Innovation Heroes

TRANSCRIPT: The Semiconductor Shortage: How Sustainability Will Save the Day

November 24, 2021

Ed 

This episode of Innovation Heroes is brought to you by Intel's Evo vPro Platform. Visit shi.com/intel to learn more.

 

Camberley 

[Innovation Heroes theme music] We will fund extending a light rail before we fund managing the current system that is failing us. As we go forward, under the banner of innovation, we need to look at what we have to say, "How do we make that better, as opposed to throwing out something old and bringing something new in?"

 

Ed 

Welcome to SHI' s Innovation Heroes, a podcast exploring the people and businesses making a difference in our constantly disrupted world. I'm your host, Ed McNamara. [Innovation Heroes theme] A black swan event is something unpredictable, something that you didn't see coming, but the semiconductor shortage has been a long time in the making, even before COVID. [gentle music]

 

Sumit 

I think we've been given a view into a world that has broken, and I wouldn't call the supply chain a crisis, per se, as compared to the other things that we've been through over the last 18 months, but it is definitely a break in the system, and it gives you an opportunity to rethink about how you wanna do it.

 

Ed 

It's unpleasant to feel like we've been backed into a corner, but that's the thing about necessity. It's a great driver for change. When you have no other options, you're forced to use what you've already got.

 

Sumit 

I promise you the demand for compute power is not going to start going down magically. It is just gonna keep on increasing, so we have to find ways to address this problem because, 2025, we consume 20% of the world's power, where do we end up in 2050? What, half the world's power is going to the datacenter? That's not sustainable, right? [electronic music]

 

Ed 

These shortages didn't come out of nowhere. There's been projections of this level of disruption since before we ever went into lockdown, but that doesn't make it any less shocking. [electricity zaps] Even before COVID, we were already heading towards a crisis point, thanks to climbing demands for electronic goods, manufacturing capacity limits, and already tenuous supply chains. Add a global pandemic into the mix, and we have the perfect storm. [thunder rumbles] We're experiencing shortages on everything from cars to personal electronics, gaming systems to networking equipment, because all of these things require chips, and there's simply not enough chips to go around. It's a pretty dire situation any way you slice it, but it's not hopeless. There are some amazing thinkers out there who are dedicated to helping us come out the other side of these shortages better than we were before. And today, I get to talk to not just one of these innovation heroes, but two of them. Sumit Puri is the CEO and Co-Founder at Liqid, and Camberley Bates is the Managing Director at The Evaluator Group. Thank you both for joining us on Innovation Heroes today.

 

Sumit 

Good to be here.

 

Camberley 

Thanks for inviting me.

 

Ed 

Well, the shortage of semiconductors and other supplies is clearly causing a lot of frustration and uncertainty. It kind of seems like there's something bigger happening here. Why is the story getting so much attention and what's so worrying about it?

 

Sumit 

You know, what we see is more and more of everything that we purchase, and more of everything that we do as a society is involving electronics, and so, when we have a semiconductor shortage that impacts all parts of the supply chain, then all of the goods and services that we are used to buying are gonna be impacted, everything from cars to televisions, and obviously, the data center equipment, and the end result of this, inevitably, has to just be higher prices, or we have to find more efficient ways of utilizing the goods and services that are in a limited fashion. So it is a big deal because electronics are a part of everything that we're doing as a society. These things cannot necessarily be fixed overnight. It takes a lot of dollars and a lot of time to stand up a semiconductor facility to build these chips that are going into everything that we are using, and so, when we encounter shortages like this, we have to be smart, agile, and innovative on ways that we're gonna work through the system while the system actually fixes itself.

 

Camberley 

I'd agree with Sumit. There's-- I think there's a couple of other factors that are playing into this is that we're a, especially in North America, and EMEA or Europe, we're an instant society, and we are so used to having things delivered tomorrow or this afternoon at our doorstep, and that it's available, and I think that COVID has probably given us a pause to say maybe things aren't quite the same, you know, as instant as we used to think they were. You know, we've exposed our supply chain problems and some of the dependencies we have, and the limitations of maybe what we have that we consider a very easy flow within a global economy. I think the other piece of it is, and I think Sumit touched on this, I don't think the consumer itself - I mean, we're in the tech industry, so we know the chips are everywhere - but I'm not sure the consumer itself understands how much we're dependent on chips and silicon in everything we buy, everything from refrigerators to the cars to the toys, etc. And so that's why it's hitting the consumer, and so I think that's why it's hitting the front page of the paper, because they're now realizing that impact and just kind of go, "Whoa, w-w-what do you mean, I can't buy my, you know, F-150 truck?" [laughing] And it's obviously because there's not a chip, and I think that's, kind of, the result of why we're on the front page of The New York Times and The Wall Street Journal and The Washington Post, etc.

