As companies adjust to a new worldwide environment with the COVID-19 pandemic, it is critical to consider what the future will bring to their operations. The virus has affected everything from work travel to how employees interact and social distance in the office. Hence, it is critical to consider what the future will bring, in terms of developing products, supply chains and project execution.
While traditional business models in the U.S. have extensively used offshore companies to support critical and core product developments, be it manufacturing, product testing, software development and the sourcing of hardware and systems, it is increasingly unclear how and whether this will continue as before.
Take, for example, the impact of the SARS virus spread on global business. This affected thousands of people in China and heavily impacted the global economy. In 2003, the Chinese economy accounted for only 4 percent of the world’s GDP. In 2020, however, this number will have increased to about 20 percent.1, 2
As the pandemic causes difficulties for workers to reach their places of work, manufacturing is being delayed, which will cause disruptions in the supply chain. Anxiety around traveling and close-proximity exposure has only increased. It is important to note that an interconnected global economy benefits from the positive effects of globalization but is also equally affected by disruptions when they occur on such a wide scale.
The U.S. technology sector is expected to be disturbed significantly, due to its dependency on China as both a major market and a key supplier for its goods. The blacklisting of Huawei as part of the U.S.-China trade war in 2019 led to tensions between tech companies in both countries and negatively impacted about $26 billion in business.3, 4 The coronavirus outbreak will only cause further damage. This makes targeting local markets a more important component of a forward-thinking US business strategy.
There has always been a call for products used in America to be “made in America” and, with recent events, this drum beat seems to be getting louder. This is especially true of today’s communications equipment, which is getting ever more complex, thus requiring close and efficient collaboration between vendor and customer.
This becomes more feasible with the move to “open” hardware models where the equipment becomes more standardized, more modular and, thus, more cost effective to be built in the U.S. Given that the U.S. market will drive a slightly higher price point, it is feasible for U.S.-based companies to meet the challenge to be competitive. Several companies are already investigating this approach. Domestic companies can push their existing offshore partners to set up production facilities in the U.S. This will take time. The immediate alternative is to work with companies that already have the support infrastructure in place.
The need for a close coordinated working relationship is even more important today, with the increasing complexity of designs to meet ever increasing data requirements. Radios now need to operate into the mmWave frequency domain, which makes the design much more complex. A close relationship is critical to ensure that the simulated performance can be realized at the radio board level. It is no longer sufficient to design semiconductor chips and assume that the board onto which they are mounted will not affect performance; the two are very tightly coupled. This will require many more in-depth discussion-analysis-discussion phases in order to test use cases and solve problems that arise.
There is an appetite at local and state government levels to support the effort to bring offshore processes back to the U.S. It is an appealing prospect to bring together tech communities. Local businesses that have an established design can merge seamlessly with their test and supply chain. In turn, a partnership can be formed with local colleges and universities to harness new talent. This collaboration proves very appealing to all parties and often generates a funding interest in the process.
The coming months and years will undoubtedly see a change in how companies address their production, design and fulfillment activities. The fear of disruptions in the supply chain based on recent events, coupled with migration to more complex designs will drive the need for more localized design and build efforts. This, combined with advances in software and the move to “open source” hardware to meet efficiency and cost targets, makes it clear that it is not only possible — but probable. The extent of this will vary from one company and market to the next. Change is in the air.
Navi Miglani is VP of sales and marketing at RaGE Systems and manages the commercial business across various electronic systems and markets, including small cell, eNodeB, RAN, public safety, intelligent transport, in-building wireless, backhaul, IoT, Wi-Fi, Bluetooth.
- Comparing United States and China by Economy, Statistics Times, Sources: World Band and International Monetary Fund, 2 August 2019
- China: share of global gross domestic product (GDP) adjusted for purchasing-power-parity (PPP) from 2012 to 2024, C. Textor, Statista, 6 February 2020
- Huawei says US blacklisting led to $12 billion revenue shortfall in 2019 as profit growth slowed, Arjun Kharpal, CNBC, 31 March 2020
- What’s the economic impact of blocking Huawei in the US?, Interview with Joy Tan, Huawei Senior VP of Public Affairs, Huawei website