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    Semiconductor waiting time down from a year to 4 months, says Johnson Controls

    technology | IST

    Semiconductor waiting time down from a year to 4 months, says Johnson Controls


    Things have started to improve on the semiconductor front with the waiting period roughly around four months from almost a year earlier, according to the automation firm that has its security and HVAC systems installed at some of the world's most iconic skyscrapers like Burj Khalifa and the Taipei 101.

    It has been the fly in the ointment for most tech-driven businesses in the last two years, but American-Irish building automation firm, Johnson Controls, says there is reason to believe the semiconductor supply logjam will end soon. Johnson Controls has its security and HVAC (heating, ventilation, and air conditioning) systems installed at some of the world's most iconic skyscrapers like Burj Khalifa and the Taipei 101.
    “We have been under tremendous pressure since the beginning of COVID — we have seen our lead times (for semiconductor procurements) increase from the range of 10 weeks to as long as 48 weeks, which is nearly a year,” said Dave Pulling, Vice President and GM of Global Security Products, Johnson Controls.
    Things have now started to improve though with the waiting time for semi-conductors now roughly around four months. However,  while procurement timelines may have been reduced to a few months, they remain erratic at best owing to factors like pent-up demand, stormy weather in the South China Sea and China-Taiwan tensions, all of which have had an impact on the global supply chain.
    “A positive for us is that over the last quarter, we’ve seen a plateau and those numbers have started to come down,” he added, “There is some optimism and it feels like we’re out of the worst of it; there are big investments in semiconductor manufacturing capacity, globally.”
    What has also worked for NYSE-listed Johnson Controls International (JCI) is a global shift toward modern semiconductors, which although caused some initial pain, seems to have worked out in the long term. “We initially struggled with capacities, but have pivoted and moved to new geometry silicon,” said Pulling, “New wafers have upped supply even as old technology has gone away.”
    However, this has come at a price. Pulling admits that at the worst of the shortage, Johnson Controls has had to buy semiconductors in “spot markets” and make “broker buys”, which resulted in tenfold price hikes: “there are only so many chips and everybody wants these chips.”
    ‘Will sell made-in-India security cameras from October’
    The building-automation and HVAC (heating, ventilation and air-conditioning) company now wants to expand its market in India, where it has been operating for a decade. On Tuesday, Johnson Controls announced unveiled its new 500-member R&D facility in Hyderabad. It also plans to manufacture security products in India from October, starting with security cameras.
    “We are looking at a couple of cities in North India and are starting off with cameras while analyzing the possibility of other products that can be made here,” said Pulling, “Ideally, we’d like to manufacture everything you can think of from a security perspective — intrusion, access control, and video solutions that can be integrated with other building management systems.”
    While the company isn’t divulging how many cameras it hopes to manufacture in India, its sales targets are ambitious. “Our goal is to double our $100 million in global revenues from cameras, AI and data-enabled by cameras,” said Pulling, “India accounts for one-tenth of these camera revenues. We now see an opportunity to grow by 10x here, and challenge our teams by way of that target.”
    India’s presence on Johnson Controls’ manufacturing map comes with key advantages, the biggest one of them being a local supply chain ecosystem — one that potentially extends to the prefab space, as the country begins seeing the need to manufacture semiconductors locally. “We realize that we may have under-invested in the Indian market thus far,” said Pulling, “India is a game-changer for us, having a factory that is local to the market is a real advantage,” said Pulling.
    What also works for Johnson Controls is a market that’s wide open. According to data from Statista, while 22 percent of American homes have security controls, the sector has only made a 3.1 percent in India. Add to this, India’s rapidly expanding office-space market, the COVID pandemic and WFH notwithstanding, and the company has solid market prospects.
    The market for security controls in India could also lead to more energy-efficient buildings. “When you optimize a building, you begin answering questions like ‘who is in the building?’ and ‘how many are there?’,” said Pulling, “This data can then go into data management where we look at numbers and capacities and come up with an opportunity to optimize operational expenses in the building, as we look across the enterprise.”
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