 

Ed 

Right. From a historic perspective, is this something that's happened recently, in the past, or do either of you recall a time when a similar situation came about?

 

Sumit 

In my history, we've seen, you know, spot shortages here and there, a particular component, a particular industry, you know, faces a small slight shortage. In the 25-plus years that I've been doing this, I've never seen a widespread global shortage that impacts every single industry out there.

 

Camberley 

And I would agree with him on-- you know, it's yes, I have experienced it. I'm a little older than Sumit is, and [Ed laughs] I hate to admit that, but, you know, I've seen where the shortages have hit IT significantly, where we've had to get things on, you know, it's got a year-long backlog of things, if you can imagine that. But we, you know, we have had those times, but it's never been at the point that it's impacted the consumer the way it has today. [pensive electronic music]

 

Ed 

In terms of the news stories about this topic, you know, a lot of them were that the party line is to just wait it out. Is that the only option we have? And why could that be problematic? And, you know, who is it problematic for, specifically?

 

Sumit 

Yeah, so my opinion here is I'm not sure that it is necessarily an option, right? Business continues to move forward. The economy is actually doing fairly well, you know, in spite of all of the shortages, so us, as industry people, we cannot sit around and afford to wait and say, "Hey, that widget is not gonna show up for the next 30 weeks, so I'll just sit around and wait 30 weeks to do business." We have to find ways to navigate around this, and people will figure out a way to shift the mix, leverage new technology so that they can get more out of the stuff that they've already invested in. They will find new ways to consume technology that's more efficient than the old way of doing it, in the sense of, you know, "I'm gonna figure out how to do more with less, and I'm gonna have to get more intelligent about how I do it," and then, in some cases, you're just going to pay more. You will pay more for that widget because there is a global shortage of that widget, and supply and demand dictates that that thing is gonna get more expensive, and, in those scenarios, it becomes even more important to get better utilization out of the stuff that you're investing in.

 

Camberley 

A lot of the enterprises have queued up and pre-ordered, and maybe they saw it coming down, but there are plenty of those that have not done that, and especially when we get into the small and medium business. They're getting hit, and that includes, like, your local government, and K through 12, and all those kind of folks that are-- you know, didn't necessarily see this coming, or feel this coming, and so they don't have the wherewithal to look at it. So they're having to look at other tools, and capabilities, and some of those they have, you know, capacity planning systems, they have forecasting systems, they start moving things around, start thinking about, you know, what you can't do with and do without, possibly even delay deployment of technology or digital solutions, because you don't have the capacity to support it. So they're moving things around and trying to find ways to get around where we are with a shortage. I'm not sure if the other industries are able to do that. I mean, if you have a John Deere tractor that's down because it doesn't have the chip, it's down. So you're gonna go down and borrow the guy down the street's tractor [laughing] to go do something, perhaps.

 

Sumit 

Yeah, I think that's a great point and, in our industry, we're just gonna have to make sure that we get maximum utilization out of that tractor, so when Steve's not using it, we gotta be able to move the tractor over to John, so that he can use that same piece of hardware and take the utilization rate of that tractor from 30%, you know, up to 50 or 60%, and we get more out of the stuff that we've already invested in. Data center space, no different, right? Typical, you know, data center infrastructure is sitting at, you know, 15, 20% utilization, meaning all of that very, very expensive stuff that we're deploying inside the data center is just not sitting at peak utilization, and technologies like virtualization are gonna be a key driver to go off and be able to do that, right? Let's get five servers out of one server, right? Our opinion technologies like composability are gonna be important that. Let's move the GPUs around so that we can get more use out of them, right? So, at the end of the day, one of the key things whether you're talking about a tractor or whether you're talking about datacenter infrastructure, if we can crank the utilization rates up, of the stuff that we've already invested in, that's gonna help us bridge the gap to where we need to be.

