Globally, there have been strong calls to reshore or “friendshore”, and to rebalance semiconductor production. A rebalancing act without the proper mechanisms will lead to more supply-side shocks, higher prices and potentially lower long-term growth.
Disentangling the complex semiconductor global value chains can create severe supply-chain disruptions. Can businesses in the semiconductor manufacturing process utilise technology to manage a myriad of challenges to continue innovating, growing and to remain competitive?
Yesterday, we hosted a dialogue with industry leaders in Penang, where we discussed the role of technology in our business & along the ecosystem to improve visibility of data-enabled end-to-end supply chain management and to enable better decision-making with the power of real-time insights, and scalable solutions.
An Industry Dialogue: Building an Intelligent, Connected and Sustainable Ecosystem
The last two years have been challenging for all global businesses, but the manufacturing sector, in particular, has been at the forefront of change. As the pandemic disrupted supply chains worldwide, plant owners were forced to respond to rapidly changing demand with newfound nimbleness, speed, and agility.
Since 1972, Penang has evolved into a regional electronics manufacturing hub, representing 80% of Malaysia’s contribution to global backend semi-conductor output in 2020..
Locally listed major outsourced semiconductor assembly and test (OSAT) companies such as Inari Amertron Bhd, Unisem (M) Bhd, and Malaysian Pacific Industries Bhd (MPI), as well as automated test equipment (ATE) manufacturers such as ViTrox Corp Bhd and Greatech Technology Bhd, saw their market capitalisations grow significantly in 2021.
According to Malaysia’s Ministry of International Trade and Industry, electrical and electronics products worth 455.7 billion ringgit (102 billion U.S. dollars) were exported in 2021, up 18 percent from 2020 and accounting for 36.8 percent of Malaysia’s total exports.
Malaysia is working to increase its capacity in chip manufacturing by constructing more factories, and the country’s factory count is expected to grow exponentially over the next decade.
Despite the challenges, as Sue Yuin Ho, Vice President, Industry Platform added, with the development of emerging technologies like artificial intelligence, internet of things, robotic process automation and so on, the future of the sector is promising. These technologies will make it easier to have a quicker and more accurate data analysis.
(You may view more survey results in our 2021/22 ASEAN Enterprise Innovation Market Overview here)
Enable better decision-making with the power of real-time insights
The maturation of Machine Learning is influencing the development of Industry 4.0 and creating new business models for some companies. Manufacturing firms, on the other hand, have decades of investment in industrial protocols, a massive install base of proprietary equipment/systems, and archaic user interfaces. Based on these factors, how can manufacturers drive global innovation, flexibility, and growth in such a fragmented environment?
Namrata Sharma, Global Semiconductor Expert, Amazon Web Services, USA, shared several smart manufacturing use cases which include examples of yield and failure analysis, preventive/predictive maintenance for machines, and computer vision for quality control.
Data is a valuable resource, but it can also be difficult to manage and use effectively. Many manufacturers in the ASEAN region have a large amount of unused and complex data that exceeds their ability to manage, use, and control it. In a rapidly changing environment, it can be challenging for organizations to keep up with the data they have, let alone use it to generate valuable insights.
To overcome this challenge, manufacturers must focus on using data to generate recommendations and insights that can help them make better decisions. This will require investing in the development of new technologies and processes for managing and using data, as well as training their workforce to use these tools effectively. By doing so, manufacturers can unlock the value of their data and gain a competitive advantage in a rapidly changing world.
Steven Yong, Executive Director, AI & Data, Deloitte Consulting, shared that Data is a valuable resource data points can be analysed and used as a tool to learn and provide recommendations to detect abnormalities and reduce the recurrence of issues. Data is a double-edge sword. Despite data’s enormous value, it has been getting more tedious for organisations to manage and use data effectively. Many ASEAN manufacturers have a large amount of unused and complex data that exceeds their organisation’s ability to manage, use, and control it. In a highly dynamic environment, the human perspective is extremely difficult to train, and data must be used to generate recommendations.
It is critical to seek out novel ways to apply analytics, artificial intelligence, and automation to key processes in order to better understand and serve their customers. In addition to having a large amount of data, it is critical to connect and choreograph that data in order to generate new insights.
Azhar Abdullah, Head, Enterprise Segment, Amazon Web Services (AWS), emphasised on the importance of differentiating between continuous improvement and innovation. Innovation is constantly changing and is done in a multi-facet manner, whereas continuous improvement is fundamental in an organisation’s operations.
Innovating towards a sustainable future
When it comes to measuring ROl, there is rarely a one-size-fits-all solution. Large investments are required for digital transformation, and manufacturers must identify and prioritise the initiative/project with the greatest impact.
Companies are potentially in a cycle of “random acts of technology” shoring up on capability acquisition and op model changes, without clearly defining strategy and business models, added Jan Nicholas, Executive Director, ASEAN, Semiconductor Consulting Practice Leader, Deloitte Consulting. This could lead to undue churn causing longer time to value.
While keeping up with the latest technologies is appealing, determining the underlying value of implementing a particular technology is far more important. It is not enough to simply examine the technologies; it is also necessary to consider how these technologies can generate something and add value to the organisation.
As we conclude the discussion with manufacturing leaders in Penang, we look forward to continuing the discussion across our ecosystem. Feel free to reach out to us [email protected] for any specific areas you’d like us to explore further in the coming year!
12 January 2023