Semiconductor industry trends and growth

Semiconductor industry overview

First the good news, silicon device demand continues throughout our world as computing power is increasingly required in all parts of life. Moreover, overall industry volatility has reduced as no one product is the dominant consumer of components at any given time as in decades past. On the downside, the fundamental assumptions of scaling according to Moore’s law are increasingly a factor in device design and manufacturing investment leading to new architectures, structures, materials and methods. As of late, the industry has also consolidated significantly following the same path of past maturing industries. The result is a consolidated industry optimized for profitability, efficiency, and scale to serve the evolving end market needs.

As the industry matures, an external trusted advisor is often helpful to navigate new challenges, redefine processes and systems, and help manage uncertainty in the face of industry challenges. The Deloitte Semiconductor practice is able to bring the strength of our multi-service, global organization to help with the most critical issues while understanding the complexities, nuances, and uniqueness of the industry.

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Semiconductor industry trends

	IoT: Connected revolution  Semiconductors serve as the foundation for enabling emerging Internet of Things (IoT) technologies. The IoT revolution has increased the demand for semiconductor chips but also shifted value capture to software and solutions. To capitalize on this new market opportunity, semiconductor companies often need to shift marketing, sales, application engineering and product development approaches and re-define go-to-market and monetization strategies.
	Digital supply networks Digitalization is transforming supply chains in every industry. In most cases the transformation is a shift from a structured, linear system to an open, interconnected, often cloud-based system that is able to integrate information from many different sources. In order to enhance the value of digitalization, semiconductor companies should consider taking a look at emerging digital supply network technologies in order to solve age old problems in the industry stemming from limited information transparency across the manufacturing and supply chain.
	Consolidation through M&A As semiconductor industry growth slows in individual segments, companies are increasingly turning towards M&A to sustain profitability, seek new sources of revenue, and reduce revenue volatility through a diversified portfolio of products or solutions in the case of IoT. To help ensure value capture, semiconductor companies should consider developing a clear M&A strategy and drive execution.
	The slowing of Moore’s Law and EUV The fundamental economics and assumptions of semiconductor production are reaching a limit. Moore’s law has been slowing down over the last few years and soaring design costs are making the leading lithographic node economically out of reach for many companies. A strong trend of alternative designs, new multi-core architectures, die stacks and multi-die packages show efforts to work around scaling performance limitations versus continue. Semiconductor companies can help by managing more complex back end assembly and test operations as the complexity increases and potential for yield loss increases due to more complex assembly. As the industry considers a shift to EUV or 450mm wafers to re-accelerate Moore’s Law, semiconductor companies, especially semiconductor equipment companies, need to be fully prepared.

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How we can help

	Market and growth strategy Deloitte works with executives to help deliver growth through customer and marketing anchored strategies and transformational change. We help semiconductor clients develop growth strategies, including transforming from component to solution providers, delivering new or focused products/services for new markets such as IoT and building GTM strategy for developing countries, such as China, with high semiconductor industry growth.
	Supply chain strategy and operations improvement We help semiconductor clients in their efforts to deliver more value at every step across their end-to-end supply chains – from design and planning through sourcing, manufacturing, delivery and return. We leverage our experience in digitalization and help clients design a global Digital Supply Network that not only aligns with their company’s overall business strategy, but also provides them with a playbook for execution.
	M&A strategy and integration Deloitte is rated by Kennedy as #1 M&A Advisory services and has delivered over 2,500 global M&A transactions that include iconic semiconductor deals. We leverage our insights and experience to help semiconductor clients develop M&A strategy to enable growth and profitability, and drive successful integration execution to help ensure value capture. We also help clients develop and execute an alliance strategy.
	Product development  Product development is becoming more challenging as the semiconductor industry evolves. Deloitte helps semiconductor clients achieve expected results with its inclusive services that range from developing product and portfolio strategy to help drive growth, to implementing product lifecycle management (PLM) process and tools to improve R&D efficiency. We advise clients in addressing fast-changing market needs with a balanced supply-driven and demand-driven approach and increased collaborations with both suppliers and customers.
	IoT strategy With a well-defined strategy, IoT can significantly increase the value of semiconductor companies. Deloitte’s leading IoT practice helps semiconductor clients identify market segments and key use cases where value can be created and develop strategies to enhance the value through organic development, acquisitions and strategic alliances.

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Semiconductor organization membership

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