Major Challenges Facing U.S. Semiconductor Industry Right Now
The semiconductor industry has been growing exponentially every year and offers a plethora of opportunities. But this year, the semiconductor industry is set to face a host of new challenges that will make it difficult for semiconductor manufacturers to grow at the same rate they have gotten used to over the past couple of years. Challenges pertaining to inventory management and the rising pressure to improve device architectures, reduce costs, and develop STEM skills in the workforce will inhibit the growth of companies to a certain degree.
The inability of companies to keep up with the ongoing pace of IoT development is another factor that stops semiconductor manufacturing companies from growing in the industry. With the cloud economy becoming mainstream in the IoT era, semiconductor companies are facing the need to continuously innovate and drive connectivity across the IoT value chain. In such an era, they can gain more traction by offering comprehensive solutions beyond semiconductor solutions, which includes hardware design, and software and systems integration for applications and products.
At Infiniti, we understand the impact that innovative technologies and future trends can have on your business. And to help semiconductor manufacturing companies excel in such a competitive landscape, our team of experts has highlighted the four most important future trends that can bring the semiconductor industry back into the spotlight.
Future Trends in the Semiconductor Industry
Future Trend #1: Artificial Intelligence
The rising demand for AI (artificial intelligence) based applications across various industries will create new growth opportunities for semiconductor manufacturing companies. AI will also bring improvements in the semiconductor market, by speeding up the manufacturing process, boosting the performance of the chip, reducing the cost of production, and increasing output. Furthermore, with the growing market for drone technology, 2019 may see the commercial rollout of AI-powered drones, globally. This is one of the future trends that can help the semiconductor industry boost its growth prospects.
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Future Trend #2: Autonomous vehicles
One of the significant future trends in the semiconductor industry is the onset of level-three autonomous vehicles on the road. The rapidly growing automotive market presents a huge opportunity for automotive semiconductors to support battery performance in EVs, enhanced sensors, increased connectivity, and other technologies.
Future Trend #3: Internet of Things (IoT)
The semiconductor industry is driving the growth of technologies like the Internet of Things (IoT). The IoT revolution has not only multiplied the demand for semiconductor chips but also shifted the value capture to software and solutions. To capitalize on this new market opportunity, the semiconductor industry needs to change application engineering, sales, marketing, and product development approaches and re-define monetization and go-to-market strategies. Such future trends can help semiconductor manufacturing companies to boost their profitability, marginally.
Future Trend #4: Digital supply networks
Today, digitalization is modifying supply chains in almost every industry. This modification is a shift from a linear, structured system to an interconnected, open, often cloud-based system that is able to combine information from many different sources. In order to improve the value of digitalization, there is a need for the semiconductor industry to take a look at emerging digital supply network technologies. This is one of the future trends that can help semiconductor manufacturing companies in solving traditional problems stemming from limited information transparency across the manufacturing and supply chain.
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Moore’s law states that the number of transistors in a semiconductor will double every two years. For decades, this theory has stood to be true. However, with processors’ size being already too small to challenge the laws of physics, this law may see its last days soon. Regardless, this does not mean that the semiconductor industry will stop innovations. Major players in the industry like Intel are investing billions of dollars in R&D programs each year to come up with more powerful chips that can power the next generation of consumer electronics. Added to that, with the rise of IoT, AI, machine learning, and big data, its high time the semiconductor industry ramps up its innovation game. With so much happening in the world of technologies, what trends are set to pick up speed in the semiconductor industry?
Rise of artificial intelligence
Businesses view AI as a source of differentiation from their competition. The next generation of AI is set to be incorporated into self-driving cars, autonomous drones, surgical robots, and smartphones. As a result, semiconductor companies are racing to meet the demands that arise from such innovations. Semiconductor chips consume a vast amount of power to perform such AI intensive tasks. Graphics chips, which were originally developed for gaming are now being used for machine learning. Companies have gone as far as developing custom chips especially for machine learning and AI.
Going smaller but stronger
Intel, in 2017, announced that they would be working on a 10nm chips. The new chip is set to deliver 2.7x improvement in transistor density compared to current 14nm chips. However, Intel is not alone in this rat race for the 10nm chips. Taiwan Semiconductor Manufacturing (TSM) and Samsung also have ambitious plans to shift to a 7nm node which could compete with Intel’s 10nm node in the power front. However, such a battle would only be beneficial to the consumers as they can get their hands on powerful gadgets.
Using analytics to optimize semiconductor processes
It is reported that a majority of semiconductor development projects are unable to meet their initial production schedules. Fabrication plants often overestimate their ability to handle complex tasks or underestimate the time required to complete the work. Analytics can help eliminate this guesswork of estimating project completion date along with manpower needs. The use of analytics can provide insights into equipment health to gain maximum performance out of it. Additionally, analytics can also help to predict process failure in a production step and prevent significant losses in the early stage of production.
The semiconductor industry is closer to the deployment of the 5G technology than ever. The need for extremely high data rates and low latency will force companies in the semiconductor industry to make high-speed and high-efficiency devices. Such demands will outline the need for a compound semiconductor. The semiconductor industry will be impacted as end-user devices and base stations will need to manage multiple-input and multiple-output (MIMO) and beam-steering technologies.
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2017 was considered to be one of the most profitable for the semiconductor industry. This year too is expected to be a robust one for semiconductor companies, not only because of the surging demand in some new and existing end markets but also due to the supply constraints in key product categories that have resulted in robust pricing. Here is some more good news for semiconductor companies- World Semiconductor Trade Statistics (or WSTS) expects global semiconductor revenue to rise by 7% (year-over-year) in 2018. For over five decades, the semiconductor industry has had a fantastic history of scientific innovation, productivity, wealth creation, and enablement of technologies and devices that have improved quality of life for humans. Let’s take a look at some major developments that could positively impact the semiconductor industry in 2018:
Semiconductor Industry Trends
A significant development that companies in the semiconductor industry can expect this year the adoption of AI (artificial intelligence) technology across various verticals. Mobile handset makers Apple and Samsung have already brought AI functionality to smartphones. Furthermore, the drone market is growing, and 2018 may see the commercial rollout of AI-powered drones throughout the world. Several industries ranging from construction to healthcare could adopt AI technology to improve efficiency and reduce costs in their business. It means that this trend could boost the earnings of semiconductor companies.
Semiconductors form the foundation for enabling the emerging Internet of Things (IoT) technologies. The IoT revolution has not only skyrocketed the demand for semiconductor chips but also shifted the value capture to software and solutions. To capitalize on this new market opportunity, semiconductor companies need to change marketing, application engineering, sales, and product development approaches and re-define go-to-market and monetization strategies.