The semiconductor industry has gone through an extremely tough time in recent years and it’s fair to say that the landscape has changed almost beyond recognition. Established companies that had previously planned on buying components based on their production patterns are having to make purchasing decisions much further in advance than ever before – two years in some supply bases and even up to 2025 in others.
For start-ups, it is now crucial that they revisit their original plans in terms of time-to-market. They need to consider every single element of the boards that they're building, every single semiconductor on that board, and look again at the feasibility of them getting what they need when they need it. This situation of planning so far ahead is likely to continue for the foreseeable future and – whether established or start-up – companies must look close at whether they have the factory space available for the production levels that they need to be planning.
Even distributors, such as Farnell, who have been helping companies to tackle supply chain challenges for many years are now seeing the sector being hit from two sides at the same time - supply issues for essential components coupled with increased demand due to greater automation and the continuing trend towards miniaturization.
Evolution of the industry
One of the key factors influencing the evolution across the semiconductor industry in recent years is the continual drive from a technology point of view to get more from less in terms of power requirements. The trend is for interconnection, with increasing numbers of devices being required to communicate with each other. Interoperability is the key. However, this puts significant pressure on how to balance greater levels of power consumption with reducing carbon footprints. On the one hand the sector needs to be driving more power but on the other hand it needs to consider the impact on the environment.
For some years prior to the COVID-19 pandemic, there had been a conscious drive to get smaller with objects that are used in our daily lives. From around 2014 onwards, the wearables market really took off, whether it was smart watches or wireless headsets or medical devices such as the insulin detection patches that you wear on your arm. There was also a growth in ‘disposable technology’ which increased the turnover of components.
The market has also been affected by various application factors based around technology that helps to make doing business easier… and COVID-19 helped to accelerate that process. Looking back10 years ago, most companies were dealing with customers around the world via e-mail and never expected to meet. Today, thanks to videoconferencing software, much closer relationships are being built with customers in every country and it has opened up a whole new world. Everyone operating in the microcontroller market around the world has been able to get closer than ever. This simply wasn't possible 10 years ago and it’s had a massive influence on market growth and competition.