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A new world order, a new battleground
Colley Hwang, DIGITIMES, Taipei 0

What kind of world will it be in 2030? The era of 5G with low latency, high speed and ultra-connectivity is maturing, and people are waiting for 6G that will leverage low orbit satellites to achieve decentralized bandwidth, opening yet another a new chapter of human life. By that time, at least 30% of the cars on the market will be electric vehicles (EV), and Level 5 self-driving cars combined with smart poles will bring about obvious changes in transportation, and smart cities will take shape. Under the ESG framework, efforts to improve information security using quantum technology will be rewarded; more efficient energy mechanisms will be connected to the super grid; the greenhouse effect will see improvements; people will be dreaming of a more stylish smart city; and we'll have new audio-visual experiences. These we can foresee and observe from the market side.

On the demand side, much can be imagined from the information available, and various technologies still need to be tested for feasibility. But on the supply side, it is the investments one has made along the way, the accumulated production capacity, and the logistics systems that are the keys. We need to understand the changes in the supply chain by carefully dissecting all its components. Asians have an obvious advantage because of what they have achieved in history and their geographical locations.

In the 1970s, Japan's major manufacturers, mainly Sony, Panasonic, NEC, Toshiba and Fujitsu, led the way not only in the field of consumer electronics, but also in semiconductors, panels, and upstream equipment and materials, where Japan had an indispensable role in the global supply chain.

However, since the mid-1980s, the rise of digital technology has prompted Taiwan and Korea to invest huge amounts in the semiconductor industry and they are now world leaders in foundry and memory manufacturing respectively. At present, nearly 80% of the world's semiconductor production capacity is concentrated in four Asian technological powers: Taiwan, Korea, Japan, and China. Among them, Taiwan and Korea together account for 60%, while China accounts for 60% of the world's semiconductor consumption, thanks to its competitiveness as the world's factory. But these structures are changing because of the US-China trade war. TSMC and Samsung will expand their semiconductor investments in the US, while mass production of notebooks and handsets will move from China to ASEAN and South Asia. In addition, the Southeast and South Asian countries, who boast enormous young populations and account for over 25% of the world's population, will be the next battlegrounds for global technology companies.

Will these scenarios that are likely to be realized gradually by 2030 bring both risks and opportunities to Asian countries? Understanding the needs of the global market requires better imagination to define the market and form the value of brands and services. But from the perspective of the supply side, the supply chain is characterized by a continuity. After all, manufacturing success can't be achieved overnight; it relies on investments in factories, improvements to technology and production yield rates, and logistics management - all these need to be assessed by the developments over the years.

Asian markets and industries are surveyed in a very different way from their counterparts in Europe and America. The information circulating in the industry - despite repeated verifications - often still carries misinformation. But a macro view of the supply chain structure can at least keep the industry players from being overly misinformed.

In 1990, nearly 40% of the world's PC market came from North America, 30% from Western Europe, 10% from Japan, and only 20% from the rest of the world. Thirty years on, the market has expanded from PCs for white-collar workers to smartphones for everyone. Not only does China's computer, handset and TV markets account for 25-30% of their respectively global markets, but India has also replaced the US as the world's second largest handset market. And much can be expected from Indonesia with 260 million people and the Philippines and Vietnam with around 100 million people each.

Computers and handsets both involve top-down marketing approaches embraced by brand vendors. But the Internet of Things (IoT) and Internet of Vehicles (IoV) business opportunities may have very different propositions involving localized markets and regionalized manufacturing - a bottom-up approach that may pose new challenges and offer new opportunities for all who are eyeing Asia.

Colley Hwang, president of DIGITIMES Asia, is a tech industry analyst with more than three decades of experience under his belt. He has written several books about the trends and developments of the tech industry, including Asian Edge: On the Frontline of the ICT World published in 2019, and Disconnected ICT Supply Chain: New Power Plays Unfolding published in 2020.
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