How to run a successful innovation lab
Discover how to set up a successful innovation lab
Read morePhoto by Laura Ockel on Unsplash
Most electronic products today use microchips—mobile phones, laptops, hoovers, LED lightbulbs, thermostats, etc. Today’s cars, for example, require hundreds of microchips to control safety features, driving systems, in-car entertainment, and connectivity. It’s not just consumer products filled with these tiny pieces of tech either; industrial computing, retail technology, manufacturing, commercial transportation, medical devices, and defence all rely on them too. It’s no stretch to say that humanity’s technological advancements and geopolitical outcomes will depend on who has tech sovereignty over the production and innovation of microchips.
Despite their importance, the microchip supply chain is very unstable. Presently, 65% of all semiconductors are manufactured in Taiwan, with a single company, Taiwan Semiconductor Manufacturing Co.(TSMC), responsible for producing the majority. It’s important to remember that Taiwan also produces 90% of the world’s most sophisticated chips and that TSMC and Samsung (South Korea) are the only foundries in the world right now that can produce 3-nanometer microchips.
This oligopoly was bound to cause issues. And as demand for laptops surged during Covid-19 lockdowns, we experienced global microchip shortages, with lead time extending to 40 to 70 weeks. Due to consumer enthusiasm for electric vehicles, the automotive sector is experiencing a similar problem, and it’s said to have lost almost $210 billion in revenue in a single year as a result.
Combining this supply chain vulnerability with rising geopolitical tensions, it’s no wonder that political slogans call for “regaining tech sovereignty.” But what does this mean in reality? It’s improbable that a single corporation, nation, or even trade bloc like the EU could fully replicate end-to-end production. Currently, microchips travel up to 70 times across national borders before reaching their destination. While firms must increase their capacity and diversify their product lines to future-proof the supply chain, tech sovereignty will be gained through strategic innovation.
To support this endeavour, the US has introduced the CHIPS and Science Act, with the EU also considering creating its own version.
The US CHIPS Act “provides $52.7 billion for American semiconductor research, development, manufacturing, and workforce development.” This includes $13.2 billion in R&D and workforce development, with $10 billion to be invested in regional innovation and technology hubs.
Recommendations made by those creating the Act include;
The creation of a “chiplet platform” so startups can test out new ideas, removing the incredibly high barriers to entry in this market.
Devising a national semiconductor research agenda with challenges to build the first “zettascale supercomputer.”
Partnerships with the National Science Foundation (NSF) to help commercialise innovations.
With these incentives on the table to support semiconductor innovation, where should businesses concentrate their efforts to acquire a competitive edge as well as help to regain that all-important tech sovereignty?
If you restrict the potential of your business to what it is now capable of, you will soon become obsolete. Strategic innovation is where a new market, technology, material, process, or business model is created. This kind of innovation, which also goes by the name ‘disruptive, radical, or transformative innovation’, generates large financial gains and a sustained competitive advantage.
Going on the offensive with strategic innovation is crucial right now, particularly for businesses based in nations that limit free trade. It’s worth noting, too, that as Moore’s Law slows, companies are competing less on microchip size and are instead looking for opportunities in the broader ecosystem to gain an advantage.
Here are some key areas corporations operating in this space should consider for strategic innovation.
Over 50% of all semiconductor revenue is generated by US chip designers. Western corporations should consider opportunities to expand microchip capabilities and materials, especially as they have strong intellectual property laws, a history of research and development, and an emphasis on education. While new applications for microchips are being developed all the time, existing areas hold opportunities for strategic innovation and specialisation;
Another such opportunity is the race to commercialise graphene, a new super material only an atom thick that has the potential to replace silicon wafers.
Microchip fabrication facilities are very energy-intensive and expensive to construct. In order to produce microchips of the future, strategic innovation is required to create new manufacturing equipment to improve accuracy and dosing, as well as drive efficiencies.
As mentioned previously, the current supply chain is incredibly inefficient and geographically dispersed across Asia, America, and Europe. Opportunities for strategic innovation exist in considering how the current business model could be overhauled.
Manufacturers also require more effective ways to estimate demand, segment their client base, and understand various product lifecycles to prevent outdated stock or shortages—all areas ripe for innovation.
The assembly, testing, and packaging process is a distinct step also open to innovation. Advanced packaging, for example, can help companies combine ‘legacy’ and leading-edge chips for applications where both are required enabling companies to combine multiple smaller chips instead of one large chip.
Although cutting-edge semiconductor manufacturing is crucial for national security, commercial businesses shouldn’t put all their eggs in one basket. The existing business model and diversity of microchip applications provide enormous opportunities. Each organisation should look to pursue strategic innovation to carve out a niche and establish tech sovereignty in this complex industry.
29/03/2022
Discover how to set up a successful innovation lab
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