How are Indian companies responding to digitalization?
We’re seeing a huge industrialization push in India. We are working with multiple companies in the automotive, pharmaceutical, and semiconductor manufacturing space. Currently, we’re working with a big car manufacturer, a big two-wheeler company and a big OEM supplier. I think $300 billion is going to be invested in India in EV transformation. In the automotive industry, which is going from ICE (Internal Combustion Engine) to electric vehicles, so many new factories are being built, (and) they need to be flexible, competitive. At the same time, there’s not enough batteries. So, there’s battery manufacturing, which is being built in the world. There’s a lot of semiconductor capability being rebuilt in the world. Also, the food and beverage segment is trying to reinvent itself massively because of supply-chain and also in terms of sustainability. In India, intralogistics is also one segment.
Can small enterprises afford digitalization? Cost is always a factor…
In India, it’s not very large (currently) but we are seeing increased interest from micro, small and medium enterprises. Substantial interest is coming in, particularly, since large companies are driving it for their own efficiency. At the World Economic Forum, we looked specifically at India — what training do we need for SMEs, what financial sort of packages do we need for SMEs, what do we need to do with our technology to simplify it so it can be absorbed – because, as the supply-chains get more and more digitally integrated, if you’re not capable of being Industry 4.0 standard as SMEs, you will not be able to be a supplier to the complete value chain… I think that is important. Germany has shown it. Germany’s strength is built on SMEs much more than big companies. Big companies like Siemens are important but the capability to have the next 2-3 layers integrated into the value-chain is what makes the strength of the German economy.
But companies are digitizing selectively. Is there data wastage?
Yes. Everyone rushed at digitalization and digitalized the R&D process or the production planning process or the quality process. These were thus put as islands. You generated data, you threw it away. So, Siemens’ idea is not to have 20 digital twins, but one single digital twin, which is comprehensive, so the data flows. When you invent a product, you use the same data to plan the production process, to check if the production process produces it, and for the product. So, that’s what we’re working on, and we will not be able to do it alone. So, our partnership with SAP, for example, is to integrate this to build those digital threads together, so that the ERP system and the production planning systems can talk. We’re working with NVIDIA in the industrial metaverse to be able to have NVIDIA’S data and our data to flow through.
What are the sectors looking to improve turnaround times?
So, it’s all about speed and adaptability. The reason why Siemens was so successful during Covid-19 is, we could, within 24 hours, take somebody else’s semiconductor, redesign the product, and immediately redesign the production chain to be able to churn out the products we needed. The next industry which is really looking at it is food and beverage. The idea of food and beverage is to move from recipe-to-production in a day’s time. That’s the dream. So, you could dream up a new ice cream one day and the next day it would be produced. It’s an integration you have to do, but I think it’s going to go through all industries starting with the more complex ones, and then make its way through.
How do you view the semiconductor industry since countries are setting up their own fabs?
If you look at the global supply chains, they went from being balanced in the 90s to 80% of semiconductors coming out of Asia, mainly China and Taiwan. We are seeing $250 billion to $300 billion being invested in semiconductor factories around the world. There’s the US Chips Act, there’s the European Chips Act, the same for the Koreans, the same from the Japanese, they’re all saying chips are so critical. We see it’s still a bit disconnected. Everybody is rushing to the super high end, the 5 nm and 2 nm. The shortage today is not on the super high end, it’s on the industrial chips, so car manufacturers were not able to produce a $50,000, $100,000 car because they didn’t have the chip. So, the industry is now really looking at how we can rebuild capabilities not only on the super high end, but also on the industrial side. We at Siemens have said that we see a normalization of semiconductor – industrial semiconductor production later than the consumer side, which has normalized already, but we still see islands of specific microchips, which are being sort of bottlenecks.
How is Siemens helping companies meet sustainability needs?
Every company has said they are going to be CO2 neutral in Europe by 2030. It implies that you look at scope 1 and 2, which is your own production, but also at scope 3 which is upstream, meaning what is being delivered to you. People want to know where my battery comes from. Has it been produced with good energy, bad energy? Has it consumed a lot of water or not? So, we’re working now in Europe and the US and making these supply chains transparent. This means that you could, on a product level, see if it’s been produced sustainably and so you can, as you deliver it to your supplier, prove that it’s actually being built in a sustainable way.How do you see 5G helping you meet client needs?
5G is super important and we’re pushing heavily on 5G. We launched our 5G router in India also and the main idea is that within the factory you must be exchanging a lot of data and you have to do it superfast because if you make a mistake, you’re going to injure somebody. So, 5G and probably 6G will be super relevant or is already super relevant in the enterprise factory environment and India really has built a great 4G network and great fibre capabilities. If you want to be at the forefront – if you want to be at the forefront of industry 4.0 or 5. 0 when it comes – 5G will play a crucial role.
