The Pulse of the semiconductor industry
Semiconductors have been an integral part of hundreds of downstream industries and the backbone for the global technology infrastructure which let’s them sit prominently at the nexus of technology innovation, finance, geopolitics and human ingenuity. Semiconductor companies today are fostering a greater sense of resilience in their operations to preserve innovation in response to the COVID-19 pandemic and recent deglobalization efforts. With government initiatives like the CHIPS Acts that will invest billions for manufacturing, research and development, and workforce development programs it is helping to sustain the future growth of the industry.
However, what is the state of the industry now? Resilience and innovation are in competition while also complementing each other, challenging executives to address both without sacrificing the other.
We designed a study called The Pulse of the Semiconductor Industry: Balancing resilience with innovation to explore these concepts in greater detail and the industry’s perception of select technologies that offer the greatest potential for innovation and next generation new products and offerings. These technologies are: metaverse, sustainability, mobility and digital health.
The metaverse has unfilled potential to change how we work, how we live and how we communicate. According to respondents, the metaverse’s infrastructure is more important than how it’s accessed and how users engage. Our 2022 Technology Vision report found almost half of semiconductor executives (45%) believe the metaverse will have a transformational impact on their organization, 90% believe it will be in the next four years.
What does this mean for the growth expectations for the metaverse and the role semiconductors play:
Executives ranked the metaverse as the most likely demand-generating application to reach commercialization at scale in the next two years.
Agree that semiconductors are the critical capability to the metaverse’s development – far more than hardware (10%) or software (23%).
Semiconductor companies are acutely aware of this challenge in terms of developing sustainable manufacturing practices while advancing sustainable technology through chip innovation. For example, overall semiconductor energy use in chip production has doubled every three years since 2010 and could consume nearly 20% of planetary energy produced by 2030 and a single large fab can use up to 10 million gallons of water a day, equivalent to the water consumption of roughly 300,000 U.S. households. Companies are reacting accordingly, with 41% of respondents indicating that almost a third of their capex/opex budgets are dedicated to sustainable programs.
To measure the success of this budget allocation, we’ve found that semiconductor sustainability can be measured in the following areas of the consumer life cycle:
The mobility sector has been on the receiving end of constrained semiconductor supply, with new vehicles containing up to anywhere from 1,000 – 3,500 chips shortage of chips has disrupted the automotive and electronics industries, forcing some firms to scale back production.
“Traditional” vehicles are undergoing a renaissance and autonomous vehicles could be mainstream for mass transportation by 2024, according to 32% of respondents. As more electric vehicles come to market, manufacturers should balance transportation innovation rather than experience innovation. Beyond that, traditional modes of transportation are being upended by drone delivery and air taxis as airspace becomes the next frontier.
As more and more digital technologies are integrated into traditional mobility platforms semiconductor companies need level up their innovations in this space:
Another example of semiconductors influencing outcomes outside of the enterprise; they play a role in democratizing healthcare. While the upward trend in wearable fitness technology is influencing the decision of insurers, health providers, and companies to take advantage of the benefits of wearable health monitoring devices one in five (21%) respondents believe that increased health education and literacy is the most important aspect enabled by semiconductor innovation. The aspect of digital health that will benefit most from continued semiconductor innovations is digitized records and treatment (30%), ahead of connected monitoring devices (29%).
As semiconductors play a more pervasive role in daily life, they continue to create better outcomes for all:
This is a story of balance: between supply and demand, innovation and ingenuity, and resilience and disruption. Said another way; today and tomorrow.
Syed Alam / High Tech, Global Lead
The industry’s core fundamentals continue to face unprecedented and prolonged challenges. Despite this, we found industry executives are overwhelmingly uncertain areas in the areas measured. This isn’t the first time the semiconductor industry has undergone a major disruption, faced mixed sentiment, or had to change strategy.
Based on our research, we believed companies should accelerate their AI and analytics adoption beyond their core business. Approximately two thirds of semiconductor companies have yet to scale cloud, a technology that drives efficiency, sustainability and resiliency. At the same time, they should ramp up investments in metaverse and digital tooling that can help to address sustainability challenges. Finally, they should discover and partner with ecosystem players (vertical or horizontal) that can fill gaps in the technology and operational portfolio.
After all, if the competition is positioning itself to emerge as better, stronger and more relevant in the future, then innovation and resilience may converge sooner than we anticipate.