Major market opportunities and complications facing the contemporary semiconductor industry

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3 trends influencing the semiconductor industry in a coronavirus world.

The Semiconductor Industry Association hosted a webinar entitled “Trends and Challenges in Semiconductor Advanced Packaging” on September 29. The presentation featured eye-opening insights from electronic component sector executives and analysts, including Amkor Technology Chief Sales Officer John Stone.

With $4.1 billion in annual net revenue and a manufacturing presence in 11 countries, Amkor occupies a significant position in the outsourced semiconductor assembly and testing (OSAT) market.

Accordingly, Stone’s observations about the opportunities and complications the sector will be dealing with going forward are hugely important.

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New Technologies, New Growth Opportunities

Stone noted certain emerging technologies like 5G could act as a multisector rising side for the electronic components industry.

Because fifth-generation mobile data networks operate on a different part of the radio spectrum than older standards, 5G-enabled handsets require new antennas, front-end RF circuits, transceivers, and mobile processors. Since consumers have reacted positively to new generation smartphones, electronics manufacturers will make increasingly large 5G component orders.

Stone’s analysis also highlighted how the 21st century’s most promising technological innovations are interrelated.

As an example, 5G’s robust bandwidth enables smartphone users to stream high-definition media with almost imperceptible buffering. The technology can also facilitate self-driving cars and smart factories connected by cutting-edge Internet of Things (IoT) devices.

In addition, 5G network architecture gives data center operators the latitude to greatly expand the range of services. After updating their infrastructure to support the fifth-generation mobile data standard, providers can offer several new services. To wit, vendors can use networking slicing to establish 5G base stations dedicated to empowering autonomous cars and connected manufacturing facilities.

Because of its versatility, market analysts expect 5G will generate $13.2 trillion in market opportunities by 2030. Advanced semiconductor technology will serve a foundational role in bringing those business prospects into maturity. And chipmakers specializing in the design and manufacture of 5G components will profit handsomely by selling the building materials for tomorrow’s digital infrastructure.

The Complications Presented by Increase Costs and Manufacturing Localization

Stone’s presentation also recognized two long-term complications semiconductor firms will need to address and overcome.

Firstly, component makers will have to make significant capital expenditures to update their production apparatuses. Companies will need to license new design software, buy upgraded manufacturing equipment, and pay for next-generation packaging and testing services to address the future marketplace’s demands.

In the fragile post-pandemic economy, the notion of making companywide upgrades will be unappealing. That said, firms that offer the most advanced integrated circuits (ICs) will be best equipped to take advantage of Industry 4.0 market opportunities. Put another way; one cannot win the lottery without first buying a ticket.

Another big semiconductor industry challenge identified by the Amkor executive is the manufacturing localization trend.

In the 20th century, companies outsourced their production tasks to low-cost providers based in regions like Mexico and Southeast Asia. But in recent years, large corporations have sought to localize their production capacity to avoid new tariffs and export controls. National governments are working to support this trend by offering financial incentives to corporations that open new plants in their countries.

Chipmakers will need to overhaul their manufacturing and logistics operations to adjust to the localization trend. That means reevaluating their raw material vendors, warehouse and factory locations, production targets, and supply chain partners.

Ultimately, the more the electronic components industry changes, the more it stays the same. Firms that capitalize on new opportunities and pivot when facing new challenges will succeed. On the other hand, companies that resist changing with the times will not.

One factor that will differentiate the two groups is their ability to use the latest and most credible market intelligence.

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