The Future of the Semiconductor Industry
The future of semiconductors continues to evolve, and current trends foreshadow even higher levels of innovation and competition. Prior to 2023, increased demand, geopolitical conflicts, closed factories, and inflation had led to semiconductor shortage and a dip in production. In response, the 2022 Semiconductor Industry Confidence Index, a figure released yearly by KPMG and the Global Semiconductor Alliance, fell to 56 out of 100. This was an 18-point drop from the previous year's all-time high.
However, this volatility is short-term. Not only are we seeing the end to the chip shortage, but more than a fourth of executives surveyed by KPMG foresee an upcoming chip excess. The rise in production means that companies will need to adapt to new technologies and processes.
In this blog, we explore the future of semiconductors, including trends, what industries will be most affected, and how to set your organization up for success.
What’s the Future of the Semiconductor Industry?
Until recently, many semiconductor companies grew their market share by incorporating multiple features into a single chip. The thought that chips could be designed once and then used in a variety of contexts.
IP reuse is still a focus for the future of the semiconductor industry – with a majority of industry leaders calling it a top concern in our 2023 Perforce State of Semiconductors survey – but now designs have shifted to achieve market growth through customization. Instead of designing single, monolithic chips, the future of semiconductor design relies on chiplets. These are specialized, modular chips that can be combined to create a complex, integrated system-on-chip (SoC).
These chiplet-based designs are made up of smaller, customizable building blocks. This approach could lead to lighter hardware, lower costs for consumers, and greater sustainability. Some IP suppliers are connecting chiplets with the idea of "soft IP," or IP that organizations can configure based on their specific needs. MIT Technology Review also identified this shift – also known as "multi-die system technology" – as the future of the semiconductor industry.While chiplet-based designs are gaining traction, it will likely be five more years before they are prevalent enough to be considered industry standard.
In addition to shifts in the future of semiconductor design, the industry will become more global. When KPMG asked semiconductor executives if their company plans to expand global hiring, working with more distributed teams across multiple companies, 71 percent said yes.
Is the Semiconductor Industry Growing?
The semiconductor industry is growing rapidly. The recent CHIPS and Science Act added more than 200 thousand semiconductor-related jobs in the United States alone. This legislation comes as semiconductors play a bigger role in an expanding rage of products. Semiconductors are even more needed with products like self-driving cars, as well as items that incorporate AI and machine learning.
According to McKinsey & Company, semiconductors will become a trillion-dollar industry by 2030.
Though revenues for the semiconductor industry are predicted to decline slightly this year, by 2024 the market is predicted to see an 18 percent annual increase.
Key Trends for the Future of the Semiconductor Industry
Several trends are shaping the future of semiconductors. These include new technologies and broadened markets. We are also seeing novel uses of existing technology through 2.5D packaging with chiplets on mature process nodes.
Leveraging New Technologies
Today, there are three key technology trends driving the future of the semiconductor industry:
- Open source hardware is disrupting the market and changing how companies think about design.
- IoT increases the demands on cost effective semiconductors.
- 5G accelerates demand for high-performance computing devices.
The use of semiconductors has broadened significantly. Today, semiconductors power everything from smartphones to sensors in self-driving cars. 2023 findings from the MIT Technology Review cited that customers are expecting and demanding more personalization. Companies are responding to this push, with more than half of executives surveyed saying they plan to expand their business's range of "smart" products.
Emergence of New Vertically Integrated Systems Companies
Vertically integrated systems companies will also be pushing the demands of semiconductor designs, as non-traditional semiconductor companies produce their own devices and platforms to support their ecosystems.
Take Apple as an example. In 2022, they released a new M1 processor. Apple developing and owning this patent represents a strong trend for the future of semiconductors: more companies entering the marketplace and increased competition.
So, why are other systems companies following Apple?
“Apple is designing more of its own chips to gain greater control over the performance of its devices and differentiate them from rivals.” (Bloomberg)
By vertically integrating, these companies can benefit from traceability. If you do not have a traceable platform, you are going to run into issues. But if you have an IP management system with traceability — such as Methodics IPLM — you’ll know what you have and where you have it. This helps you accelerate innovation and improve performance.
