One of the most important aspects about technology is that it is constantly evolving, so it will always have a specific influence on the way that we do business.
This innovation can happen overnight, or it can happen over the space of a couple of months. For us to ignore this would be catastrophic as we are no longer living in a world that is entirely defined by human leadership or interaction. Artificial Intelligence (AI) has created a space where machines can perform human based tasks to.
While technology innovation has had a poignant impact on first world countries, its effects has not had a significant impact on developing countries. However, this is rapidly changing.
Winds of change
I recently read an article on iol.com which pointed out that the technological winds of change are blowing steadily and rapidly.
The article points out that with a population of more than 1.2 billion people, 54 countries, and foreign direct investment (FDI) totalling $59 billion in 2016, Africa presents organisations across industry sectors with ample business opportunities.
Speaking to Business Report, which is part of the IOL Group, Annalie Terblanche – a Product Manager at SilverBridge Holdings – said that although the continent has long been viewed for its potential, the rate of technological innovation in recent times has seen it attract even more interest.
“Africa is well-known for its infrastructure challenges especially when it comes to fixed-line connectivity, reliable electricity, and access to drinking water. However, people across the continent have long embraced a culture of innovation to overcome these. An example of this is the growth of mobile telecommunications for more than two decades. Mobility has become synonymous with Africa as people and organisations are using it to address their accessibility needs,” Terblanche told the Business Report.
The article adds that even though fibre has become a key development priority in cities and urban areas, those in rural communities have come to rely on the likes of 3G and LTE to access services. And given the investment mobile operators are making across the continent to ensure reliable and high-speed access, even those living in highly populated areas are often opting for this as their preferred method of access.
“It is in this age of innovation and mobile growth that entrepreneurs are starting their businesses. Many are receiving investment from several local and offshore sources. The way these start-ups are approaching business problems given the limitations of their physical environments, make them good value for international investors who are searching for people who can think out of the box,” Terblanche told the Business Report.
The IOL article adds that at a time when there is a sizeable unbanked population across the continent, circumventing the need for traditional accounts have resulted in a reliance on prepaid vouchers to buy anything from goods at informal markets to insurance and healthcare. This also provides financial services organisations with the ability to create business growth in previous untapped markets.
Granted, cash transactions are still part of the reality of doing business in Africa but thanks to the increasing popularity of mobile money solutions like MPesa, customers (and insurers) have a viable alternative.
The article points out that MPesa brings those without bank accounts financial inclusion in a broader ecosystem that was not possible before. Mobile money is much safer than carrying cash. Furthermore, it reduces a lot of the overhead and administration costs of managing cash for insurers and give them a more effective way to collect premiums.
By better enabling users to manage their funds, additional benefits are unlocked. These can include anything from earning interest on savings to access micro-loans. The continent has unique requirements spread across each of its 54 different markets. What works in one country will not apply to another.
The article adds that companies must work closely with local partners to ensure they understand the dynamics of those areas in which they want to get involved in. This approach will not only highlight the innovative start-ups that are driving trends in those markets, but it will also enable businesses to better manage their strategic objectives.
“Yes, there are still significant obstacles to overcome in Africa. Even so, the excitement of working in such an open environment where the possibilities are limitless is too good to resist. Businesses are looking towards this more agile approach and following suit with their own enhancements to better meet the needs of those in the continent”, Terblanche told the Business Report.
The great innovation in China
Africa is not the only continent in the world where technology innovation is happening at an accelerated rate. I recently read an article which points out that technology development in China is developing at unprecedented levels. As the country forges ahead with its ambitions to be the worlds largest technology producer by 2025.
The article points out that a year ago, Chinese government departments across the country received an order from the general office of the Communist Party to hand in a timeline detailing how soon they could replace existing computer hardware and software programmes with domestic substitutes.
Under the guise of ensuring information security, the central government’s intent was to reduce the use of computers, servers, semiconductor chips and software made by Western firms as it looked to build its own core technologies, lessen its dependency on imports and become a big player on the global tech stage.
The article adds that the vision of global leadership to match the country’s economic might emerged in 2015 when the government unveiled its Made in China 2025 (MIC2025) plan.
At the heart of the plan is the country’s semiconductor industry, in part because advances in chip technology can lead to breakthroughs in other areas of technology, handing the advantage to whoever has the best chips – an advantage that currently is out of Beijing’s reach.