 

Ed 

So Camberley, it seems to me that one of the trickiest pieces in this puzzle is the balancing act of delivering service while also continuing to charge forward under the banner of innovation. What else do we need to be thinking about in in guiding the future of tech?

 

Camberley 

So I'm gonna be a little bit [laughs] maybe controversial, especially with the term of the name of this podcast on the innovation. So I recently read a book called "The Innovation Delusion", which was on, kind of, the top-10 list for the CIOs to read, and it took this position. It talked about our tendency to devalue those that maintain systems, those that, you know, versus those that face, or are driving into the face of always innovating, always changing, always the new, always chasing after the new, shiny toy. And, you know, we do have, as a society of value, you know, the new. We don't necessarily value those people that are keeping our systems up and running and going that, you know, unless we hit a crisis, like a ransomware hit or, in this situation, a capacity problem, we don't necessarily value the people that can actually make the things keep working and keep going. What this book, kind of, really made me think about is valuing those guys that are doing the maintenance of 60% of our systems and keeping it running. And then, also figuring out how to maximize the utilization, as Sumit is doing, and maximize the use of what we have. An example of this would be, in our government, we will fund a new overpass before we will fund repairing the bridges. We will fund extending a light rail before we fund managing the current system that is failing us. Examples of that would be Washington, DC, Metro and a couple of other metro systems. We will find new digital systems before we will talk about, "How do we maintain, and continue to keep going, the transactional systems environment that we have to have, that we have to update?" There's a mind shift there. Part of that is because we don't value that which we have. So I think from an IT standpoint, it's like, as we go forward under the banner of innovation, which we do wanna push because sometimes we do need innovation to get better utilization of our systems, sometimes, we do need to adopt new ways of doing things to find out better ways of deriving what we have, but having new for new's sake is not necessarily... And, I don't think anybody does think about having new for new's sake. We always have a reasoning there, but we need to look at what we have today to say, "How do we make that better, as opposed to throwing out something old, and bringing something new in?"

 

Ed 

This episode of Innovation Heroes is brought to you by Intel's Evo vPro Platform. Visit shi.com/intel to learn more. [Innovation Heroes theme music] There are a lot of unsung heroes out there these days, and no shortage of them are in the IT industry. They're the ones businesses count on to save the day every day. That's one of the reasons Intel has created the new Evo vPro Platform, built to do what IT heroes need, and what users want. Now that the office can be anywhere, you need the unrivaled, built-for-business PC platform that offers the ultimate manageability and security. Supporting barrier-free collaboration, the Intel Evo vPro Platform helps maximize productivity to let your team stay in the zone all day long. And you can be confident that they're safe too, thanks to comprehensive hardware-based security with below-the-OS protection, application, and data security, and advanced threat detection. The Intel Evo vPro Platform is built for business. It provides the manageability, stability, and security you need to be the greatest IT hero the world has ever seen. For the superpower to do it all, visit shi.com/intel and learn more about the Intel Evo vPro Platform today.

 

Ed 

[gentle music] "Maintenance Heroes" doesn't quite have the same ring to it, but I understand where Camberley and Sumit are coming from, and I completely agree. I wouldn't go as far as saying the shortages we've been facing are a good thing, but this situation definitely proves that we need to make some big changes in the way we think about our industry, and Sumit and Camberley have some great ideas about what we need to do next. I've often thought that we needed to shift our practical understanding of what being green in this industry means. What does sustainability mean to you?

 

Camberley 

It is getting away from a disposable everything, and to a place where maintenance is not a dirty word anymore. It's more maintenance becomes investments. How do we invest? How do we do with what we have, and do more with it, and build from there? And can we? Can we actually build with what we have? And, you know, I came from the data storage industry and that industry is notorious for using, you know, only 50% or 75% of the actual data storage. You know, can we build systems and capabilities that would actually use more of that? So we get more out of, whether it's a spinning drive or a solid-state drive, especially getting to solid-state 'cause there's, you know, less energy being used for the solid-state environment, and maximize that space. But that takes work. It's a whole lot easier just to throw more hardware at the problem, [Ed laughs] and it's less headache, 'cause I don't have to figure out how to make it all fit in. But is that sustainable?

