The semiconductor industry has been experiencing massive changes for the past few years. These changes also include challenges that have left different impacts on the industry, and also driven the industry towards innovation.
Semiconductors are key for ensuring digital transformation in different industrial sectors. This is because it is used in a wide range of applications including industrial gear and consumer electronics.
Even though the future of semiconductors is undoubtedly promising, there are some key trends and challenges to look out for because of the influence they have. In this article, we will take you through some of these trends and strategies, and how they influence the semiconductor supply change globally. Continue reading for more.
The Rise of AI and IoT
Artificial intelligence AI, and the Internet of Things are the two main factors that influence the demand for semiconductors. As more devices get connected, what’s certain is that the demand for semiconductors will skyrocket. This is particularly through for semiconductors that can process large data effectively and fast.
One sector where this increase in demand will be felt is the automobile sector, with the consistent evolution of vehicles geared toward connectivity and intelligence. The projection for automotive semiconductors is that the market will increase from $37.4 billion to $64.4 billion between 2020 to 2025. This is also at a compounded annual growth rate of about 12%, and the projection is from the research firm MarketsandMarkets.
There are other sectors that will experience the impacts of IoT and AI, and they include the agriculture, healthcare, and energy. For example, enhancing individualized treatments and boosting precision of diagnosis could be possible with the aid of AI-powered devices. Also, the agricultural sector could enjoy the benefits of IoT sensors that can help minimize waste and maximizing yields for growers.
Effective and Sustainable Chips
The rise in demand for semiconductors will also bring about the need for more effective and sustainable chips. With more devices getting connected, semiconductors will consume more energy in future. This will require the need for the creation of new manufacturing techniques and materials to reduce the consumption of energy by these semiconductors.
For example, researchers are currently investigating the use of gallium nitride and silicon carbide as substitutes for silicon-based semiconductors. This is due to the higher effectiveness of these substances, especially when subjected to higher temperature conditions, and it makes them an ideal option for applications like power electronics.
Another thing to note is that there’s more emphasis on sustainability in the semiconductor industry. Businesses and organizations are now seeking models that will help in prioritizing the recycling and reuse of semiconductors and electronic components.
Geopolitical Impacts on the Semiconductor Supply Chain
The semiconductor market operates on a global scale, with Asia being the home to leading chip makers. However, geopolitical unrest around the world has made many to realize the dangers of solely relying on a single region for the supply of these essential components.
For example, the trade conflict between China and the United States has caused restrictions in the export of some technologies including semiconductors. This has prompted other businesses to seek alternatives in regions like Europe.
Another example of geopolitical issues is the COVID-19 pandemic which caused difficulties in the supply of not only semiconductors but other items across the world. There are many other ways the semiconductor market has experiences restrictions due to geopolitical impacts, and this only causes delays in the production of newer chips.
The Role of Government in Supporting Semiconductor Supply Chain
Considering the vital role semiconductors plays today, many governments are responding actively to provide support in line with the expansion of the industry. This includes research and development, campaigns supporting the manufacture of chips, and even as financial commitments.
For example, in March 2021, the United States government declared its commitment to investing $52 billion within the semiconductor sectors alone. This also includes providing funds for research and development and also providing incentives for the manufacture of indigenous chips.
Another similar effort put in by the government is by the European Union that have started multiple projects to further make the semiconductor industry more competitive. The enhance the creation of new processors, the European Union established the European Processor Initiative.
Resilience and Volatility of Supply Chain
With the discovery of different factors that can affect the global semiconductor supply chain, manufacturers are now recognizing the need for resilient supply chains that won’t be adversely affected by any form of disruption. Various strategies and approaches have been implemented to achieve this, and some include supplier diversification. Basically, relying on only one supplier is risky, which is why it’s important for companies to start diversifying to prevent this risk.
Another strategy is transparency and visibility. This involves predictive analytics and real-time monitoring to gain visibility into the dynamics of the semiconductor supply chain. With that, proactive decision-making becomes seamless. Agile procurement is another strategy that increases the flexibility in procurement practices. This also makes it possible for companies to adapt quickly to different changing circumstances.
The Future of the Semiconductor Industry
The future of the semiconductor industry is characterized by many difficulties and opportunities. In a few years to come, the industry will be greatly influenced by many variables. These variables include the demand for efficient and sustainable chips, AI and IoT, role of government in supporting semiconductor supply chain, and the influence of geopolitics on the supply chain.
There’s currently a wide range of new production methods, applications and materials being used today. This positions the industry for continuous innovation and growth, irrespective of the accompanying difficulties and challenges. The industry is currently developing at a fast pace, and what’s certain is that it will stay vital in fostering economic growth globally and enhancing digital transformation in multiple industries.
Despite the difficulties the industry is currently facing, the semiconductor industry continues to enjoy different advancements, and it’s currently geared for innovation and sustainable development. There are also new production techniques and components that further help the industry.
