Autonomy. Sustainability. Device Proliferation.
2020 saw a boom in the semiconductor industry when the pandemic accelerated remote working environments. As the digital world became “the” playing ground for consumers and businesses alike, semiconductor sales skyrocketed. In fact, according to the Semiconductor Industry Association (SIA), 2020 sales increased by 6.5% compared to sales in the previous year. Three years later, however, as we move into 2023, quite a different story is unfolding. The end of the pandemic might now be within reach but 2023 started with a new set of challenges.
The industry now finds itself amid a downturn in the macroeconomy as interest rates rise and inflation increases. Geopolitical tensions in sensitive regions and heightened attention toward sustainability also present considerable challenges for the industry to overcome. Thankfully, however, there is light at the end of the tunnel. While the industry is forecast to feel the negative effects of a decline in technology purchases, semiconductor demand for enterprises such as advanced computing, the industrial market, and healthcare will likely hold strong. Welcome to 2023.
Trend #1: The Race for Semiconductor Autonomy
Since a sizeable percentage of semiconductor production occurs in the Asian region (and more particularly in Taiwan), the aftermath of the pandemic has continued to cause supply chain challenges and a desire to bring production back home. Mounting geopolitical tensions have also led to a growing number of countries wishing to re-onshore production in an effort to minimize reliance on any single region. The push by sovereign nations to regain production control for semiconductors, therefore, remains one of the greatest trends spilling over into 2023.
This desire for semiconductor autonomy has led to government action felt worldwide. In some instances, policymakers have presented the semiconductor industry with the classic carrot-and-stick scenario. In others, governments have introduced other complexities that companies must now work to resolve.
United States
CHIPS and Science Act
The U.S. CHIPS and Science Act (commonly referred to as the CHIPS Act) was signed into law in August of 2022. According to the White House Briefing Room, the act encourages manufacturers to bring production back to the United States by setting aside $52.7 billion for:
- Manufacturing incentives
- Research & development and workforce development
- International information communications technology security and semiconductor supply chain activities
Companies such as Qualcomm and GlobalFoundries have also announced their continued support with billions of dollars in added investment in American semiconductor manufacturing. And while these efforts will likely generate the building of several new factories (fabs) in the nation, other government actions—such as the Foreign Direct Product Rule—create novel challenges the industry must work to overcome.
The Foreign Direct Product Rule
The Foreign Direct Product Rule was also imposed in October 2022 to prevent sensitive regions from acquiring advanced computing chips. The U.S. justified this action by warning that these sophisticated chips could potentially be used to develop nuclear weaponry, among other military capabilities. By imposing this act, the federal government essentially prohibits companies from selling products developed with American technology. Companies that develop products even outside of the United States are subject to this rule.
The EU and Japan
The EU CHIPS Act
The European Union is set to adopt its own EU Chips Act in the first half of 2023. The act will pour billions of dollars aimed primarily at increasing the number of fabs for advanced chip production and further semiconductor research within the EU. Pressed by the United States, the Netherlands (an EU Member State) and Japan—two formidable countries within the semiconductor manufacturing space—have also agreed to further support these efforts that restrict the export of some of their most advanced semiconductor manufacturing equipment and machinery to certain sensitive regions. EU policymakers are hopeful that the adoption of this act and support from allies will help to spur renewed investment from major semiconductor companies.
Trend #2: Sustainability
To date, the United Nations lists 194 countries that have now joined the Paris Agreement in a concerted effort to accelerate decarbonization efforts. Pressure is also mounting for the global private sector to develop and execute plans focusing on net-zero emissions—pressure that is certainly being felt by the semiconductor industry. As McKinsey & Company states, “businesses across industries are now scrutinizing emissions along their entire supply chain—and in many cases, semiconductor companies will account for a substantial amount of them.”
“Businesses across industries are now scrutinizing emissions along their entire supply chain—and in many cases, semiconductor companies will account for a substantial amount of them.”
— McKinsey & CompanyAnd while the pressure is on for semiconductor companies to adopt greenhouse gas emissions (GHG) reduction policies and increase investment in renewable forms of electricity, the push toward a more sustainable future also presents novel business opportunities as technology developers actively work to reduce the world’s power footprint with smaller (and less power-hungry) devices. These technological advancements will inevitably lead to increased demand for more transistors per millimeter which ultimately means smaller line geometries helping to drive down power consumption, leading us directly to our third top trend—device explosion.
Trend #3: Device Proliferation
Gone are the days of massive mainframe computers equivalent to the size of homes that relied heavily on semiconductors. In fact, since the mid-1960s, Gordon Moore’s prediction (known as Moore’s Law) —that roughly every two years, the number of transistors able to fit on an integrated circuit would double—has indeed, held true. In today’s semiconductor industry, this has led to advanced technology enabling smaller devices such as smartphones that offer computational power far exceeding that of the massive mainframes of yesteryear. These advancements have also led the way for advances in autonomous vehicle technology, machine learning, cloud computing, and a whole host of smaller, more capable connected devices.
The massive spikes we once saw in the consumption of semiconductors used in computers are now seen in cell phones and in the Internet of Things (IoT) applications. This proliferation of the number of chips is truly exponential—instead of just being essential to computers and mobile phones, they’re needed in virtually everything. The increasing number of smart devices will continue to drive consumption of application-specific integrated circuits (ASICs) in 2023 and in the years to come. ASICs also fit nicely into the world’s desire for a more sustainable future since they are generally considered more power efficient and offer better performance than general-purpose circuits.
Benchmark, When It Matters
When Autonomy Matters
Benchmark supports a broad footprint not centric to any one region. As a result, our global presence not only helps with cost control but also supports our customers’ desire to build closer to home whether that be in Asia, in the United States, or in Europe. Benchmark also has a proven history of diversifying manufacturing investment. Some shining examples include our new Mesa, Arizona location soon to open, our expansion in Penang, Malaysia, and our continued investment in Europe. Benchmark’s geographic diversification will continue to benefit our customers now and well into the future.
When Sustainability Matters
Benchmark is strategically positioned to support our partners’ sustainability efforts. In fact, because we build some of the most important components within a much larger assembly, every platform we design, and build contributes to our collective sustainability efforts. For the semiconductor industry, this means that Benchmark enables the continuation of technology that shrinks line geometries for increased efficiency.
When Device Proliferation Matters
Although Benchmark offers extensive expertise on the manufacturing side of the semiconductor space, our engineering capabilities also support new designs from leading suppliers—suppliers that are all moving the needle on higher throughput production and increased efficiency. As you work to develop alternative types of equipment and advance your lithography, metal deposition, and node technologies, Benchmark’s manufacturing and engineering teams will work right alongside you as your strategic partner, helping drive your innovative thinking forward.
When it matters, turn to Benchmark.
