Generative AI is a form of machine learning that enables users to create content and streamline processes. With the recent explosion in popularity of OpenAI’s ChatGPT, generative AI, and AI altogether, have rapidly become an attractive topic of discussion on both macro and micro levels. Companies are jockeying to discover new ways they can leverage this new tool to become more optimal and gain an edge over their competitors. Gartner reports that “generative AI provides new and disruptive opportunities to increase revenue, reduce costs, improve productivity, and better manage risk. In the near future, it will become a competitive advantage and differentiator.” To many, AI has become a new gateway into innovation and discovery. The recent surge in the development and integration of AI into everyday operations has many major implications for the semiconductor industry and supply chain.
The Supply Chain
Artificial intelligence is seemingly the next big jump in technological achievement, a cutting-edge resource that amplifies and expands human inquisitiveness. Attractive benefits such as automating the mundane or rapidly offering complex solutions are just the start of a deeper foray into the thrilling unknown that is the future of AI. Here are a few uses of generative AI in the supply chain:
- Improve administrative functions in the supply chain: This technology can be used to identify patterns and areas for improvement by analyzing purchase orders, invoices, and shipment tracking information. This ability would put organizations that make use generative AI at a distinct competitive advantage, allowing them to process information quickly, and make strategic decisions based on the data that was collected and organized to them.
- Mitigate linguistic and cultural ambiguity: Communication is key regarding the global supply chain as important details can be lost in translation. Generative AI technology can minimize these issues by helping organizations and individuals communicate more quickly and effectively.
- Logistics and route optimization: Generative AI can be used to optimize logistics and find the perfect route to transport goods; real-time traffic and weather data can be gathered and interpreted. Forecasting inclement weather and finding alternative routes is imperative in the supply chain.
- Predictive Maintenance: Patterns of data gathered from equipment can be analyzed to determine when maintenance is needed. This technology empowers companies with the ability to identify equipment issues before they become more costly. This will lead to more effective obsolescence management.
- Sourcing: With the right data, companies can use generative AI technology to pinpoint which supplier best fits their needs.
- Optimize the supply chain to be more environmentally sustainable: The concept of Corporate Social Responsibility (CSR) is rapidly spreading as the call for environmental sustainability becomes more widespread. The incorporation of generative AI into supply chain operations will not only be cost-effective, but it will decrease the amount of resources organizations use. Transportation routes will be optimized, and waste will be reduced to create a more sustainable supply chain.
The Advanced Semiconductor Market
It is forecasted that the advanced semiconductor market will grow the semiconductor market greatly. According to a Congressional Research Services document, “revenues from semiconductors used in AI may increase rapidly from around $44 billion in 2022 to $120 billion in 2027.” While fabs are being erected at record numbers around the globe, very few have the capabilities needed to manufacture the advanced semiconductors that are required to utilize AI. One of the rare companies that have these capabilities is investing an incredible $2.87 billion in a new advanced chip plant. AI applications require an enormous amount of data to be stored. Thus, what little companies exist that can manufacture advanced semiconductors must expand quickly to keep up with demand. According to Redline group, AI could very well boost the semiconductor industry to 40-50% market share of the technology stack.
According to Reuters, the US is cracking down on American semiconductor manufacturing companies that are exploiting loopholes enabling them to export AI chips to China. The Biden administration is creating rules that “will block some AI chips that fall just under current technical parameters while demanding companies report shipments of others.” These forms of protectionism against China by the US have become more frequent as of late as political tensions continue to escalate between the two countries.
As AI technologies continue to grow, the need to use end-to-end supply chain services will grow along with it. Per the Institute of Electrical and Electronics Engineers, “To adapt to an industry increasingly dominated by the need for AI hardware, semiconductor manufacturers will need to provide industry-specific end-to-end solutions, innovation, and the development of new software ecosystems.” Converge provides its customers with unparalleled and scalable end-to-end lifecycle management services.
For more information on how Converge can strengthen your supply chain and better prepare you for future challenges, contact us now.