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Dec 02, 2023

The Semiconductor Industry and IoT: A Threat to the Future?

The Internet of Things (IoT) has become an indispensable part of our interconnected world, enabling our everyday lives through the connectivity of various technological devices. From smart home

The Internet of Things (IoT) has become an indispensable part of our interconnected world, enabling our everyday lives through the connectivity of various technological devices. From smart home devices to wearables, industrial sensors to patient monitoring devices, semiconductors play a critical role in powering these devices and ensuring seamless connectivity.

However, the ongoing challenges faced by the semiconductor industry pose a long-term threat to the functionality of IoT. The availability of semiconductors is crucial for the full potential of IoT to be realized, as it affects device availability, innovation, cost, scalability, and seamless connectivity between IoT devices. Any disruption in the semiconductor supply chain could severely impact the growth, development, and adoption of IoT.

The chip shortage that has plagued the global economy has affected almost every industry, including hyperscale, automotive, telecom, security, and medical. While there have been some improvements in chip production and supply, an inventory imbalance still persists due to increased buying and forced delivery from long-term agreements signed during the component shortage. This has led to a surplus of certain electronic components but a lack of crucial parts needed for production.

With the IoT industry expected to grow exponentially in the coming years, the demand for semiconductors, especially IoT’s essential components, will surge. However, challenges in IT infrastructure buildout may create unpredictability and significantly impact IoT adoption. The construction of new fabrication facilities globally aims to ease the pressure, but these facilities will take time to become fully operational and mostly focus on next-generation technologies.

To address the challenges posed by the semiconductor supply chain, continuous investment in research and development is necessary. This will drive advancements in fabrication techniques, wireless communication, energy efficiency, security, and processing capabilities. Despite these efforts, supply chain volatility, component constraints, and inventory mix issues are expected to persist until 2030.

In this rapidly changing landscape, OEMs and executives leveraging IoT need to remain vigilant. Continuous planning, monitoring, and adaptation will be crucial for success in this technological revolution. The ability to adjust and adapt will provide a clear competitive advantage.

As the future of IoT depends on the availability and stability of semiconductors, it is essential for chip manufacturers and industry stakeholders to work towards stabilizing the supply chain and meeting the escalating demand for IoT devices.