From shortage to oversupply, and globalism to nationalism – the semiconductor industry is going through some changes. A pandemic, economic downturn and supply chain crisis have made their mark on the sector. Many of the trends which have continued to develop in 2023 have been shaped by one or more of these factors. So what comes next in the ever-changing landscape of microelectronics?
With the year in full swing, here is a look ahead at the market and design trends that may come to characterise the semiconductor industry over the coming months and years.
Building on home soil
According to a recent report from Deloitte, the combined market cap of the top 10 global chip companies fell from £2.4 trillion to £1.5 trillion (down 34%) between November 2021 and November 2022. The significant loss in market capitalisation was attributed to “rising interest rates, high inflation, lower consumer confidence, and tech-led stock market retreats”. As a response, chipmakers are cutting costs, and one way of doing this is bringing production closer to home.
Increased self-sufficiency has emerged as a priority at both commercial and governmental level in the European and US markets, underlined by the European and US Chips Act This involves increasing domestic industrial capacity, with new fabs and expanded facilities being planned and constructed on chipmakers’ home soil. As it is not realistic for any country to be 100% self-sufficient in the semiconductor industry, decisions are being made on which parts of the supply chain to operate and which to outsource according to their objectives.
The search for added efficiency
Power efficiency is driving the development of new design, with new materials and manufacturing processes geared to increase performance. This will be the direction for a significant share of funds from the aforementioned Chips Act in Europe and the US. More efficient semiconductor devices can meet the computing power demand across applications such as data centres and edge devices.
Speaking to the Semiconductor Engineering platform, one expert picked out C++ design as an area that can be fundamental to driving efficiency. Jeff Roane, product marketing director in the Digital & Signoff Group at Cadence, explained: “The focus on C++ design entry comes on the heels of hyperscaler chip design activity, which reduces power and improves performance for workloads that previously ran on CPUs and GPUs… we’ll see increased development and adoption of tools aimed at software developers giving them an easier path to more performant hardware implementations.”
Data analytics to counter semiconductor supply chain conundrum?
A byproduct of the semiconductor sector’s increasing localisation could be the spread of advanced technology manufacturing away from its traditional base in Asia. There is the possibility that this may result in more supply chain disruptions, and that’s where platforms that allow the integration of data and collaboration between suppliers could make the difference.
Artificial intelligence can enable the ‘crunching’ of the information produced by the semiconductor supply chain, helping to anticipate disruptions such as bottlenecks, plan according to demand, assess risk, and manage suppliers and customers. As well as problem-solving, data analytics could also create opportunity. Jennifer Strawn, vice president of solutions and sourcing for the Americas and EMEA at global sourcing specialist Rand, told CNBC: “If a customer has a need to alleviate inventory surplus, we use data and analytics to identify other users of these products and create an opportunity to rehome them."
Automotive upsurge
Automotive chips are now a key driver for semiconductor growth. According to research, this market could grow from £34 billion in 2019 to £122 billion by the year 2030. The demand stems from a range of vehicle applications; from central and power control to in-car entertainment, IoT and advanced driver assistance systems (ADAS). Given the automotive industry’s chip requirements, manufacturers in this sector have started to strike up partnerships with foundries, cutting out the middleman. Volkswagen’s discussions with Global Foundries and TSMC are a case in point.
Demand patterns in this sector have also been influenced by the emergence of self-driving cars. From enhanced sensors to more connectivity, there is a range of electronic solutions specific to autonomous driving, increasing requirements for the specialty HPC chips behind the real-time analytics in these vehicles.
The certainty of change
There will be economic factors and market forces which will have a big hand in dictating the outlook for semiconductors over the coming months and years. From banks slowing or hiking interest rates to the demand for consumer electronics. The policymakers will also have their say, with government attitudes to semiconductor technologies likely to change according to the state of the market, and their financial foreign policy.
In a sector of uncertainties, one thing is for sure – the pace with which design, fabrication technologies, and applications are emerging means that the semiconductor industry will never be guilty of standing still.
