What Is IIoT and How Will the Chip Shortage of 2021 Affect It?

IIoT – the industrial internet of things – refers to interconnected instruments, sensors or other devices that are networked and can be centrally controlled. Industrial IoT devices are often connected to industrial software and applications for energy management, quality assurance or improving manufacturing efficiency. The internet of things can also refer to the personal network of smart home devices, fitness trackers and other lifestyle tracking gadgets consumers increasingly utilize on a daily basis. Many homeowners now have lights, thermostats, door locks and security systems that are all interconnected and can be controlled through various voice commands or mobile applications. IIoT shares some significant functional similarities with its consumer-facing cousin. Businesses can:

Be notified with alerts about equipment failures
Collect data on efficiencies and production
Accumulate data from a variety of connected devices that can then be compiled and analyzed
Use machine learning and AI to develop solutions that lower lead times
Decrease defective products
Improve product traceability
Better gauge maintenance requirements and equipment depreciation

IIoT allows businesses to utilize automation, machine learning and smart manufacturing to manage, optimize and significantly improve the analysis of things like asset performance, maintenance and industrial controls. IIoT technology makes many industrial fields safer and reduces breakdowns and errors, all while improving efficiency. Industries that are rapidly adopting IIoT solutions include:

Oil and gas
Transportation
Utilities
Mining
Aviation
Logistics
Manufacturing

Each of those industries is different, which is why many require customized IIoT solutions that are tailored to their exact needs. Businesses like Penguin Edge that develop the boards and edge servers necessary to process data and network IIoT systems for industrial automation, process control and data acquisition must take into account the potential computational needs of a variety of end users with significantly different operations. The adoption of IIoT is still in the ramping-up phase. Meticulous Market Research released a report in 2020 suggesting the IIoT market is expected to maintain a compounded annual growth rate (CAGR) of 16.7 percent and be valued at $263.4 billion by 2027¹. That’s still a far cry from the smart home market, which is expected to experience a CAGR of 29.3 percent and be valued at $622.59 billion by 2026². IIoT systems require a lot of computational hardware and chips. Shortages of silicon, semiconductors, resistors, power modules, transistors and other components have been making it harder for many companies, including those that produce IIoT solutions, to meet the demands of industrial and manufacturing clients in 2021.

How Is the Global Chip Shortage Impacting IIoT?

The shortages in more visible consumer-facing industries often get more publicity due to their products’ impacts on day-to-day life. Consumers who want to buy a new car might be aware that the price of new cars, and even used cars, are being driven up by the global chip shortage. Those same consumers are less likely to think about how the chip shortage may be impacting the development and creation of automated manufacturing equipment that helps build their cars. Industrial IoT is fundamental to the manufacturing, processing and packaging of products we purchase and use daily, but consumers might only become aware of production problems when they suddenly notice increasing costs, scarcity or inflation. The extent to which components and raw material shortages are affecting tech companies varies. Network-switch manufacturers are coping with long lead times on silicon. Companies like Intel and AMD have not had much difficulty finding the materials for server CPU silicon wafers, but they have had to divert resources and make operational changes to better manage their supply chains. The head of NVIDIA’s DGX unit, which produces AI servers, commented to Data Center Knowledge that he has struggled less with CPUs and GPUs than he has with more minor components like resistors, transistors and power modules³. Some industry experts are expecting manufacturers to run into trouble meeting expectations on the consumer side of IoT (i.e. home automation)⁴. Device manufacturers are facing shortages in both talent and components like semiconductors, CPUs and GPUs in a rapidly growing industry that is expected to include 41.6 billion connected devices by 2025. As a work around, IoT companies are attempting to find what chips they can and then develop firmware adaptations that allow them to operate effectively in their devices. How much or how severely the chip shortage effects IIoT companies and other tech manufacturers comes down to preparedness, flexibility and experience. Penguin Edge is proud to say our stellar operations team are supply chain veterans, so we have been able to minimize the impact of these the global disruptions on our customers.

Learn More About How Penguin Edge Helps Develop the Future of IIoT Solutions

Penguin Edge’s edge servers help provide the processing power to drive an array of machine learning and AI-powered sensors and automated infrastructure. You can learn more about some of our technologies on our website or by contacting us at 602-438-5720. References: