The Future of the Semiconductor Industry
While the future of the semiconductor industry looks bright, no one knows with certainty where it’s headed. The direction it moves in depends on many factors. And this article succinctly examines several of these factors, which include the following:
- the experimentation with new semiconductor materials
- the increase in the price of rare earth metals
- the accelerated industrial adoption of new technologies in artificial intelligence (AI), the Internet of Things (IoT), and related fields
These factors and others will inevitably impact sales, create opportunities, and present fresh challenges. It is the hope of IEEE that armed with the knowledge it offers here and in its International Roadmap for Devices and Systems (IRDS™) Technical Community, key players and stakeholders can make better strategic decisions for their organizations to the future benefit of the entire semiconductor industry.
Semiconductors have the unique ability to act as either insulator or conductor, depending on environmental factors. Temperature, light, electric currents, or even electric fields can affect a semiconductor’s properties. The number of valence electrons in the electron shell of an elemental semiconductor determines its conductivity.
This unique feature makes semiconductors pivotal to modern technology. Without semiconductors, integrated circuits, transistors, solar cells, and many other computing materials simply would not exist. Because of this, semiconductor materials have a significant impact on the computing and electronic product supply chain.
Commonly used semiconductor materials
Traditionally, manufacturers have used one of three common semiconductor materials: germanium, silicon, and gallium arsenide. Go in depth on semiconductor materials. Discovered in 1886, germanium was the “original” semiconductor. However, germanium fell from grace after manufacturers realized silicon cost significantly less.
Silicon’s four valence electrons allow it to conduct electricity at high temperatures. On top of that, silicon is the second-most abundant element on Earth—making it the most widely used semiconductor material. Silicon also has strong mechanical properties in its crystalized form, silicon dioxide.
When manufacturers need to amplify high-frequency signals, they use a compound called gallium arsenide. While a powerful semiconductor, gallium arsenide costs significantly more to manufacture than alternatives.
Recent advancements in semiconductor materials
In recent decades, scientists have made great strides in progressing semiconductor innovation. Researchers have consistently kept pace with Moore’s Law, which states that the number of circuits on a microchip doubles every two years. They have accomplished this by experimenting with variations of semiconductor materials.
For example, scientists have seen potential in revisiting germanium for use in transistor technology. Electrons move four times faster in germanium than in silicon, providing a great opportunity to improve speed.
Additionally, manufacturers have experimented with the following semiconductor materials:
- Tin oxide
- High-power gallium nitride
- Antimonide-based and bismuthide-based materials
The process for manufacturing semiconductor devices consists of hundreds of steps. Semiconductor manufacturers must apply both precision and expertise when manufacturing semiconductor chips, transistors, and any other semiconductor products. Learn more about semiconductor manufacturers.
The process of making semiconductor devices
To produce a semiconductor device, manufacturers must heat, cut, grind, and polish a semiconductor “ingot” into a wafer-thin form. Next, the wafer goes through a process called photoresistor masking. This applies highly complex circuits to the wafer and can take months to complete.
Afterward, the manufacturers subject the wafer to a process of chemical etching. This diffuses any areas not covered by photoresistor film. Lastly, the wafer undergoes “doping.” This adds boron or phosphorus to the semiconductor to alter its conductivity.
Manufacturers must repeat these steps until completing the multiple layers that make up the semiconductor.
Rare earth metals and the semiconductor industry
Semiconductor manufacturing depends on substances known as rare earth metals. These materials play an integral role in the manufacturing of most electronic devices. China has nearly monopolized the production of these metals. However, because of US-China trade disputes, the prices for these metals have risen.
Inevitably, these rising prices also impact each subsequent step in the semiconductor supply chain. Only time will show the long-term impact for semiconductor industry leaders going forward.
Semiconductors create economic tension because they represent a multibillion-dollar industry. While the US has historically maintained leadership in the semiconductor industry, more competitors have risen in other countries. Go deeper on the leading companies in semiconductors.
US leads market share of semiconductors
According to the Semiconductor Industry Association (SIA), the United States owns 46 percent of the market share for global sales of semiconductors. The following companies represent the top five semiconductor industry leaders, in order of market share:
- Intel Corporation ($241.88 billion)
- Samsung Corporation ($221.6 billion)
- NVIDIA Corporation ($152.88 billion)
- Texas Instruments Incorporated ($113.83 billion)
- Broadcom Inc. ($108.13 billion)
Of these companies, Samsung is headquartered in South Korea while the rest reside in the US.
While currently the US maintains its industry dominance, experts eye China as the next large competitor. Semiconductor sales and marketing teams should prepare accordingly to deal with this rising contender.
For the past century, semiconductor sales have grown steadily. Experts predict the industry will achieve $542.64 billion in annual revenue by 2022. This means semiconductor sales and marketing teams should expect to grow the existing market size. Learn more about sales and marketing of semiconductors.
Sales growth for semiconductor manufacturers
While the rise of smartphones has driven growth for the past few decades, this market has mostly saturated. Instead, teams looking to grow semiconductor sales should grow market share in AI, the IoT, and other previously overlooked industries.
Enabling sales and marketing teams in the semiconductor industry
In many ways, traditional marketing and sales principles apply to even the semiconductor industry. Of course, industry nuance exists, but keep the following principles in mind:
- Align sales and marketing teams: While some companies may view departments as separate entities, it is important for manufacturers to coordinate marketing and sales efforts.
- Streamline inefficiencies: Look for common pitfalls, time sucks, and find opportunities for automation wherever possible.
- Understand customer need: As in any industry, understanding precisely what the customer needs will only improve solution-based selling.
As the smartphone market becomes saturated, innovators must look to new semiconductor technologies and applications to increase long-term profitability. Learn more about new semiconductor technologies and applications.
Artificial intelligence, IoT, and growing semiconductor technologies
AI and IoT, in particular, have sparked a new wave of innovation in the semiconductor industry. Manufacturers who can meet the needs of both AI and the IoT for semiconductor chips will likely rise to the top in future markets.
In addition, the implementation of 5G networks coincides with growing demand for faster high-performance computing devices. Semiconductor manufacturers have vast opportunity to tap into this new market—as long as innovation can keep up with consumer demand.
Lastly, semiconductor technologies have enabled researchers to develop everything from bomb detectors to smart glasses. And according to the IRDS™, semiconductors impact everything from data centers and smart homes and cities to high-speed networks and the automotive industry.
As an industry, AI has grown rapidly since its initial development in the 1950s. Going forward, semiconductor and AI technology will need to evolve in tandem to reach maximum profitability.
Experts predict the AI market will reach $733.7 billion in worth by 2027. Needless to say, this growth will increase demand for integrated circuits, processors, and improved sensors. All of these are dependent on semiconductor technology. Go deeper on semiconductors and artificial intelligence.
Artificial intelligence’s growth and impact on the semiconductor sector
Because AI essentially allows computers to “think” and “learn,” semiconductor technology needs to adapt for these unique considerations. Instead of prioritizing speed and power, semiconductor manufacturers must shift their focus to efficiency.
Already, researchers have created chips that mimic human synapses, firing only when needed instead of constantly remaining “on.” In addition, nonvolatile memory technology allows data storage even when turned off. Combining this with processing logic will allow chips to adapt to AI demands.
However, current AI chips are quite large and costly. To make AI products practical for everyday consumers, more innovation must occur in this area.
AI industries impacted by semiconductor technology
Looking toward the future, AI will inevitably change the way our world works. As it stands, AI researchers and developers already have begun to disrupt the following markets:
- Financial services
In conjunction with IoT, artificial intelligence will only increase demand and innovation in the semiconductor sector.
