Despite the recent slowdown in demand experienced through the semiconductor market, signs of confidence in its recovery are beginning to push through.
The reality is that industry is spurred by the development and application of advanced technologies: AI is suddenly prevalent across many business sectors, for example, whilst the Internet of Things (IoT) and cloud computing are creating accessible automation and driving innovation. Alongside demand for high performance computing (HPC) and the promotion of 5G, these advancements are boosting the development of the future digital economy.
Elsewhere, the demand for automotive electronics continues to grow, driven both by technological developments and legislative and environmental pressures. Looking to the future, this industry particularly needs high-quality, well-designed semiconductors moving through the supply chain.
The signs of this recovery are indicated in the industries aligned to semiconductor manufacture, for example, in packaging and testing which is a post-process of integrated chip design. As a closely allied process, this link in the supply chain acts as a barometer for changes in the industry. Having already cooled dramatically, with the rest of the supply chain following behind it, production lines in this area are warming up again in preparation for mass testing and mass production of advanced packaging solutions.
The area of packaging and testing is touted as one of continuous growth, with emerging applications such as 5G, HPC and automotive electronics demanding a transition to advanced packaging solutions. Indeed, this may well become the main growth area of the industry going forward. Semiconductor manufacturers are preparing to vigorously deploy advanced packaging and will expand their capital expenditures to do so.
It is the preparation for expansion of production capacity by major manufacturers that is signalling new growth and confidence in it. Drawing on the data of their growth cycles, the biggest manufacturers of consumer and trade electronics hold a firm grasp on the cycle of recovery and prediction of future demand. The global recession will ease and companies like Intel, for example, have stated plans to invest more than €33Bn to promote chip manufacturing in Europe.
Taiwan Semiconductor Manufacturing Co. is taking advantage of the U.S.’ CHIPs and Science Act to build production plants in the United States, on the ground and ready to supply the country. Designed for the manufacture of advanced chips, future supply needs are already being mapped out for automotive transformation and growth of consumer demand.
The investment injection to fund the CHIPS and Science Act has come directly from the manufacturers who plan for their component needs up to three years ahead. Bringing the high-profit manufacturers in as investment sources almost completes the semiconductor supply chain, bringing it into a full circle which adds a degree of future security to the supply chain.
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