How Society Will Change in the Digital Age

Report Series

Part 1
What is Digitalization?


  • December 28, 2017
  • Text by Kenji Tsuda

Recently, terms like digitalization and digital transformation are used profusely by manufacturing and IT companies. Different terms are often used to express the same concept. Some clarification seems to be required. Electronics and semiconductor companies, once referred to as general electronics manufacturers, display confusion when companies completely unrelated to IT call for digitalization. What does the wave of digitalization mean? What will be the fate of electronics companies? What will become of the semiconductor manufacturers and makers of semiconductor manufacturing equipment? In Part 1 of this series, we will examine the meaning of the term digitalization and consider its impact on society. Next, in Part 2, we will consider the changes that digitalization will bring about, and in Part 3, we will look at entirely new businesses that will emerge with digitalization.

Lately, we frequently encounter terms like digitalization and digital transformation during interviews and at manufacturing industry seminars. The terms digital twin and cyber-physical system also come up occasionally. People with years of electronics experience may find these terms strange, while those not involved with electronics will find something new about the terms. Let us attempt to clarify their meaning.

Renaming of e-commerce, or electronic commerce

First, we need to understand that the use of these words is gradually changing. For example, businesses whose payments were settled online were referred to as “electronic commerce” or “e-commerce.” The word digital was rarely used, and so prefixing terms with “electronics” or “e-” was the norm. This emphasized the role of electronics, as denoted by the words “electronic” or “e-.” The basis for electronics semiconductor integrated circuits (IC) technology. In reality, e-commerce required an Internet browser and information registered with a bank account, nothing more. While it was called “electronic,” the transaction did not actually use electronics.

The core technology behind the PCs and smartphones that display the Internet browser is based on electronics, and so the prefixes “electronic-“ or “e-” prefix were used even though electronics was only indirectly involved.

Now, the word electronics is rarely used. Instead, the terms digitalization and digital transformation have come into fashion. As with “electronics,” the terms were used to imply the “electronification” of fields where electronics had not been used previously. In fact, electronics—sensors, analog circuits, digital circuits, CPU, memory, and so forth—can be used to automate systems and enable autonomous movement. Consequently, the terms digitalization or digital transformation are being used to describe the use of electronics to change society in fields that were previously unrelated to electronics.

Conversely, this means that electronics and the supporting semiconductor IC technology are spreading to society, infrastructure, construction, mining, and financing and in fields that require human-intervention, such as farming, office work, and building management.