The IoT focuses on turning ordinary objects into smart devices, including internet-connected ovens, smart fabric, and even medical devices. Even more appealing, IoT solutions hold perhaps even more economic opportunity than AI.
Opportunities for semiconductor manufacturers in IoT technology
According to analysts, IoT could generate upwards of $3.9 to $11.1 trillion in revenue by 2025. With the rise of smartphones, IoT naturally aligns with semiconductor innovation. Semiconductors and IoT have already disrupted the following industries:
- Wearable technology
- Smart-home appliances
- Medical electronics
- Industrial automation
- Autonomous vehicles
- Traffic control
Learn more about semiconductors and IoT.
Challenges for IoT and semiconductors
Despite market forecasts, many semiconductor companies have balked at investing research in both personal and industrial IoT. Historically, IoT devices have produced slower sales volumes and lack consistent standards between products.
Security and privacy create another layer of concern. By nature, IoT applications collect private data from individuals. Determining who manages this data provides a multi-layered challenge to the industry.
For the past few decades, the universal cry from consumers has remained consistent: “Better, faster, cheaper!” These ongoing demands challenge semiconductor manufacturers to find more production efficiencies. Read more about new challenges facing semiconductors.
Supply chains in semiconductor manufacturing
In particular, manufacturers should focus on ways to streamline and improve their supply chain and processes. Lead time for semiconductor devices can stretch up to twenty-eight weeks. Manufacturers have a lot to gain by cutting these lead times.
However, this could mean retrofitting or overhauling manufacturing plants and foundries. Taking these steps will ensure manufacturers keep up or even pass the competition.
Keep in mind, internal efficiency can boost profits. But to stay at the forefront of innovation, researchers will need to come head-to-head with Moore’s Law.
As it stands, semiconductor technology rapidly approaches the limitations of Moore’s Law. Manufacturers must find new ways to improve future semiconductor performance. Dig deeper into future semiconductor performance. For this reason, the IRDS™ has proposed both More Moore and More than Moore.
Innovation through More Moore
More Moore focuses on shrinking the size of physical components while improving density and performance. This aligns with the principles of Moore’s Law.
However, geometric scaling will eventually reach its limits as chips approach atomic levels of scale. In contrast, equivalent scaling allows for 3-D design integration and seeks out new materials to affect electrical performance.
Diversification through More than Moore
In contrast, More than Moore looks externally—outside of Moore’s Law—to alternative technologies. These innovations include the following:
- System in Package (SiP)
- Solid-state lighting
- Integrated radio frequency functions
- Organic technology
Consumer expectations may clamor for the past century’s rate of innovation. But eventually, More than Moore may very well prove to be the future of the semiconductor industry.
The past century has been kind to the semiconductor industry. However, in 2019, the global market took a dip. While the original outlook for 2020 was optimistic, the COVID-19 pandemic stunted industry growth.
Regardless, the semiconductor industry outlook for 2021 predicts a rebound as the market—and the rest of the world—gets back on its feet. Learn more about the semiconductor market outlook.
Future opportunities in the semiconductor sector
As experts debate the end of Moore’s Law, the future still holds great opportunity for the semiconductor industry. History has shown the semiconductor industry can consistently overcome both economic and scientific barriers.
Semiconductor leaders should position themselves to take advantage of developments in AI, IoT, and 5G. And researchers should focus on new ways to improve semiconductor technology inside—and outside—of Moore’s Law.
Semiconductors have paved the path to today’s achievements. And they will continue to do so into the future.
Interested in learning more about the future of the semiconductor industry? Consider reading the International Roadmap for Devices and Systems (IRDS™). The IRDS™ is a set of predictions that examine the future of the electronics, semiconductor, and computer industries over a fifteen-year horizon. It encompasses a number of critical domains and technologies, from application needs down through devices and manufacturing. Join the IRDS™ Technical Community to download the roadmap and stay informed of our latest activities.