The year 2021 has been a tough year for everyone. Industries across the globe were shut, companies were barely floating above the economic ocean, in fact, and this year had pushed the whole world almost 2 to 3 years backwards, when all we were aiming was to achieve the things new and unheard-of milestones. The unprecedented outbreak of Covid 19 had a fierce impact on all the sectors of the global economy. Businesses that were hoping to expand and grow were now barely surviving, and no sector remained untouched from the horrors of the pandemic.
However, things are changing their course now. As the whole world is rapidly moving forward with vaccination drives, the blanket of the outbreak is being pushed away. Businesses and industries are going back to Normal, but with a ‘New Normal’. They are optimistic to recover the damage that has been made by the pandemic and foresee a brighter future for their operations.
ELE Times Sub Editor and Technology Correspondent Mayank Vashisht got an opportunity to have a profound conversation, with Anil Challyil, Global Technical Marketing Manager, element14, where he reflected back upon 2021, and discuss the optimism for the next year, and provide an outlook for 2022, for their respective industry.
ELE Times: What would be the exciting industry developments to look forward to in 2022?
As global demand for chips continues to rise, and global fabs expand their production capacity worldwide, it is anticipated the chip supply crunch will alleviate in the second half of 2022 and/or 2023. There will be considerable progress in three major semiconductor sub-industry sectors: IC design, IC manufacturing, and IC packaging and testing. We will also see significant growth in the Internet of Things (IoT) sector as the industry is increasingly embracing the IoT sphere.
North America continues to top the market share of electronics products. That’s followed by the Asia-Pacific region which is home to the largest electronics market, with China and India being the dominant growth drivers. While China has a great influence on the market, the customer base in India will likely grow in 2022 due to increasing consumer awareness about innovative technologies and a booming industrial sector.
The industry developments in 2022 will include:
Predictive Maintenance: Equipment breakdown can wreak havoc with a company’s production schedule. This results in a significant revenue loss, especially when repairs may take a considerable amount of time. This can make prevention a priority for the majority of businesses. One of the increasingly common ways of doing so has been with predictive maintenance. Much of this is done in conjunction with IoT technology, which can monitor the health of equipment. Coupled with data collection, this can predict when and how a piece of equipment may fail, allowing business owners to avoid it.
Moving from B2B to B2B2C: Electronics manufacturers are shifting to the business-to-business-to-consumer (B2B2C) model in recent years, which allows manufacturers to sell directly to consumers. This has allowed for a variety of benefits. Prominent among these has been an increased profit, as companies can avoid factoring in a retailer. It also provides a faster time to market, which many firms may want to take advantage of. This is enhanced by better consumer data, allowing manufacturers to tweak their products or services, enhancing customer relationships.
VR & AR: Virtual reality (VR) and augmented reality (AR) allows designers to make more accurate and reliable changes to a product before the production phase begins. As a result, there have been a few areas for which this has been beneficial. For example, designers can make modifications to products quickly, while reduced inspection time can help workers identify and fix errors before a product is made.
ELE Times: What innovations are lined up for 2022 and for what application areas? (specific to our company)
element14 has especially focused on innovation enabling equipment such as test and measurement, where changes in technology and rapid modernization are placing greater demands on test and measurement equipment manufacturers. They have responded by utilizing new technological advances in industrial automation and control technology, combined with the integration of connected devices through IoT and IIoT to bring to market the most cutting-edge and innovative products.
We have invested significantly over the last 12 months to build a comprehensive portfolio of the latest solutions from world-leading suppliers. element14’s in-stock range of test and tool products includes oscilloscopes, power suppliers, signal generators, and digital multimeters, as well as soldering products, hand tools, and 3D printers. Free technical support is available to customers 24/5 from element14’s in-house test and measurement specialists as well as access to online resources, datasheets, application notes, videos, and webinars.
The company will continue to invest in existing and emerging IoT applications and reveal the technologies being deployed in IoT solutions. By enhancing its understanding of the market areas, design requirements, and new trends, element14 stays ahead of customer needs and ensures we can support product designs now and in the future.
Opportunities and applications for the Internet of Things are growing at an increasing pace and we ensure that our customers have immediate access to the hardware and software they require to minimize their product development times. Our increasing range of modular solutions means designers no longer need to have a deep understanding of AI to build this into their systems.
