Semiconductors are the driving forces of technological developments and progress. The semiconductor industry, which includes companies that manufacture or supply semiconductor materials and equipment, is expected to experience continued growth, with rising technological advancements.
According to the World Semiconductor Trade Statistics (WSTS), the global semiconductor market grew by 21.6 percent and reached USD 419 billion in the year 2017 to meet the rapidly increasing demand for semiconductor materials in AI programs, such as autonomous vehicles, IoT, and AI-driven electronics. The market is expected to be up by 9.5 percent to reach to US$451 billion in 2018.
Semiconductors are used extensively in electronic devices, such as smartphones, flat-screen monitors & LED TVs, civil aerospace, and military systems. The industry is set to grow as the need for longer battery life, AI capability and biometrics surges. Growth in cloud computing, internet-connected devices (IoT), and artificial intelligence will further contribute to semiconductor companies’ revenues.
According to SEMI, robust volume shipments and higher ASPs for memory, coupled with storage, industrial, wireless, and automotive applications contributed to the strong revenue growth in 2017.
Through 2025, the semiconductor industry is set to benefit from the ongoing innovation and development of connectivity, data centers, communications, automotive, and advanced software. Increasing consumption of electronic components used in the safety, infotainment, and navigation of automobiles will further contribute to the growth in the industry.
IoT, being one of the top growth drivers of the semiconductor industry, security concerns around connected devices pose a major threat to semiconductor companies. This includes home automation systems, wearable devices, and industrial automation products. Semiconductor products, especially those used in medical electronics and industrial automation, will, therefore, need to place more focus on developing secure chips.
As with any industry in the technology value chain, the semiconductor industry will need to constantly innovate products to meet newer technology demands.
In 2018 and beyond, there will be a major focus on smaller chips that consume less power and provide better support for wireless connectivity.
- Reduction in the US corporate tax: The reduction in the US corporate tax rate from 35 percent to 21 percent has created a favorable business environment for companies in the US semiconductor industry. The act encourages investments in the US, thus, making semiconductor companies more competitive for research, design and manufacturing.
- Artificial Intelligence: The rising demand for AI-based applications across different industries will create new growth opportunities for semiconductor manufacturers and suppliers. AI will also bring improvements in semiconductor manufacturing, by speeding up the process, increasing chip performance, reducing production costs, and increasing output.
- Transition to the 10nm node and beyond: The shift towards smaller nodes will provide semiconductor companies with a competitive advantage by offering increased power and performance. However, the move presents significant challenges, in terms of costs and resources, which the semiconductor industry will need to address.
- Autonomous vehicles: Semiconductors will play an important role in the growth and innovation of automotive technologies used for connected cars and electric vehicles. The rapidly-evolving automotive market presents a glowing opportunity for automotive semiconductors to support increased connectivity, battery performance in EVs, enhanced sensors, and other technologies.
- Growth of 5G and AR: Similarly, the semiconductor industry will also benefit from the deployment of 5G technology during 2018-19. Additionally, increase in adoption of augmented reality/virtual reality in industrial and gaming companies will create significant growth opportunities for semiconductor companies for the future.
