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 the 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 is 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.
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Connected revolution: IoT
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.
The next significant development for the semiconductor industry is the onset of level-three autonomous vehicles on the road. Google’s Waymo plans to launch its autonomous ride-sharing service as early as 2018. Nvidia expects its Drive PX 2 platforms that deliver level-three autonomy to power some models of Tesla and Toyota. There could be some substantial growth in Intel’s and Nvidia’s automotive revenue in 2018. Also, the consumption of electronic components for safety, infotainment, navigation, and fuel efficiency continues to increase in the years to come. This will eventually drive the demand for analog ICs, MCUs, and sensors.
5G and AR/VR technologies
The semiconductor industry could also come closer to the deployment of 5G technology this year. Although that may not generate significant revenues in 2018, it could create substantial growth opportunities for the future. Even AR/VR (augmented reality/virtual reality) adoption could pick up in the industrial, as well as gaming market as companies such as Advanced Micro Devices, work to make wireless headsets more user-friendly.
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