Disruption, Digitisation, Resilience

10 DISRUPTION, DIGITISATION, RESILIENCE : The future of Asia-Pacific supply chains people worked from home and increased their spending on devices in lieu of dining out, going to the movies and other forms of entertainment. 3 Another was stockpiling by tech firms, which reportedly occurred on a massive scale. 4 Even before the pandemic, these firms recognised that semiconductors were fast becoming a focal point in US-China trade tensions, potentially making them much dearer, if not impossible to come by at some point in the not-too-distant future. This concern was especially acute among Chinese firms like Huawei, a manufacturer of smartphones and network equipment that purchased two years’ worth of supply in March 2020. 5 Access to raw materials/primary input was a key source of disruption in the food and beverage sector, and the healthcare/pharmaceuticals/ biotechnology sectors. In the food sector, access to raw materials shared the top spot with logistics, both picked as the top reason for the supply-chain disruption by 27.8%. Anirban Mullick, director of business development at Unilever International and responsible for the company’s food and refreshments category, says “we had supplies coming out of China, India, which were disrupted; out of Europe, there were insignificant disruptions.” This happened at the same time “there were some demand spikes in the food segment, because people were staying at home — and we have quite a large portfolio of retail foods — which saw a significant rise in demand because people were cooking more at home and staying more at home.” The automotive industry’s problems are somewhat unique in regards to supply of technology, and are arguably the result of poor planning. The semiconductor shortage facing the automotive industry has received significant attention partly because it might have been avoided. Mark Liu, the president of TSMC, the world’s third-largest chip manufacturer, seemed to say as much in an interview with US weekly news programme 60 Minutes claiming that carmakers cancelled or delayed orders early in the pandemic. 2 Mr Nicholas, who also spent time in the semiconductor industry, shares Mr Liu’s view on the subject. “They [the carmakers] dialled down orders,” he says, “because they thought they would have idle capacity and they wanted to reduce working capital.” The automotive industry’s problems are somewhat unique with regard to supply of technology, and are arguably the result of poor planning. When the industry recognised the mistake, it was too late. The capacity had already been committed elsewhere. There are a number of reasons that capacity had been committed elsewhere. One was that demand for personal computers and other consumer electronics surged during the lockdowns as more 2 Chip Shortage Highlights U.S. Dependence on Fragile Supply Chain.” 60 Minutes. 2 May 2021. Available online at https://www.cbsnews.com/news/ semiconductor-chip-shortage-60-minutes-2021-05-02/ 3 “Why there’s a chip shortage that’s hurting everything from the PlayStation 5 to the Chevy Malibu.” CNBC. 10 February 2021. Available online at https:// www.cnbc.com/2021/02/10/whats-causing-the-chip-shortage-affecting-ps5-cars-and-more.html 4 “Why We’re in the Midst of a Global Semiconductor Shortage.” Harvard Business Review. 26 February 2021. Available online at https://hbr.org/2021/02/ why-were-in-the-midst-of-a-global-semiconductor-shortage 5 “Huawei builds up 2-year reserve of ‘most important’ US chips.” Nikkei Asia. 28 May 2020. Available online at https://asia.nikkei.com/Spotlight/Huawei- crackdown/Huawei-builds-up-2-year-reserve-of-most-important-US-chips