Key Challenges for the Future of the Semiconductor Industry
Today, the biggest challenges facing the semiconductor industry are time to market and cost. Workforce and talent shortages have also recently emerged as a significant obstacle.
Meet Time-to-Market Demands with IP-Centric Design
Shifting to an IP-centric design methodology can help you accelerate design and reduce costs by enabling more efficient IP reuse. Find out how by watching 5 Steps to Achieve IP-Centric Design.
Time to Market
Time to market is a major concern in semiconductor design. Our annual Perforce State of Semiconductors survey found that improving time to market is the primary objective for the majority of semiconductor executives. When semiconductors don't meet their designated time to market – which happens in about half of production cases – revenues decrease dramatically.
The cost of manufacturing a semiconductor is high. Experts point to this as the reason why the industry has been dominated by a few companies. Re-spins are especially costly, making it essential for companies to ensure their semiconductors will function ahead of manufacturing and production.
Changes in the workforce, including pivots to remote work and more global team structures, have heated up companies' competition for talent. Research from Deloitte identified that by 2030, more than one million workers will be needed to fill new positions in semiconductor organizations. While this is a complex issue, companies will find that streamlining workflows, improving collaboration, and working with new, efficiency-driving tools can help ease workforce frustrations.
What Causes These Challenges?
The root causes of semiconductor challenges are many:
- Enterprise engineering environments are not keeping up with the complexity of designs.
- Organizations report minimal component reuse.
- Acquisitions can create design silos.
- Design data sizes are exploding, slowing down performance.
- Manufacturers lack traceability from requirements to design to verification, triggering re-spins.
- There’s a lack of communication of requirements change.
- There’s reuse of an existing IP that misses key requirements of the overall design.
These are significant challenges, but they can be reduced by using a traceability-focused platform like Methodics IPLM.
Better Prepare for the Future of the Semiconductor Industry with Methodics IPLM
Here’s how you can solve semiconductor design challenges with Methodics IPLM.
1. Enable Full Traceability
Without traceability, you’ll lose track of important metadata and which IPs are used where.
Using a platform like Methodics IPLM enables you to keep track of what you’ve built, what’s available, and what can be reused. By getting traceability from requirements to design to verification, you can avoid re-spins and improve communication of requirements change.
2. Enable IP Reuse
Because semiconductor designs are so complex, it’s challenging for design teams to manage releases and their dependencies during the design phase. This can lead to missed time-to-market windows.
Methodics IPLM provides a solution by making it easy to identify and reuse IPs. This means you can design an IP once and then reuse it. This accelerates time-to-market and drastically reduces costs.
3. Maintain a Single Source of Truth
With acquisitions of other companies or expansions of design teams, it’s more critical than ever to maintain a single source of truth.
With Methodics IPLM, you can federate all your design data and metadata from design silos in your company. This will improve communication across design teams.
4. Improve Collaboration, Even Security Is Needed
Collaboration is becoming ever more critical in the semiconductor space. Design teams are spread around the world.This adds to the complexity of collaborating on chip design. Due to strict export laws, you’ll need to have strong IP security.
By using Methodics IPLM, global design teams can empower collaboration without sacrificing IP safety.
Your Platform for the Future of Semiconductors: Methodics IPLM
Methodics IPLM is your ideal platform to design the future of semiconductors. Whether your organization is a semiconductor manufacturer or you’re an electronics company just getting into chip design, Methodics IPLM is the solution for you.
That’s why Methodics IPLM is trusted by 9 of the 10 top semiconductor companies.
“Methodics IPLM offered a powerful solution by providing us with a collaborative platform to perform IP reuse more efficiently and in a sustainable, scalable way.” -Rick Stawicki, Executive Director, EDA Engineering, Maxim Integrated
Connect with one of our IP experts today to schedule a live demo, get answers to your questions, and gain access to evaluation resources to see how Methodics IPLM can help your organization accelerate chip design by boosting IP reuse and enabling secure collaboration.
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