 

Sumit 

The throwaway mentality will change. It has to change, and economics will drive it, right? As soon as we can make it clear that there's economic benefit to do something one way or another, that will drive it, right? And soon, we will find ways and invent technologies that increase the utilization of the stuff that we're already deploying today, and that will change the economics of it, but I don't wanna ignore the green part of it because I guess, even as a data center guy, I guess I quite didn't understand how big of a problem I would say it actually is for us, right? And so, we go from 2008, we were sitting in an environment where-- sorry, 2012, we had half a million data centers. Today, we have 8 million data centers. By 2025, data centers will consume 20% of the world's electricity, and we're gonna generate 14% of the world's emissions, right? This is no longer a niche problem, right? This is a mainstream problem, and I live in the West, and an average data center consumes 3 to 5 million gallons of water per day. That is as much as a small city, right? And so we will be addressing this problem, right? As a society, we have to address this problem. It's not like compute power is gonna start going down, right? This problem is only gonna get worse over the next 20 to 30 years. And the best way, again, back to the thing of how we solve the problem, the biggest knob we can turn in the data center to impact: power, cooling, water consumption, footprint, all of that goes back to utilization, right? If we can take a rack of infrastructure that's sitting there, 20% utilized, somehow figure out how to get 40, 60, 70% utilization out of that same footprint then, inherently, we're gonna do more with less. We're gonna do, with one rack of infrastructure, what used to take three racks of infrastructure to get done, and that is how we are gonna impact the power and the cooling, right? Compute power. I promise you the demand for compute power is not going to start going down, magically. It is just gonna keep on increasing, so we have to find ways to address this problem because, 2025, we consume 20% of the world's power, where do we end up in 2050? [pensive music] What, half the world's power is going to the datacenter? That's not sustainable, right?

 

Ed 

So, in practical terms, what do we need to be doing now to overcome not just the short-term issues we're currently facing, but actually solve some of the underlying issues that's causing these symptoms?

 

Sumit 

To me, this is a learning, right? This is an opportunity to learn. This is an opportunity for improvement. None of us like being here, right? But a lot of things were thrust upon us and there were some good things that came out of it. I like being able to sit home and hit a button and have my food delivered to me, right? I like the fact that, you know, now maybe we're going into a work environment where it's not 100%, "You must be in the office all the time, or you're not working," 'cause we've kind of been forced to prove to ourselves that, you know, we can be slightly distributed here, and still make things work, and the same thing in the data center. Whatever learnings we take on here to get through this difficult time, however, we figure out how to how to stretch our dollar, whatever improvements that we put in place to do more with less and get more out of the stuff that we're already deploying, those are lessons that we're gonna take on the other side of this thing. When we get to the other side of the shortage, and you know, there's abundance everywhere, we shouldn't necessarily walk away and be like, "I'm gonna go back to the old way of doing stuff." We're probably never gonna do that. Once we've been forced to figure out a better way, my belief is that we are gonna come on the other side of this thing, and we are gonna get even the next level of improvement because whatever we've done here to improve our supply chain, improve our architecture, make things more flexible, make things more agile, drive utilization rates, even better, when we get to the other side, we're gonna be able to scale up, do more, do things bigger, and you know, still be within the budgets that we wanna be in, right? And so I'm actually excited to see what the other side of this thing brings when the cost curve starts going down on the other side, and you know, budgets are healthy, and we've figured out how to do more with less. In theory, we should be able to do a lot more on the other side of this with the same footprint, that we are investing in more applications, more deployments, more ideas, more programs, more storage, more AI, more everything, right? And so, this is a setup for something really exciting on the other side of the shortage, in my opinion. [pensive music]

 

Camberley 

I think there's this issue of, you know, "How do we solve the underlying issues?" And there are several areas and Sumit talked about a couple, the supply chain. I think the industries, and I'll say industries - it's not just the IT guys and our chip problem - are going through a lot of rethinking about how the supply chains move products through the market, and seeing a shift and a change, possibly, of how we manufacture things, and where things get manufactured, as well as, I mean, the other big thing we have to look at is what's going on in the shipping. The backup on containers, and everything else has gotten to be-- and if you've seen what's going on in Long Beach and some of the other places, it's crazy. But those need to be rethought, and, probably, there's technology to address that, as well, that we can go into. I think the other one is valuing the people that figure out how to make things work, you know, or in this piece of it is give us more sustainability, and, of our systems, extend the life of possibly the system, the higher utilization of the systems, that group of people, and they are often not put on a pedestal and told how wonderful and creative and brilliant they are in doing what they're doing. They're often the unsung hero that's in the background that's made stuff work, that loves to make stuff work, and yet we don't-- we maybe value the new and the exciting kind of stuff that's there, so it's rethinking those, how we deal-- how we work with those people and give them the space and the place that they need to be creative with the kind of technology, you know, address the things that they do for our systems. And I think the last one that I'll mention is our personal responsibility to be a bit different, to value the sustainable, value, you know, to move away from a disposable economy to a world that we say, "These things are of value, and what do we need to sustain? What do we need to build upon? And what do we need to do to go to the next stage?" and looking at all three of those, and not just, "What do we need to go to the next stage?" but all three of those levels.

