Manufacturing the Internet of Things

or
Is the Internet of Things a

Non-linear opportunity for the

Electronics Manufacturing Supply Chain?
Markus Riester
EPoSS Annual Forum 2015, October 13, 2015

How can the electronics manufacturing supply

chain benefit from the exponential growth
proposition of the Internet of Things?

Electronics
manufacturing
supply chain

Internet of Things

What is the IoT?

The IoT is the network of
all Smart Things
communicating over the
Internet with something
else without human
interaction and that have
some sort of sensing
mechanism.

Source: McKinsey & Company / GSA report

The Internet of Things, May 2015

Source: www.teamarin.com
2

More dough through IoT

More Bread, More Dough: How
IoT Boosted Bakery Production
11 IoT connected machines
resulted in an additional 180,000
pounds of bread compared to
traditional unconnected.

Connected devices by 2020

49.8bn devices

12.7bn devices
millions

From: The Internet of Things: The next growth engine for the semiconductor industry, May 2015, PwC

IoT market in 2020

bn US$

From: The Internet of Things: The next growth engine for the semiconductor industry, May 2015, PwC

CAGR for IoT Devices (proposed)

Research company

CAGR (%) 2014

2020

BI Intelligence

45.8

2.5

24.0

Harbor

24.6

6.0

22.5

3.4

22.5

27.5

Cisco

20.6

13.0

40.0

ABI Research

13.9

16.0

35.0

Gartner

24.9

5.0

19.0

PwC

33.0

5.4

30.0

IDC

Figures in billion IoT devices

Exponential growth of things

1,E+13
trillion
1,E+12

500 bn

1,E+11
20 bn
1,E+10
3.5 bn
billion
1,E+09

1,E+08

Mobile Phones: number of phones

1,E+07

Internet users: number of users

million
1,E+06

1,E+05

Internet of Things: number of

things (forecast)
maristechcon

Data sources: Gapminder, wikinvest

Manufacturing

e xh i bit 2

Manufacturing value added was growing globally until the financial crisis
Real value added in manufacturing
Constant 2000 $ trillion
8

World
7

Compound
annual growth
rate 3%

High income

16% of global GDP

(2012)

4
3

Middle income

2
1

Low income

0
-1
1998 99 2000 01

02

03

04

05

06

07

08

09 2010

SOURCE: World Bank; McKinsey Global Institute analysis

Market conditions
electronics manufacturing
World PCB Shipments (with forecast)
Converted @ Fluctuating Exchange Rates

Chart 2

6.0
5.5
5.0
4.5

$ Billions
Growth calculations:
Europe = Eurostat Wiring Device
Japan & N. America from JPCA & IPC data
Taiwan/China:46 rigid & flex company
composite
Rest of Asia growth = Taiwan/China 44
company composite
Includes S Korea data for 2011-2014

+1.6%

+2.8%

-1.1%

4.0
3.5
3.0
Actual

2.5

Source: Walt Custer Consulting Group

Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
Jan

2.0

Forecast

99

00

01

02

03

04

05

06

07

08

09

10

11

12

13

14

15 16

Calendar Year
Source: Custer Consulting Group - 2010 base year expanded by monthly growth of
N. American, European, Japanese & Taiwan/China monthly PCB shipments

10

How can the electronics manufacturing supply

chain benefit from the exponential growth
proposition of the Internet of Things?

Electronics
manufacturing
supply chain

Internet of Things

11

Semiconductor operating
model - revisited
Develop the supply chain to deal with the new market
structure imposed by the IoT
Integrated: develop all solutions in-house, or acquire and merge
them to form a new entity with enhanced capabilities.
Collaborative: establish preferred suppliers for critical hardware
components and software that co-develop application relevant
solutions, and drive the entry into product developments
Platform-based: Establish a (open source?) system platform,
allowing developers to leverage a proven solution for fast
development of products.

12

The opportunity is in the

EMS Supply chain
Possible fields of growth for electronics manufacturing through
the advent of the IoT (qualitative)

13

Conclusions
IoT is a reality it is all around us, even if we cant
always tell and it will continue to grow
The supply chain will need to adapt, and there will be
major changes for the benefit of B2B and B2C
customers this process has started and will gain
momentum
Value creation will govern what goes

14

Supporting businesses in the

Electronics Manufacturing Supply chain

15