In a technology-driven world where even a coffee maker has 10+ microelectronic components, the semiconductor industry stands as the backbone of innovation across all segments of life. From enabling mobile communication to powering industrial automation and healthcare, semiconductors are integral to our daily lives and the global economy.

Understanding the semiconductor landscape

Not long ago, the ubiquity of semiconductor components was largely unrecognized by the public despite its critical role. Today, its importance is widely acknowledged, spurred by its all-pervasive presence in our day-to-day lives. The criticality of a sustained supply of semiconductor was also brought to fore during COVID-19 when lack of raw materials brought semiconductor manufacturing almost to a halt impacting almost every industry like automotive, personal computing, communication due to supply chain disruptions. Today this industry isn't just surviving but is thriving and accelerating at nearly 7% CAGR, with a projected 1 trillion USD market by end of this decade.

Drivers of growth in the semiconductor industry

The demand for semiconductors is climbing, fueled by several key trends:

• AI and Machine Learning: From conversational AI to complex image recognition, AI is demanding more from semiconductors in terms of compute and communication capabilities.
• Advanced connectivity: With the rollout of 5G and enhancements in wireless networking, there is a significant push towards improving semiconductor technologies.
• Automotive innovations: As autonomous driving and assisted driving become more prevalent, the automotive industry's reliance on semiconductor technology grows.
• Industrial automation and edge: With increasing usage of IoT and sensors across all heavy industries and assembly lines, industrial automation coupled with computing at the edge is driving the growth of low powered computing devices.

No wonder, nations worldwide are recognizing the strategic importance of semiconductors, leading to legislative initiatives aimed at bolstering domestic production capacities to secure a resilient supply chain and improve balance of trade by reduction in importing of semiconductor components.

Legislative impact and industry response

The U.S. Chips and Science Act exemplifies these efforts. It marks a significant move by the government to support an industry that is capital-intensive and difficult to bootstrap independently. This act has already spurred major investments in semiconductor manufacturing within the U.S., with giants like Intel, TSMC and GlobalFoundries announcing plans for new fabrication plants. Such initiatives aim to diversify the global manufacturing landscape, which has been predominantly centered in Asia, primarily Taiwan.

Japan’s Economic Security Promotion Act, passed in May 2022, recognised a stable semiconductor supply and domestic industry as urgent national tasks. Buoyed by the support and subsidies from The Ministry of Economy, Trade and Industry’s Domestic Investment Promotion Project, companies like Rapidus are coming up to cater to Japan’s domestic semiconductor needs at advanced nodes.

To position India as a Trusted Partner in the Global Semiconductor Supply Chain, the India Semiconductor Mission (ISM) has come up as an independent Business Division within the Digital India Corporation that aims to build a vibrant semiconductor and display ecosystem. Government of India has inked a comprehensive long-term strategy for developing semiconductors and display manufacturing facilities and semiconductor design ecosystem in the country in consultation with Government ministries / departments / agencies, industry and academia.

The role of advanced technologies

While newer computing paradigm like quantum and neuromorphic computing along with increased demand in domains of artificial intelligence, agentic/generative AI, computer vision and high-speed connectivity are propelling the demand for high-performance semiconductors, these technologies themselves are turning out to be productivity multipliers in design, verification and manufacturing of semiconductor components.

Sustainability in semiconductor manufacturing

As the industry grows, so does its adverse effect on environment. Semiconductor manufacturing processes require extreme precision and rigorous environmental control, often resulting in huge demands on electricity and water. The semiconductor sector is actively addressing these concerns, with initiatives like water reclamation and recycling. Search is on for new production models that push toward net-zero emissions production along the entire semiconductor value chain. For instance, Intel recently committed to achieving net-zero greenhouse gas emissions in its global operations by 2040, setting the goal of achieving 100% use of electricity from renewable sources by 2030.

Challenges and opportunities

The semiconductor industry is not without its challenges. Rapid technological advancements and the physical limits of semiconductor manufacturing present significant hurdles. However, these challenges also offer opportunities for innovation and growth. For instance, the push for rapid development of new manufacturing nodes, like Intel’s 18A node with RibbonFET, backside power delivery and use of EUV, illustrates the industry's commitment to pushing the boundaries of what's possible.

Cultivating talent and fostering a learning culture

Perhaps one of the most critical challenges facing the semiconductor industry is the need for skilled talent, capable of keeping pace with rapid technological change. Companies must foster a culture of continuous learning and adaptability to thrive in this dynamic environment.

Conclusion

As the semiconductor industry continues to evolve, it remains at the forefront of technological advancement, driving the future of a myriad of industries. For new engineers and companies entering this field, the key to success lies in adaptability and a lifelong commitment to learning. With proper support from legislative measures and continued innovation, the semiconductor industry is well-positioned to maintain its critical role in shaping our technological landscape.