“The US controls the most important core technologies,” Roger Sheng, an analyst at research firm Gartner told the South China Morning Post. He added that the standards are all in the hands of the US, which means it controls the upstream and downstream segments of the industry chain. He was referring to the entire process of making a chip, from design and manufacturing to consumption by end users.
“The first step is to see if they can compete with Korea and Taiwan, then slowly see if they can compete with the US. Competing with the US is not a one-day or two-day matter. Mainland China’s huge manufacturing industry makes it the world’s biggest consumer of chips; the brains that power everything from electrical appliances and smartphones to the most sophisticated super computers and driverless cars,” said Sheng.
However, the article points out that China has to buy most of its chips as it only makes 16% of what is used domestically. It spent $260 billion on chip imports last year, more than the $162 billion that went on crude oil, a commodity that was seen for years as a source of strategic frailty for China because of its dependence on foreign supplies.
Now that sense of frailty has been transferred to the chip industry, spurring renewed efforts to build a domestic alternative. And there are signs that a shift in the tech landscape, as China embraces all things digital and pushes into new areas such as artificial intelligence, could help it towards that goal.
The road is long
The South China Morning Post article pointed out that China has been trying to develop its chip industry for a number of years, even before the development of the MIC2025 plan.
The article adds that China has poured in billions of dollars of subsidies, grants and investments, but progress has been slow. There is no equivalent of US giant and chip pioneer Intel, or South Korea’s Samsung Electronics and SK Hynix, which design and make their own chips. China’s biggest player, Semiconductor Manufacturing International Corporation (SMIC), makes chips to order for other companies, but lags behind the advanced technology of the global leader in such contract production, Taiwan-based TSMC.
SMIC uses what is called 28-nanometre process technology, which refers to the size, in billionths of a metre, of the circuits on a chip. TSMC is preparing to make 5nm chips by 2020 with 3nm chips planned for 2022. Intel is working on 10nm technology.
The smaller the circuits, the smaller and more powerful the chips – and consequently the gadgets they power – can be.
Local support and focus
Under MIC2025, China aims to meet 70% of domestic chip demand with home-grown products. However, according to leading industry official Ding Wenwu, the industry has three shortcomings:
- a semiconductor trade deficit of $66.9 billion;
- heavy reliance on foreign core technologies such as central processing units (CPU) for computers; and
- a 10-fold difference in operational scale between SMIC and the world leaders.
Ding is president of the National Integrated Circuits Industry Fund, which was established in 2014 to build up manufacturing processes and help companies acquire assets internationally.
The article pointed out that the fund, spearheaded by the finance and industry and information technology ministries and funded by leading state institutions like the China Development Bank Capital and China Mobile, has invested more than $11.9 billion in 67 projects involving firms including telecoms equipment firm ZTE, SMIC and another chip maker, Huahong Semiconductor.
The article adds that, at the same time, the new generation of Chinese firms are grasping for opportunities in more specialised areas of the semiconductor industry where there is less ground to make up, and even a chance to take the lead.
Vast domestic market
The South China Morning Post article pointed out that China’s vast domestic market is rapidly embracing smart living through the “internet of things” – the name given to the connection of the internet to physical devices – and connected workplaces, homes and smart devices. The government is also heavily promoting artificial intelligence, an area it wants the country to take the global lead in.
These areas require different types of chips. For example, there is the system-on-chip that includes not only a CPU, but often a graphics processing unit, RAM memory, ROM memory and a communications modem to connect to the internet of things and devices.
The article added that there are also field-programmable gate array (FPGA) chips – which can be programmed after they are made – as well as neural network processors, which can “learn” and are used in artificial intelligence.
Although it is less than half the volume of the US market, which is the world’s biggest, China’s smart-home technology penetration rate of 4.9 per cent means enormous growth potential and opportunities for nimble firms.
“The CPU [segment] comes with a legacy and baggage … specialised chips provide opportunities for start-ups like ours,” said Barry Tam, Marketing Director of Intellifusion, a Shenzhen-based AI firm told the South China Morning Post.
He said that once the playing field was level, China would be in a better position to gather the technologies, skills and talent to advance the domestic semiconductor industry, including into the development of mainstream chips.
Tam estimated that specialised chips currently made up around 1 per cent of China’s overall chip market.
We cannot ignore the impact that technology development will have on the world that we live in. If China is successful in becoming the worlds largest technology producer by 2025, we will be living in a completely different world than the one we know today.