We’ve all had those heart stopping moments, “Where’s my phone?!” Is it on the back seat of the taxi disappearing into traffic, or did I leave it at home? Maybe I haven’t lost everything.
For more than a decade, we have been tethered to a flat piece of metal and glass that is now central to our lives – combining communications (voice and text), photography, music, videos, news, web search and dozens of other seemingly essential apps into one indispensable device we have to carry everywhere.
The smartphone hasn’t changed much since Apple revolutionised mobile telephones with a touch screen version in 2007. In fact, the decade of the 2010s saw only incremental innovations in smartphones, or gimmicks like folding screens.
Now the double whammy of the US-China trade war and the coronavirus outbreak might provide the jolt needed to accelerate a shift to smartphones 2.0 – something you won’t need to carry everywhere because it won’t be a “device”.
Here’s why: Supply chains hum along nicely under normal circumstances. Every link in the chain is rewarded for their small part and those at the top, like Apple, are able to charge premium prices for new models that offer incremental improvements to entice buyers to upgrade.
Nothing revolutionary happens as far as the technology goes because there is too much invested in the existing supply chain infrastructure.
But Apple CEO Tim Cook bet the orchard on China and now he’s paying the price.
Last year Cook had to plead with Trump to get iPhones exempt from the tariffs and now the mainland Chinese Foxconn factories that make most iPhones are experiencing disruptions as returning migrant workers face 14 days of quarantine due to the coronavirus outbreak.
Every electronics company CEO is now doubling down on efforts to diversify their reliance on China-based supply chains – including Apple. If it turns out that shifting manufacturing to Vietnam or India is too expensive or not feasible, they just might be forced to get creative.
And that’s when the current smartphone form factor could quickly become a relic of the past.
Many of the technologies needed for the smartphone 2.0 have already been invented. The speed of 5G means you won’t need gigabytes of memory on the device – photos, music and videos can be stored in the cloud.
Virtual displays – whether augmented reality or holograms – will replace physical ones, speech recognition or mind control will eliminate the need for touch-screen controls, and so on.
(One feature that can’t easily be replaced right now is the camera, specifically quality lenses, but some would welcome the return of stand-alone cameras and an end to smartphone selfies!).
Freed from reliance on these physical components, which in turn require assembly lines in factories, smartphones of the future could evolve in radically new ways. We could see a phone on a chip – the successor to the SOC (system on a chip) – the key silicon component in today’s mobile phones.
A chip phone would be small enough to attach to your body (as jewellery, for instance) or could be embedded under your skin if you dare. These devices won’t need to be made by the Foxconns of the world, employing armies of migrant workers assembling hundreds of parts on massive assembly lines.
They will be produced in semiconductor wafer fabs that operate in Taiwan, Japan, South Korea, Singapore, as well as Europe and the US. Chinese chip makers, given time, could also produce complex SoCs, but currently they lag far behind in this technology.
Whether Apple, Samsung (which has already closed all its mainland Chinese smartphone factories) or Huawei Technologies – the top three global brand names – can stay on top remains to be seen. Past technology disruptions have shown that established players are usually unseated.
Two decades ago a fire in a microchip factory in the US city of Albuquerque set off a chain of events that led to the demise of one mobile phone giant and market share gains for another.
The damage from water and smoke to millions of Philips-made radio frequency microchips disrupted the supply chain for Ericsson and Nokia – both major mobile phone makers at the time.
Ericsson bungled its response to the crisis and posted huge losses, eventually exiting the mobile phone business. Nokia responded adeptly, immediately seeking alternative sources, leading to increased profits and sales until missteps years later saw its phone business sold to Microsoft.
A decade before that fire, the US semiconductor manufacturing industry was in crisis, with chip makers in Japan, Korea and Taiwan outcompeting US peers. Most US wafer fabs closed down and US tech leadership was in question. Rather than decline, the US industry grew stronger when a new type of chip maker emerged.
So-called fabless chip makers, like Nvidia and Qualcomm, devoted their R&D dollars to designing chip products, not building expensive factories, and outsourced the chip fabrication to Asian wafer foundries like Taiwan Semiconductor Manufacturing Corp. (TSMC).
This new business model enabled tech revolutions in graphics processors, led by Nvidia, and wireless telephony, from the likes of Qualcomm.
Without the Trump tariffs or Wuhan coronavirus, it might have taken decades for the smartphone of the future to arrive. The industry would have taken the path of least resistance, maintaining the status quo.
Now, with back-to-back supply chain disruptions forcing a rethink of China as the world’s electronics factory, those heart-stopping moments may soon become a thing of the past.
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This article was first published in the South China Morning Post.