Smartphones, Semiconductors and Supply Chains

It’s an easy thing to overlook the impact technology has on our everyday lives. I know I didn’t marvel at its wonders the last time I checked Twitter, and I’m certainly prone to moments of pique at slow internet connections during which I pay no regard to what’s actually required in order for me to stream a film in perfect HD quality. And that’s because, in general, we just use technology, reserving our thinking-about-it time for when something goes wrong – for when servers are down – or for when something exceptional happens. Something exceptional like Facebook deciding it really wants to spend $19billion on some software called Whatsapp.

Of all the things that warrant attention in a transaction like this, and there are many, that Whatsapp is software – an app – is one aspect with far reaching implications. The notion that the app is as valuable as Mark Zuckerberg believes is built on the foundation that it is used by a lot of people – about 450m and growing, in fact. Every one of those users needs a way to access it, and that means 450 million smartphones and tablets. Producing technology on this scale, and getting it to market, requires not only some of the world’s most sophisticated supply chains, but also some of its most sophisticated parts – semiconductors being a prime example.

Semiconductors are a vital part of many of the hi-tech gadgets we use every day, and this makes them a good indicator of future electronic goods sales as well as a reliable proxy for demand in some specific logistics markets. This is why we track the sales of semiconductors as part of the Ti Dashboard.

Ti Dashboard - Global Semiconductor Sales

Ti Dashboard – Global Semiconductor Sales

This chart, tracking the value of semiconductor sales on a global and regional basis, tells us several stories about the state of hi-tech manufacturing, each with an important logistics implication.

The rise in global semiconductor sales over the course of 2013 is good news for those interested in sales of smartphones and tablets. This will include Facebook, which undoubtedly sees mobile as a key platform for the future, as well as any number of retailers the world over. It’s also good news, in a general sense, for air freight providers who often see volumes grow as semiconductor sales strengthen and retail sales of hi-tech products rise – the speed of air freight and the environment of transportation make it a preferable mode for high value cargo, especially in the here-and-now hi-tech consumer market.

While semiconductors obviously have an extremely wide range of uses, 2013 saw a jump in demand which took the total value of sales to $305.6billion – the highest ever single year total. This increase will almost certainly have been driven, in part, by higher global demand for smartphones and tablets. The increased demand for these products, aside from being welcome news at Facebook, means production increases and a greater need for logistics capacity to get products to market. Hi-tech logistics is a tough and competitive marketplace, with manufacturers and producers increasingly leaning on their supply chains, and supply chain partners, to extract increased value and efficiency from operations as they compete to drive retail prices down. If logistics providers are to gain from increasing production volumes, they will again have to show their ability to innovate and change in order to support manufacturers’ evolving needs. Such competition amongst logistics providers in the past has seen the development of niche providers specialising in hi-tech logistics, as well as the introduction of reverse logistics, service parts logistics and a range of other aftermarket services to the sector.

Whether or not Facebook’s valuation of some instant messaging software is accurate, it’s certainly a significant indication that smartphones and tablets are only going to become more important to our everyday lives, and that the supply chains which get them into our hands are going to become increasingly sophisticated and increasingly vital.

You can find out more about Ti’s Dashboard here, and you can check out how the interactive Dashboard charts work by following this link.

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One thought on “Smartphones, Semiconductors and Supply Chains

  1. Pingback: Friday Afternoon with February’s Best Bits | the Ti blog

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