Blockchain in Manufacturing Market Latest Trends and Key Drivers Supporting Growth Forecast:2022-2031
The global spending on the blockchain by the manufacturing sector was valued at USD 313.08 million in 2019, and it is expected to reach a value of USD 9,298.50 million by 2025, registering a CAGR of 76.26% over the forecast period. When compared to several industries, such as the financial services sector, healthcare sector, etc., the adoption of blockchain technologies in the manufacturing sector is considerably low. The dynamic nature of the market and significantly high costs of the blockchain technology services and solutions have limited the penetration of blockchain solutions in the manufacturing sector.
– However, as the global manufacturing output is stabilizing, the demand for blockchain solutions in the manufacturing sector, especially from large scale operators, is increasing rapidly. According to UNIDO, the world manufacturing value-added increased by 3.6% in 2018, with the leading countries being China, the United States, Japan, Germany, Republic of Korea, India, Italy, France, United Kingdom, and many more.
– The manufacturing industry is also on the verge of technological advancements with the shift from pure mechanics or electromechanics to mechatronics, which is, in turn, increasing the scope for automation. Such developments in manufacturing are diminishing boundaries of domains and increasing the influence of IT and electronic.
– With the advent of IoT in industrial space, combined with Industry 4.0, is further influencing the adoption rates in manufacturing space. For instance, according to Microsoft’s 2019 Manufacturing Trends report, the Industrial IoT is poised to have a significant impact on manufacturing, along with the global economy; this is expected to create USD 15 trillion of global GDP by 2030. Additionally, projected IoT spending is expected to surpass USD 1 trillion in 2020.
– Players in the manufacturing sector are leveraging this technology to produce smart goods. For instance, in September 2019, manufacturing players, such as Mitsubishi and Hitachi, among others, announced their plans to use blockchain and IoT technology for data sharing, to use smart solutions in smart homes, like smart meters.
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Key Market Trends
Electronics and Semiconductor Vertical is Expected to Account for the Largest Market Share
– Electronics and semiconductor manufacturers are facing number of quality, logistics, and supply chain challenges in the industry. Poor quality and counterfeiting to inefficient processes and a lack of trust in production are driving the demand for advanced solutions in the sector.
– With complex manufacturing processes, the demand for parts and material integrity within the supply chain needs to be enhanced in order to reduce the lead time and lower the production cost. In each stage of electronics and semiconductor manufacturing, blockchain could be applied in a variety of use cases to expedite processes and overcome the security issues.
– For instance, in pre-production scenarios, manufacturers can utilize blockchain solutions for Collaborative Planning, Forecasting, and Replenishment (CPFR). Data related to materials of components and subcomponents of manufacturing equipment and products can be stored and analyzed in blockchain, which can further help in verifying compliance with health and environmental regulations.
– Suppliers can also integrate IoT sensors with blockchain on shipping containers to provide a tamper-resistant record of shipping conditions. It is estimated that annually counterfeiting costs USD 7.5 billion to the US-based semiconductor manufacturers. Therefore, adopting blockchain solution can help them minimize these cost.
– Foxconn, Taiwan Semiconductor Manufacturing Company, and Samsung are some electronics and semiconductor manufacturers that are also utilizing the potential of blockchain technology for advancing their manufacturing process.
Asia Pacific is Expected to Dominate the Market
– Manufacturing is one of the pillars of Asia-Pacific’s economy and is undergoing a rapid transformation. It is reported that low-end manufacturing firms are moving to Southeast Asia to cut costs, which include automotive and electronics manufacturing companies. It is estimated that in the next five years, the automotive industry may expand by 6-7% annually.
– Manufacturing in China, which is one of the largest in terms of output, globally, is undergoing a rapid transformation. This large-scale transformation has aided the country in maintaining its position in the manufacturing space, globally.
– Apart from China, Japan is predominantly a manufacturing nation. Its manufacturing industry contributes close to 20% to the nominal GDP, whereas, for other developed countries, it is close to 10%. According to the IMF, the manufacturing sector in the country has achieved significant industrial productivity gains over the services sector, owing to the increased adoption of ICT. The automotive and electronics sectors are the most productive manufacturing sectors in the country
– On the other hand, India is one of the strongest emerging economies in the Asian markets, and the manufacturing sector witnessed high growth in the country due to government initiatives, like ‘Make in India’, which are aimed to provide global recognition for the manufacturing hub and are expected to drive the adoption blockchain technology.
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The blockchain in the manufacturing market is consolidated owing to the presence of limited established and recognized vendors across the industry domain. Also, the blockchain technology is not yet widely adopted in the manufacturing industry, hence not many vendors are available to provide the technology for the manufacturing industry, since, the market is in the nascent stage, the manufacturers are continuously investing in the new technology to capture the maximum market share.
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