effect of coronavirus outbreaks and Brexit regulations. So, the electronics manufacturing sector must encourage training and education within organisations to help address the skills shortage by introducing courses such as IPC’s ‘Electronics Assembly for Engineers’ to tackle skills gaps within the industry.
Reinforcing every element of supply chain management will be crucial to guarantee the industry can keep pace with the growing demand for electronics as manufacturers, suppliers and customers transition away from survival mode and prepare for long-term growth.
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