By Pete Singer, Editor-in-Chief
Joe Sawicki, Executive Vice President, Siemens EDA provided a very optimistic view of the semiconductor industry’s future on Monday, speaking at the Design Automation Conference (DAC), which is co-located at Moscone with this year’s SEMICON West.
In his talk, titled “Digitalization—The Return to Outsize Growth for the Semiconductor Industry” Sawicki described how, in just one short year, a decade of digitalization occurred across all industries fueled by innovation in the semiconductor industry. Dramatic growth occurred in use of the cloud, work from anywhere and telemedicine, while online collaborative tool usage increased a staggering 4000%.
“Impressive as this all is, it is just the beginning of a massive reinvigoration of the semiconductor industry. Emerging new compute and telecom infrastructures, with IoT starting to deliver its long-promised value, coupled with new technologies such as artificial intelligence are reshaping the competitive landscape at break-neck speed,” Sawicki notes.
Sawicki described digitalization as an “inelegant term,” but said it represents a significant change underway in terms of the semiconductor industry’s impact on the global economy. “It’s always been the case that semiconductors have had a significant effect on the product offerings across numerous industries,” he said. What’s new is that they are driving a change in how companies do business and how they deliver value to their customers.
One example is the automotive industry. “They’re not just looking to deliver a better infotainment screen, but to be able to change that infotainment screen over time,” Sawicki said. “Tesla innovated on over-the-air updates and significantly changed how the car operates through its life cycle.” Car makers are looking to monetize subscriptions, for example, which allows them to add functionality to their car. This shift in monetization will bring about a change in how car companies are organized and how they manage their data. “You start to understand why there is so much emphasis right now at a national level in terms of semiconductor policy as an expression of national policy,” Sawicki said.
The pandemic has accelerated the trend toward digitization. “The more you were able to transfer your operations from being based in an office to being able to flexibly allow your employees to operate wherever they are, the more effective you were in managing the pandemic,” Sawicki said. “This has accelerated to where people are talking about moving that whole infrastructure into the cloud and transforming their business through digitalization at a rate twice what it was pre-pandemic.”
Another big change is that systems companies are getting much involved in the design and manufacturing of semiconductors. “Whether it be the hyperscalers, high-end consumer or automotive companies, all are moving to where they are looking at semiconductor being a capability which necessitates bringing it in house so they can ensure that by managing architecture and design, they can optimize that value stack that they’re delivering to their customers,” Sawicki said. “It’s not just a trend line that we’re pointing to moving forward: This is already occurring.”
As evidence of this, Sawicki pointed to the amount of foundry revenues coming from systems companies. 10 years ago, in 2011, it was about 1%. In 2021, it’s expected to be 21.3%, a compound annual growth rate of 26.8%. “This is a material shift in terms of who’s doing the design that’s going into those end electronics applications,” Sawicki said. “It shows the value that is presented by semiconductors because of the value that’s attempting to be achieved as we move into this era of digitalization.”
From an architectural standpoint, Sawicki sees four main drivers: 1) sensors, 2) edge computing, 3) 5G/wireless communication and 4) cloud/datacenters. “There are sensors to bring in data from the edge, edge compute to manage that data locally, before presentation through a 5G wireless structure, then out into the cloud and data centers,” Sawicki explained.
He described the amount of data being generated by sensors as “shocking,” noting that in 2015, 1.6 billion sensors were linked to the internet, 7.5 billion in 2020 and 29.6 billion expected by 2025. “That’s an enormous amount of data which drives an enormous amount of opportunity, not just for the semiconductor sensor providers,” he said. “You can start to understand why some of the established node fabs that are driven on the need for sensors are getting a lot more investment, but also the need for continued investment in wireless communication technologies.”
Expect to see a very good growth rate in 5G for the traditional wireless infrastructure, but Sawicki said that will be dwarfed by the rate that’s going to occur for consumer devices, automotive and industrial applications. “The estimates are by 2023, almost half of the market for 5G chips will be in areas that traditionally have not been a market for 5G chips,” he said.
The market for data centers is also expected to see good growth. Semiconductor consumption in data centers is expected to grow from $87 billion in 2021 to $242 billion in 2030.
Overall, the global semiconductor market is expected to reach $1.2 trillion by 2030 (according to International Business Strategies, IBS). This includes semiconductors with AI functionality, which will represent $631 billion by that time. What may be surprising is that AI use is not limited to the “usual suspects” of deep learning in the data center or image recognition, but ranges from everything from optical computing, odor detection, medical cybersecurity to IoT applications. “You’re seeing AI broadly adopted across virtually every category out there,” Sawicki said.
