Jennifer Strawn, the Executive Vice President of Sales and Sourcing for Rand Technology, joins Ryan Chacon on the IoT For All Podcast to discuss navigating the semiconductor space for IoT. They cover the impact of semiconductors on IoT, how shortages affect IoT adoption, the current state of the semiconductor industry, how other IoT components are affected by shortages, the efforts to address semiconductor shortages, and advice for navigating semiconductor shortages.

About Jennifer Strawn

Jennifer Strawn brings 25 years of supply chain solutions experience. Throughout her career, Jennifer has served in executive-level supply chain positions with several large global companies, most recently with a high-profile North America-based electronics manufacturer and distributor. She is skilled in collaborating with cross-functional teams to scale and grow global organizations and in building highly-effective sales teams in Europe and North America.

Interested in connecting with Jennifer? Reach out on LinkedIn!

About Rand Technology

Rand Technology has been a leading electronics component sourcing and supply chain solutions company for more than 30 years with 11 worldwide offices, 5,000+ clients in 72 countries across 5 continents. The company provides Fortune 500 customers with a comprehensive suite of services including guidance and strategy during NPI, production, distribution, and sustainability solutions.

Key Questions and Topics from this Episode:

(00:11) Introduction to Jennifer Strawn and Rand Technology

(00:34) Impact of the semiconductor industry on IoT

(02:55) Will chip shortages affect IoT adoption and growth?

(05:10) Current state of the semiconductor industry

(07:28) Impact of semiconductor shortages on different industries

(10:27) Future of semiconductors and other components

(13:58) Efforts to address the semiconductor shortage

(16:05) Advice for navigating semiconductor shortages

(17:49) Learn more and follow up

Transcript:

- [Ryan] Welcome Jennifer to the IoT For All Podcast. Thanks for being here this week. 

- [Jennifer] Thanks for having me. I'm really excited.

- [Ryan] I am very excited to have you as well. Prior to getting into our conversation, I would love it if you wouldn't mind giving a quick intro about yourself and the company to our audience.

- [Jennifer] My name is Jennifer Strawn. I'm the Executive Vice President of Sales and Sourcing for Rand Technology. Rand Technology is known as an independent distributor. We are a supply chain sourcing and solutions company for tier one OEMs. 

- [Ryan] I wanted to have a conversation with you today about an element of IoT solutions that's super important that we really more gloss over at times, and we've never really dove into kind of the impact it has on the industry, and that is the semiconductor space for IoT. Let's just for our audience's benefit, can you give us a high level overview of the impact the semiconductor industry has on IoT? 

- [Jennifer] The semiconductor industry impacts everything requiring anything electronic, anything that has a motherboard or a hardware component to its technology. And when there are constraints or challenges within the supply chain, it has an impact on every sector, whether it usually starts in a sector would be whether that's automotive or a consumer, so it usually starts with one, and you see the trickle down effects into all the other different types of products that are manufactured across the globe.

It's been unusual in the last two years because when there's disruptions in supply chain, normally it's one or two types of products. And it's been overwhelming for the last couple of years for all types of products across all types of different varieties of semiconductors. It's unusual because there's never been every impact of every critical type of semiconductor that goes into production so that created the situation where we are today that affected automotive, it affected consumer, it affected infrastructure build out and for a number of different reasons. 

- [Ryan] Yeah, I noticed. I remember when I was buying a new car, and my parents were buying a new car around the same time, the impact that was having on getting certain models they were looking for and it changed, the price was increased a lot, and they kept talking about the chips, the chips are the issue. We're running into supply chain issues. For those out there who have maybe been hearing about that or have heard about in the past, that's what we're talking about here. So with all that being said, obviously, given how important that is, it's likely to, it's where it's likely thought that this can threaten and impact IoT adoption and growth going forward. Is that a fair statement to say? 

- [Jennifer] That's a very fair statement to say. And when people, you're right, I've done this for almost 30 years, and I always make a joke because even my mom and dad probably couldn't tell you what I do for a living still because semiconductors don't get discussed on an everyday basis. So they've been highlighted for the last couple of years and people are starting to understand maybe what some of those are.