 

Ed 

Yeah, we started this conversation talking about, you know, the consumers being more aware of the supply chain shortages. You know, aside from that, which is, you know, when a consumer has good knowledge, a good working knowledge of how they're gonna be affected, obviously, it's easier to make change. But why else is now the right moment for us to be making these changes?

 

Sumit 

Yeah, I think a lot of times, we're not going to have choices, right? You know, like, I'll go back to the environmental impact. You just can't continue to do things at the status quo, right? The status quo, fast forward, leads you to some place that is unsustainable, right? That's number one. The second thing is, if we don't change, if we don't adapt the way that we do things, we don't reach the next level of innovation, right? The next accelerated point of deploying the next algorithm, the next AI, the next consumer solution, the next application that's gonna change the way that we, you know, get from point A to point B, right? And so, it's inherent, right? And so, me, personally, inside of our organization, we're looking at this entire thing as an opportunity, right? Reflect and translate, and figure out, you know, "When we come out the other side of this thing, how are we going to be better? What are the good things that we learned? What are the bad things that we learned?" It is around the people, right? And that's one of the things that has come out in this process is it has given certain people an opportunity to shine and show themselves as the true rockstars that we, kind of, thought that they were. So, to me, I think now is the time because the opportunity is now, and it would be foolish for us to waste this opportunity, and if we don't change the way that we do things, we very quickly reach a point of unsustainability, and then it'll be thrust upon us, and then things become uncomfortable. Right now, we were given an opportunity.

 

Camberley 

I think we've been given a view into a world that has broken in areas, and whenever there's a break, there's a crisis, and I wouldn't call the supply chain a crisis, per se, as compared to the other things that we've been through over the last 18 months, but it is definitely a break in the system, and whenever you have a break in the system, there's all eyes are on it, and it gives you an opportunity to rethink about how you wanna do it. And rethinking, in all the different possible ways and the power of many people looking at some of the same problems and coming up with new ideas - and there I am on the new, not just the maintenance - coming up with new ideas to address this, you know, those problems that we're having, and I think that's what we've got right now. It's just an opportunity because all eyes are on it. [Innovation Heroes theme music]

 

Ed 

All eyes are on it, indeed. Sumit Puri of Liquid, Camberley Bates of The Evaluator Group, I wanna thank you both very much for taking the time to speak with us today.

 

Camberley 

Thank you.

 

Sumit 

Thank you. [gentle electronic music]

 

Ed 

Sustainability is no longer just a nice-to-have, but the current problems we're facing could be the push we need to finally make disposability a thing of the past. Making maintenance make economic sense is the next phase of fixing this problem, but we need some new ideas and ways of thinking from the whole industry to help make it happen.

 

Ed 

[Innovation Heroes theme music] Thanks for listening to this episode of Innovation Heroes. Next time on the podcast, I'll be speaking with Barr von Oehsen, the Associate Vice President of The Office of Advanced Research Computing at Rutgers University. He spends his days helping researchers across the nation who are using higher resource supercomputing for all sorts of amazing projects. So tune in next time. You won't wanna miss it. [Innovation Heroes theme music] If you enjoyed this episode, then consider being our hero. Smash that like and subscribe button to Innovation Heroes wherever you get your podcasts.

 

Ed 

Innovation Heroes is a Pilgrim Content production in collaboration with SHI. Our producers are Tobin Dalrymple and Jessica Schmidt. Our associate producer is Olivia Trono, with production assistance from Carmi Levy, Ronny Latimore, and Jane Norman. I'm your host Ed McNamara, and I'll be back with another amazing story in two weeks.

 

Ed 

This episode of Innovation Heroes has been brought to you by the Evo vPro Platform by Intel. For the superpower to do it all, visit shi.com/intel.

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