Defining Semiconductor Engineering Services
Semiconductor engineering is a key branch of engineering that supplies chipsets across industries. Since the chipsets power the critical devices across applications/products/systems, the importance of the semiconductor industry is of paramount importance. This is also evident from the recent semiconductor shortage in the automotive industry. The semiconductor industry is both extremely knowledge and capital-intensive, for which there are specialized large enterprises across the value chain. As the devices and applications have become more complex, semiconductor enterprises also invested large amounts of dollars for research and innovation. As a result, the portfolio of semiconductor engineering service providers has also increased over the years due to strategic partnerships, increased collaboration, and strategic partnerships.
Here we will discuss key aspects of the overall semiconductor industry, key engineering features, and outsourcing.
Key players in the semiconductor industry:
COVID-19 made a huge impact on the semiconductor industry from a demand perspective but due to supply chain issues, now the industry is facing issues from the supply side. The key players in the telecom industry are highlighted below.
- Chip-design companies (Fabless). Includes enterprises that are involved in semiconductor designing, sales, and marketing aspects of the semiconductor chips but not associated with semiconductor manufacturing/ do not own foundry. Examples include AMD, NVidia, Qualcomm.
- Foundries: Includes enterprises that specialize in semiconductor manufacturing and typically are not involved in designing. These companies also act as third-party manufacturers. Examples include Global Foundries, TSMC.
- OSAT (Outsourced Semiconductor Assembly and Test): Includes enterprises that are involved in third-party (typically from IDM and foundries) IC-packaging and test services. Examples include ASE, Amcor, SPIL
- Integrated device manufacturer (IDM): Includes enterprises that operate across most of the value chain i.e. designing, manufacturing, marketing, and sales of the chips. Examples include Texas Instruments (TI), Intel, Samsung.
- EDA companies: Providers of tools and platforms for semiconductor design, validation, and manufacturing. Examples include Xilinx, Synopsys, Mentor Graphics
- Equipment suppliers: Includes enterprises that manufacture equipment those are primarily used for semiconductor manufacturing. Examples include ASML, Applied Materials, etc.
- Others: Enterprises are involved in distribution, value engineering, and sales among others.
Semiconductor engineering segmentation by components:
Some of the key semiconductor segments are highlighted below. Broadly the components are divided into analog and digital segments. And most of the components now belong to digital ICs such as MCU, MPU.
- Analog IC
- Microprocessing Unit (MPU) (System on Chip (SoC), Microcontroller (MCU), Neural Processing Unit (NPU), Digital Signal Processor (DSP))
- Sensor (Temperature sensors, Pressure sensors, Image sensors, Proximity sensors, etc.)
- Memory Devices (RAM, ROM, Flash memory, etc.)
Some of the key trends of semiconductor engineering are highlighted below:
- Decreasing technology nodes: The technology nodes of the chips have decreased rapidly from 7-10nm (3-4 years back) to 2-3nm at present, demonstrating the complexity of the overall chip design.
- Industry-specific development: Nowadays chips are designed for specific applications. For example, particular chipsets are used for ADAS (Autonomous Driving). In 2017, Intel acquired Mobileye to increase its automotive portfolio.
- AI-enabled chips: As edge computing is becoming a key pillar for several applications, AI-enabled chips are becoming widespread for the majority of critical applications, providing improved performance and increased power efficiency.
- Industry consolidation: We have observed several large ticket acquisitions in the last few years in this industry. For example, in 2020, Nvidia acquired ARM ($40B) and Analog Device acquired Maxim Integrated ($21B).
- Sustainability: Semiconductor players particularly foundries are showing commitment to sustainable development. For example, TSMC is planning to use renewable energy and also exploring ways to reduce water consumption (beneficial for drought-hit Taiwan) for wafer fabrication
Semiconductor engineering services opportunity:
Engineering service providers can focus on the key segments of semiconductor engineering as mentioned below.
- Design & development: Includes VLSI design services (SoC development, RTL design, FPGA design, etc.) across different technology nodes with experiences in architecture, interfaces, and protocol standards among others.
- Testing & validation: Includes pre-silicon and post-silicon verification, field testing, connectivity testing, inter-operability testing, pre-certification, etc.
- Manufacturing operations: Includes semiconductor manufacturing-related services such as quality management, inspection, and process monitoring.
- Support & others: Includes engineering, business operations, and technology support across tools, applications, and processes.