Most commonly you hear names like Micron or Samsung or maybe even more importantly lately like a Texas Instruments or those have been highlighted because they've been one of the critical manufacturers over the last couple of years or an STMicro. So people are loosely learning but your connectivity, your Internet of Things, whether it's from your, as a person for your appliances or your products or your apps, all starts with a bigger picture starting with infrastructure, right? Whether we have the correct cloud space and power set up. So if that is not ready, and that is in the middle due to the COVID push, where everybody learned you could work from home and connectivity became basically fast forwarded into 5G and further and then you bring on with that everybody wants to move to the new technology of products as we are definitely in a technology renaissance of a whole new set of products for the future, which leads us to IoT adoption. And then the AI and then the electric vehicles. So all of that at one time with new products and new demand created constraint in the supply chain. 

- [Ryan] No, that makes total sense. Where are we now with this because obviously this has been a conversation for quite some time. It was definitely a big thing during the pandemic. Where are we now? Is this situation fixed? Is this, are we seeing the light at the end of the tunnel of this coming back to being something that is less of an issue and less of a concern for IoT companies, or where do things stand now? 

- [Jennifer] Now we're in, again, another very uncharted, unknown territory because when we had the last couple years of the constraint, there was not enough product. And some things transpired on the back end of that with chip manufacturers and the companies that needed the chips in order to help get them through that time period. There were different types of non cancellable orders they had to put in and lead times were very long. A lead time to make the chip went from a normal six to eight weeks out to 52 plus weeks.

So because of some of the activities that took place to get the last couple of years under control, people have more products starting to be delivered now, and we're now in an uncertain market for many reasons about geopolitical recession pending, so demand is down, but there's all this surplus of inventory coming out into the customers from the orders they put in place over the last year and a half.

Now, companies have too much inventory. And their demand is stalled right now or less, and they're not able to use as much of that surplus in production because they're not building as much right now for various reasons. And they're sitting on a bunch of extra inventory. All types of companies, automotive has surplus, consumer products have surplus, everyone has too much inventory, but still missing maybe some critical parts they need to complete a build. 

- [Ryan] It's an interesting problem given how big of an impact this can have on an IoT solution and deployment. Are there any, you talk about automotive, when it, if we're thinking about other industries in the IoT space, or other, are there certain industries that you've seen more affected by this than others or ones that are maybe closer to being able to move forward at that pace they were hoping for to, with given the issue that we are talking about here with the semiconductors?

- [Jennifer] Yes, people, companies that make a consumer product or a product that would probably fall in the line of IoT, in a market that everybody has just gone through, when there's constraint and allocation in the supply chain, pricing gets incredibly high. If you cannot get the product direct from your normal sources, whether that's through factory director, they're authorized distributors, you have to go out into what's called the market, which is what Rand specializes in, helping customers navigate the unknown, the open market. And when you're working with companies like Rand, we help try to find the parts somewhere else in the world at a cost that allows them not to have too much price variance, right?

They have a standard cost of a dollar and now the part is 20 dollars in the market. Companies whose product may only cost 10 dollars to begin with or 25 dollars or a coffee maker that's 200 dollars, if parts that go in it start outpricing the price of the product, companies have a challenge. So they get, and they also don't have as much priority in line at the authorized distributor or the chip manufacturer as a bigger company, such as some making automotive or infrastructure build out, networking, different types of strategies take place. So they usually get put back, and they're the most, they're in most need of a solution because they're the ones that acted the most. 

- [Ryan] Absolutely, yeah, it's interesting to think about, since we focus a lot on enterprise conversations, and we talk about enterprise deployments, thinking about all the work that has to go into a solution just to get it to the pilot stage and then potentially convince the company through that pilot stage to now scale, if they are then hit with this increase in cost in different components that they were not expecting, they may have a signed contract and agreement, that can be dramatically, become a very dramatic issue for them, right? Can be very detrimental to their ability, right, the company may not even be able to exist if that could possibly happen because it potentially could kill the entire ROI that they now have to take on themselves, maybe the company building it versus the customer. This is obviously a very important kind of area for us to focus on, but outside of the semiconductor itself, are there, what are you seeing with the other different, other components that are going into a lot of these solutions, microcontrollers, processors, memory chips, communication modules, all those different areas. Are those being impacted as well or are those, like what's the kind of the forecast that you all see from the impact they're having in the market right now given how available they are, maybe how available they are not.

- [Jennifer] When you think about production and also what you need to complete your products, areas such as memory, for example, particularly in DRAM modules, it's been relatively flat and stable because if you can't build all the other things, you're not going to buy some of your more expensive products such as memory, right, until you, that type of product is bought specifically for what's going to be produced. So they buy, they don't overstock that. It's a very, it's a commodity. So that remained a little stable, but now memory is at the very bottom of its pricing, and you're gonna, when we start to see the market build back up, there is going to be the moment for memory.

