Semiconductors are an integral part of modern life, even though they are frequently overlooked. They play a significant role in consumer devices like televisions and cell phones. However, they can also be found in a variety of other products, such as washing machines, refrigerators, as well as cars, and airplanes. As a result, the semiconductor business is being impacted by growing consumer demands for anything from safer travel to more effective housekeeping to more interesting entertainment.
In other words, it can be said that the world is built on semiconductors as they are contributing to all industries at a massive scale now.
The growth and expansion of the semiconductor industry have experienced a block during the pandemic era, with a suffering global supply chain system, restricted manufacturing, and other lockdown restrictions. But after all the restrictions have been lifted, the industry has started to push its limits of success and is running at its full pace.
The semiconductor industry is expected to grow exponentially in the coming five years due to the presence of certain key factors and drivers in the market. Although during the pandemic and in the post-pandemic era, the industry has suffered a lot, its growth is directly driven by the rise in demand caused by the adaptation and implementation of new technologies such as Artificial Intelligence (AI), 5G, IoT (Internet of Things), and others.
Advancements in the semiconductor industry
In the previous years, the business of semiconductor industry has undergone a dramatic transformation due to the emergence of design houses and foundries. System integrators maintain control over the business model and design of semiconductor chips while specialized manufacturers build semiconductor devices through fabless manufacturing.
System integrators can create system requirements for new products at the beginning of a design cycle because of this skill. As a result, semiconductor producers respond to requests generated by these system needs and move down the fabrication production chain.
The development of a quicker, more advanced integrated circuit led to the design of new personal computers. The relationship between new devices and semiconductor technology, however, is now reversed: the development of new cell phones promotes the development of new semiconductors.
These most recent changes are a part of a larger industry movement. The industry is transitioning from a monoculture to one that is more diverse and innovative. This should help to mitigate some of the negative effects of earlier industrial growth. This change undoes the architecture and industry concentration that in the past restricted industry participation stifled innovation, and created instability within the sector.
Challenges faced by the industry
For any industry, security is one of the major concerns and this is the same for the semiconductor industry. With upcoming technological advancements of 5G and IoT, security becomes a risk factor and one of the major challenges for the industry to cope with. For instance, home automation devices, wearable devices, and certain medical electronics consist of semiconductors, and organizations are required to develop more secure chips for better integration into devices.
Apart from the security concern, the increasing demand for semiconductors is also a challenge, as with high demand, the technology developments need to be integrated with the already existing semiconductor technology. The semiconductor industry needs to keep updated with the upcoming technologies to keep itself relevant in the industry.
The stakeholders are therefore required to make certain strategic changes and implement new strategies for adopting new technologies and collaborating with new technology players in the market. One such factor is to develop smaller chips with better security to implement in wireless communication devices.
One other factor is increased consumption or demand for communicating devices, semiconductor industry has experienced a boom due to the increase in the demand for such devices. As the transportation industry is excelling with self-driving cars and other technologies, the need for semiconductors has increased in demand.
Opportunities for growth in the market
The application of semiconductors is extensive in electronic and communicating devices including smartphones, military systems, flat-screen monitors, and LEDs. With its application in these segments the need for longer battery life, biometric function, and other AI capabilities are bound to increase to stay relevant in the market. Apart from this other emerging concept such as cloud computing, IoT devices, and other applications of artificial intelligence is going to drive the growth of the industry.
These factors together provide a whole new spectrum of growth for the semiconductor industry. Further, this becomes a choice of the organizations to consider these factors and grab onto the opportunities. Moreover, the semiconductor industry has other application industries as well, such as automotive software, data centers, and other connectivity devices.
An increase in the consumption of electronic devices in the automobile industry such as sensors, and other devices for the industrial revolution (Industry 4.0) is another growth opportunity for the industry.
What is driving the industry?
For the semiconductor industry to follow the graph of growth, there are certain key driving forces in the industry that need to be considered. For the coming five years, these driving forces are going to be the biggest demand generator for the semiconductor industry.
The computing industry is one of the major industries creating demand for semiconductors. It consists of laptops, servers, and other electronic devices, a basic for everyday functions. With increasing technology, complications also increase, and to work with such complications, highly advanced semiconductors are required, creating a huge demand for semiconductors in the industry. The computing industry with increasing digitalization is becoming more complex and requires advanced devices for its proper functioning. With the adoption of new concepts such as remote working, the necessity and dependency have increased on the semiconductor industry to help develop the devices.
Everyday aspects of daily life such as metros, and trains everything is becoming advanced in terms of technological application and very advanced with its features. This automation has generated the need for semiconductors in the industry and has been a contributor to its growth of the industry. This industry is coming up with innovative features of safety and entertainment as well. For introducing and incorporating all these new features semiconductor chips have been required at a large scale. Another recent trend in the transportation sector is the adoption of EVs (electric vehicles), (for several reasons), and with this new trend in the sector, the need for semiconductors has spiked and contributed to its growth as well. Based on the scenario, the transportation sector comes out to be the most important segment among all the driving forces.
Telecommunication is another industry with the application of semiconductors and is highly dependent on the same. This is one such industry that has a higher dependency to conduct daily tasks and implementation of semiconductors in this industry is required at all stages. All forms of telecommunication solutions whether wireless or wired function with semiconductors and are huge consumers of semiconductors. With evolving telecommunication industry and the implementation of innovative technologies such as 5G, the need for semiconductors for the industry has become much more important.
The manufacturing sector depends on automated equipment and robots. All these solutions call for cutting-edge semiconductors that must function without generating errors. The semiconductor industry’s income is reaching new heights thanks to a market like this. Industry 4.0 has implemented the use of IoT and automated the entire process of manufacturing, further contributing to the use of semiconductors in the industry and devices used. The automated manufacturing sector is becoming a new rising trend providing a better consumer experience as the result.
Semiconductor chips are widely used in consumer goods including smartphones, game consoles, security systems, appliances, and so forth. Consumer solutions are another demand generator for the semiconductor industry as their use rises year over year.
With all these driving forces in the industry, the semiconductor industry is experiencing a certain growth and expansion, as all these factors have together contributed towards the semiconductor industry enhancement. However, only the above-listed drivers are not the only force to initiate this growth, the constant need for advancement in technology, and the need to be updated at all times, are also contributing factors to this industry’s growth.
The bottom line for semiconductors
Artificial intelligence (AI) advancements are driving new semiconductor demand and, consequently, new industry growth and innovation. However, chances for innovative and interesting uses of semiconductor technology inside already-existing businesses also abound in the future. For instance, the development of fifth-generation (5G) wireless cellular technology proclaims the arrival of new semiconductor applications in the communications sector. The need for semiconductors will increase as video gaming consoles and televisions with high-quality video streaming becoming increasingly popular.
The industry has faced a significant low in the pandemic era and has suffered losses, but in the post-pandemic era, as technological advancements are becoming more frequent, the semiconductor industry is gaining pace again. However, there are certain factors present in the market that are providing the industry with opportunities for its growth and being a major consumer of semiconductors, contributing to the high demand for semiconductors.
It could be concluded from the above-listed factors that in the coming 5 years, automotive, computation, transportation, telecommunication, manufacturing, and consumer goods the majority of growth is to be contributed by all these factors. All these factors have upcoming trends and technologies, and the dependencies on these industries are extremely high.
With the growth of the above-stated factors, the semiconductor industry is bound to grow, and further, the semiconductor industry is evolving itself every day to prepare for new advancements and to provide better services. For the governing bodies in the industry, it is essential to identify these sectors and start their collaborations with the key players.