By Jonathan Davis, global VP, Industry Advocacy, SEMI
The 27th annual SEMI Advanced Semiconductor Manufacturing Conference (ASMC 2016), opened today (May 17) in Saratoga Springs, New York. A record-setting 340-plus conference attendees joined this year’s event which focuses on key issues and trends in the manufacture of semiconductors.
Opening keynoter Don O’Toole of IBM’s Watson IoT Alliances & Ecosystem Business Development group highlighted the economic implications of the emerging Internet of Things and discussed how cognitive IoT is driving new business models. He pointed to significant macroeconomic impacts as well as disruption and necessary change at the micro/strategic level within all enterprises.
In his talk on the “Economics of Things” he said that high-tech firms are challenged to continuously transform their business models and partner ecosystems to keep pace with the quickly evolving nature of business technology. Across industries, companies are turning their focus from traditional business equipment to a new generation of devices that will transform not just the electronics industry but many others.
O’Toole said that companies are moving beyond merely selling connected, intelligent products and services to using cognitive IoT to deliver greatly enhanced customer experiences over the life of their products. He described fundamental change or “liquidification” in the markets for physical goods.
Just as the internet created liquid markets with the digitization of music, news, maps, weather and traffic, the Internet of Things will eliminate physical constraints, structure information and create liquid markets in real estate, manufacturing, agriculture, retail and transportation. A radical repricing of credit and risk will improve financing and reduce “moral hazard,” which, in economic terms, is an information asymmetry that influences risk-taking to leverage lack of transparency.
The primary vectors of IoT to produce both opportunity and disruption will be the creation of new asset marketplaces, improved risk management and greater efficiency. Fuller visibility and predictability will change market analysis and decision making with significant economic impact. This characteristic will be apparent in widely varied industries including two that O’Toole profiled as examples: agriculture and real estate.
U.S. commercial real estate is a highly inefficient market in which lack of information transparency and predictability constrains utilization. O’Toole said there is 12 billion square feet of commercial office space, however, only 67 percent is utilized. IoT solutions that include sensor technology and user analytics potentially shift profit pools (as some actors benefit from the lack of information transparency), but can produce a $128 billion net economic benefit due to price efficiency and the elimination of shadow markets.
Similarly, agriculture faces high degrees of variability. Despite significant scientific advancements, crop yields can fluctuate 39% between years, lending the moniker of “legalized gambling” to the farming industry. Employing IoT technologies that leverage sensors, monitoring, drones, cloud-based information systems and data analytics will reduce uncertainties, improve decision making and lead to better deployment of capital assets. O’Toole estimates that this will produce a 6% decline in farm prices and raise GPD 2%. He cited California wine-maker E.J. Gallo’s ability to decrease water use by 20% as an example of the beneficial impact of cognitive IoT technologies.
While the economic benefits will accrue to multiple industries, high tech and electronics are to be among the greatest beneficiaries of the application of cognitive IoT functions in manufacturing. New ecosystems of customers and partners will develop. Design and development will necessisarily change to be more agile, with faster prototyping and shorter product lifecycles. O’Toole sees new value creation with machine-learned cognitive capabilities and natural language interfaces.
O’Toole expects to see far more information sharing between industries. He said that the permutations of ecosystems and industries that devices have to support are making interoperability the biggest challenge in the Internet of Things.
To win in the cognitive IoT era, O’Toole says companies must focus on experience. He offered the following advice:
· Move from discrete, fixed engineering to continuous engineering
· Future-proof designs with software-driven feature updates
· Consider higher value business models that can shift capital expenses to operating expenses
· Lead product development teams to use design thinking to better understand end-user personas
· Build stronger relationships with end users by applying cognitive learning technologies to improve product services and experiences.
Other ASMC opening day sessions include contamination free manufacturing, advanced metrology, defect inspection, factory optimization, as well as 37 poster sessions on critical technological topics from representatives from global IC makers, equipment companies and materials providers.