So we expect to see somewhere through 2024, the uptick in demand for memory and then probably some of its own allocation challenges. So there will be a moment for that. In terms of CPUs or more likely GPUs as some of the AI product or a, between AI and AR and VR, different graphics and mathematical equations, you'll start to see more constraint through GPUs, and it will just build from there. There could be a moment when you think about the new technology. So that's one of the interesting things with going back to when you asked me if the problems were fixed, and that's still very unknown because a lot of the things that transpired to create the problems are still in a solutionable stage. They haven't completed the corrections yet. And many things around that are impacted. When we don't know the products yet, it's hard to know what's going to be used in those products. So, it's hard to say that whether your memory or some of your more common chips used around power or switching, such as a not to use technical terms but like a MOSFET or IGBT or things that, MCUs, that are used in broad products from appliances to communications to automotive, those we don't know how many and what the demand is and how many new capacitors or resistors will be in need for, whether it's again your refrigerator used to be just to store your food and now it's on your phone and you can order and all the things. So that's unknown. So the, what they call the mix or the demand is still uncertain. As we move forward, it's going to be very complicated. 

- [Ryan] What if anything is being done right now to really address this as far as are there new manufacturing plants, things being built, and if so, what impact is that going to have in the short term and the long term? 

- [Jennifer] So, I'm sure people have heard a lot of talk, particularly in the United States. There was the announcement of the CHIPS Act and bringing semiconductor foundries to the U.S. and different areas across the world to not only increase capacity but a little bit of de-risking with things being built in China. So a lot of things are going around that and those take many years to build, and they're in the process of bringing those up.

But then there's what comes behind it is the calibration test and quality preparations because semiconductor production is very complicated, right? And that leads us into then the talent pool, right? The people, the employees that have the skillset and the background to manage and run and participate in those plants. And that is something that at least in the U.S. we are working on building because we haven't had that level of or that type of education and talent in the U.S. for at least the last 25 years since we offshored everything. People went to school to major in other things. So as we work on the talent, as all the foundries come online, you have to work through the reliability and quality to make sure that those things come off the line in the same practiced way that they did in their other foundries. So there's a lot of components to that. 

- [Ryan] You even think about not just the impact that this is going to have, but the things that are impacting this, the ability to turn this around. There's obviously global events that impact this, right? Like where we get a lot of our chips from around the world. I believe Taiwan is a big area for this. All the kind of things you see in the news about them and what's going on in that area of the world is going to impact this as well. For the audience who's listening to this and has been influenced by this in any way at all, what is your advice for them on how to navigate these shortages going forward. 

- [Jennifer] If some of the audience works for manufacturing that produces products or participates in supply chain hardware, companies are really looking at risk mitigation and supply assurance. And in risk mitigation, they're just thinking about, when you create a product and you design what's going to go on the PCB board, the print, the green circuit board, you can pick up a semiconductor that might have other brands or alternates as they're called. So making sure you don't have one product single sourced helps a lot. Work, companies are thinking about now we have this surplus of inventory, how do they help repurpose that inventory. And most importantly, it's been highlighted that you need an arsenal of solution partners in your belt. So you have your standard line of source of supply, but then you definitely need somebody that specializes, like Rand does, in helping them understand if you can't get anything you need, or you can't find a second source, or you need help in these areas, that's where a company like Rand can step in and help facilitate some of their needs. So they need to have good supply chain solution partners that help them navigate through the critical markets. 

- [Ryan] I think it's a challenge like you've mentioned that a lot of people listening to this have been affected by, will be affected by going forward, but it's important for them to understand what is causing it and how to approach it in order to keep the business going forward and help these deployments still get off the ground, see success, so I really appreciate you taking the time to jump on here with me and talk through this. For our audience who wants to learn more about what you all are doing, maybe follow up on discussions, topics, that we talked about today, what's the best way they can do that? 

- [Jennifer] They can find our website. It's www.randtech.com. I would be happy to share my contact information if you would like it, and they can reach out to me directly, and learn more about us and how we could help them. 

- [Ryan] Jennifer, thank you so much for taking the time. It was a great conversation, super important topic for us to cover that we haven't been able to cover yet. So thank you for taking time out of your day, and I look forward to getting this out to our audience. 

- [Jennifer] Thank you. Thank you again for having me.