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The semiconductor industry is experiencing a transformative period as emerging technologies like artificial intelligence, spatial computing, connected devices and autonomous cars continue to grow in prominence. This rapid evolution means increased pressure on semiconductor manufacturers to provide a diverse range of chips to support these advancements. Additionally, the ongoing efforts to onshore manufacturing are adding further complexity to the industry. In this article, we will explore the changing role of semiconductor manufacturers, the opportunities and challenges facing them and the strategies they are adopting to adapt to this shifting landscape.
Rethinking the supply chain: silicon to systems
Semiconductor manufacturers are no longer simply producing chips and moving on. Increasingly, they are compelled to tighten their integration with customers and business partners. Manufacturers now contribute a larger portion of the value that companies seek to deliver, and there is an opportunity for them to drive even more by taking on the burden of end-to-end supply planning between front-end silicon manufacturing and back-end assembly and test.
Numerous procurement and planning models exist between different semiconductor companies. Design companies, for example, could be buying tested wafers, diced wafers or final products. The multitude of these different procurement models, alongside the increasing complexity of back-end assembly, the need for heterogeneous integration and the increasing diversity of final products, results in an exponential rise in planning difficulty that manufacturers are best positioned to solve.
This has brought about the rise of system manufacturing and system foundries. Intel’s recent announcement to become a system foundry is a perfect example of the industry’s response to the increasing complexity of products. The role of semiconductor manufacturers is expanding beyond chip production to encompass system-level solutions.
The implications of onshoring
Ongoing semiconductor manufacturing onshoring efforts, materialized in the U.S. and EU CHIPS Acts, highlight the critical role of semiconductor technology in maintaining a domestic competitive advantage. While onshoring presents an opportunity for increased control and resilience, it also introduces new challenges. Manufacturing requires a different skillset and talent pool than semiconductor design and thus a different workforce development strategy. TSMC, for example, had to halt construction in Arizona because of a workforce shortage. Moving key supply chain components onto different geographies also means different regulations that will require new relationships with local governments.
Collaboration and partnerships have always been at the core of the semiconductor industry, and as manufacturing is brought onshore, this will continue to be vital in addressing these multifaceted challenges. Manufacturers must work with academia to ensure a steady supply of skilled talent at the regional and local levels. Additionally, partnerships with local governments can help facilitate funding and development and create an enabling environment for semiconductor manufacturing. Embracing healthy competition is also crucial, as system-level foundries require integration and the willingness to engage in conversations that involve competitors. By advancing capabilities collectively, manufacturers can drive industry growth and innovation.
Expanding IP catalogs and evolving organizations
Finally, the explosive growth of diverse emerging technologies is pushing semiconductor manufacturers to expand their IP catalogs to cater to the diverse needs of their customers. For example, a manufacturer specializing in chips for the mobile industry may now need to develop IPs that can withstand a broader range of temperatures as new applications emerge. This expansion will require the adoption of new processing technologies, as manufacturing processes may differ. To support these changes, organizations must evolve and adopt a customer-centric approach: mobile, automotive and IoT customers are all served in very different ways, even though they all need silicon chips.
The changing role of semiconductor manufacturing in the face of emerging technologies and the onshoring trend is reshaping the industry. Manufacturers are no longer confined to chip production but are becoming integral players in a solution-oriented value chain. Collaboration, partnerships and the ability to adapt to evolving demands are crucial for success. As the semiconductor industry continues to evolve, manufacturers must embrace these changes, expand their IP catalogs and evolve their organizations to meet the needs of a dynamic and complex ecosystem. By doing so, they can thrive in an industry that plays a pivotal role in shaping the future of technology.
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