ELE Times: What milestones are targeted in terms of research, technology development, market expansion, and revenue generation by end of next year? (specific to our company)
Building upon element14’s solid performance in fiscal 2021, the company began fiscal 2022 with a strong first quarter. The company delivered another consecutive quarter of record sales and reached our respective short-term operating margin targets of 10% (an increase of 263 basis points). element14 is continuing to strengthen its position by driving execution and accelerating the growth of higher-margin businesses, while also working closely with our supplier partners to balance supply and demand across the supply chain. We expect the current market environment to extend well into the calendar year 2022 and will continue to help our customers navigate component availability challenges by serving as a vital link at the centre of the technology supply chain. As we look ahead to the next quarter, we expect to benefit from continued operating improvements to our business and strong market demand to deliver results in line with our fiscal first-quarter performance.
element14’s digital capabilities yielded notable performance with 53% of revenues and 69% of total transactions attributed to e-commerce sales. We observed positive results from the element14 platform over the last 18 months as the team has embraced digital transformation, and we’re excited by the potential for even greater success as we move all businesses to the platform over the coming quarters. Avnet, our parent company, continues to invest in inventory, adding 18,800 SKUs this past quarter. This reflects continued progress on the group’s plan to add 250,000 SKUs through the fiscal year 2022. The company’s inventory investments have been critical to its success. This quarter, 15% of sales were derived from new SKUs added over the last two years. We look forward to delivering continued returns on these investments as they’ve enabled us to grow and strengthen our overall offering through our broad base of engineering customers and suppliers around the globe.
ELE Times: What policy support do you envisage from the government? Discuss in the light of taxes, incentives, infrastructure, quality power, Exim laws, and capital landing rate, labor laws, and more. Please raise the problems and their possible solutions.
A vibrant electronic components manufacturing ecosystem is vital for the long-term and sustainable growth of electronics manufacturing in India and essential to achieving a net positive Balance of Payments (BoP). The electronics sector in India is expected to nearly double its contribution to the gross domestic product (GDP) as the government has been increasing its focus on the domestic manufacturing of electronics components. It is expected to hit US$400 billion by 2025 and this goal requires coordinated action on many fronts, including taxation, incentives, economies of scale, and elimination of cost disadvantages.
Governmental policies should be holistic, investor-friendly, and market-driven towards creating a conducive environment that attracts global and domestic companies to invest in the growing Electronics System Design & Manufacturing (ESDM) sector in India. The government of India has taken several steps to boost electronics manufacturing in India, reduce import dependence and increase exports. The Make in India program, National Policy on Electronics (2019), Production Linked Incentive Scheme for the electronics sector, the Modified Special Incentives Scheme, Electronics Manufacturing Clusters (EMC) Scheme, and several other measures are designed to provide incentives for domestic manufacturing, localisation of electronics manufacturing, inviting foreign direct investment and boosting exports.
Modified Special Incentive Package Scheme (MSIPs) subsidy of at least 40% of capital expenditure (20% in SEZs) should be made available and all excise/CVD duty paid on capital equipment be reimbursed.
Electronic Manufacturing Clusters Scheme should provide 55% of the cost for development of infrastructure and common facilities in greenfield clusters (the undeveloped or underdeveloped area from an electronic manufacturing point of view) and 80% of the cost for brownfield clusters (the area where a significant number of existing EMC exists). Land can be made readily available in several of the new EMC being supported by the Government of India. Currently, around 30 EMC are notified.
To promote greater research in electronics and IT, the Government of India should fund PhD students in universities across the country for research in the area of electronics & IT/ITES. The government should also provide opportunities for skill development for the private sector.
ELE Times: Considering emerging technologies what market trends are to be followed in 2 to 4 years?
The next four years will bring many exciting technological advances. These include:
- Blockchain is a distributed ledger technology that enables sharing of an immutable ledger among network participants. It is the future because it can help in tracking and trading almost anything of value on a virtual platform. Interestingly, blockchain takes away the concerns of risks and costs involved in such transactions traditionally.
- Artificial Intelligence is impacting the future of virtually every industry and every human being. Artificial intelligence has acted as the main driver of emerging technologies like big data, robotics, and IoT, and it will continue to act as a technological innovator for the foreseeable future.
- Cloud Computing benefits abound as more and more companies utilize cloud applications. Perks like effective collaboration and content sharing are some of the reasons why cloud computing is so attractive.
- 5G could affect a wide range of industries, from healthcare to financial services to retail. It is transforming connectivity. 5G will be essential as the number of IoT devices rises. The number of IoT devices — which will rely on 5G to transmit vast amounts of data in real-time — is projected to grow to 30B+ in 2025, more than four devices for every person on earth.
Mayank Vashisht | Sub Editor | ELE Times