As the longest-serving CEO in Silicon Valley and after running Micrel Semiconductor for 37 years, I’ve seen a lot of trends in the semiconductor industry. From the “dot-bomb” implosion of 2000 to a number of ‘Great Resignation’ years, I’ve seen them come, and I’ve seen them go.
Even so, there is no doubt that 2019 and 2020 were historically two of the most challenging years for the semiconductor industry. Facing a global pandemic, the entire industry struggled with supply chain issues, fab shutdowns, worker shortages, remote working, unusual demands, and more.
As we know all too well, semiconductor demand in 2021 was unusual and somewhat inflated. The IC shortages and supply issues associated with the pandemic caused customers to double order about 15% and suppliers to raise prices about 15%. This exacerbated demand was about 30% above what nominal demand might normally be. Knowing this, 2020 promises to roar back with the following trends:
- Enterprise segment growth
The enterprise sector will be a main growth driver in the chip industry because semiconductor pricing is not as big an issue here as it’s in the margin-squeezed consumer segment.
Increasing tensions with China and the ongoing threat to Taiwan are driving the large semiconductor players to increase wafer production outside of China and Taiwan, mainly in the United States. The United States will continue to strive to reestablish chip dominance domestically and shore up a fragile global supply chain. It will also have an impact on pricing since the cost of wafer production will go up.
The biggest impact here will, of course, be on consumer electronics. That’s because power management ICs (PMICs) that are primarily used in consumer electronic products are expensive to design and produce. It will further hamper consumer electronic markets once wafer production moves more into the United States. Conversely, enterprise electronic products that tend not to use PMICs as much will not be as impacted by price and supply chain issues.
- Wide bandgap markets
The market will experience increased adoption of wide bandgap (WBG) semiconductor technologies such as GaN and SiC, and here, reduced manufacturing costs and increased yields will help drive lower ASP. Primary market segments will encompass power conversion of more than 50 W. Servers, telecom, and electric vehicles (EVs) are where power density optimization will continue to be of critical concern.
- Bigger wafers, better packaging
The industry will also see 6-8” fabs migrate to 12” in order to reduce costs and increase throughput. This migration will help alleviate supply chain issues moving forward.
Overall, the industry will continue developing novel packaging technologies that will enable multiple die and passives to reside in the same package, thereby saving more precious real estate.
- Power supply innovation
Finally, as consumers continue to clamor for more power and longer battery life in their electronic devices, PMIC development using tighter litho nodes will enable innovative power delivery solutions for space-constrained applications such as mobile phones and laptops.
Ray Zinn is the former CEO of Micrel, the analog chipmaker acquired by Microchip in 2015. He holds over 20 patents for semiconductor design.