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Semiconductor Industry 2023 Mid-Year Review Advancements & Challenges

Semiconductor Industry 2023 Mid-Year Review: Advancements & Challenges


As we passed the midpoint of 2023, the semiconductor industry finds itself at a crossroads of transformation, with a myriad of innovations challenging the status quo. The fast-evolving landscape of the semiconductor industry has been marked by groundbreaking advancements, sustainability initiatives, the rise of AI, and ongoing chip shortages in the automotive sector. Let's take a closer look at the significant developments that have shaped the semiconductor industry in the first half of 2023.

Technological Breakthroughs & Alternatives to Silicon

Image: Envato

Silicon has been the dominant material in the semiconductor industry for several decades, enabling the development of a wide range of electronic components. However, we are slowly approaching the limits of silicon-based transistors. As various applications demand higher speed, lower latency, and light detection, transistors are miniaturised and positioned closer together, heat generation intensifies, and current leakage between them becomes more pronounced, directly impacting their overall performance. [1] This has prompted researchers and industry experts to explore alternative materials and technologies that could potentially outperform silicon and offer new functionalities.

In February this year, a team of University of Michigan researchers introduced a remarkable ferroelectric semiconductor platform tailored for AI and IoT computing systems. [2] A month later, they presented their latest creation — a ferroelectric semiconducting high electron mobility transistor. These ferroelectric semiconductor devices possess the remarkable capability to sustain and toggle electrical polarisationm, possibly enabling the creation of highly versatile, energy-efficient, and compact electronic devices with the potential to revolutionise various industries. As more breakthroughs are underway, we can expect to see a growing impact on the electronics industry and a broader range of applications that could benefit from these advanced materials.

The Semiconductor Sustainability Challenge


Image: Envato

Amid mounting pressure to reduce carbon emissions and meet ESG targets, semiconductor manufacturers are actively seeking sustainable solutions. Governments, including Taiwan, are driving net-zero legislation, compelling industry leaders to decarbonise their operations. [3] Leading chipmakers, such as GlobalFoundries, Samsung Electronics, and Taiwan Semiconductor Manufacturing Company (TSMC), have joined the Sustainable Semiconductor Technologies and Systems (SSTS) research program, aiming to assess and minimise the environmental impact of semiconductor manufacturing. [4] On the other side of the globe, European semiconductor companies are also taking sustainable initiatives seriously, setting ambitious emission-reduction targets to achieve net zero by 2050. Infineon's CEO, Jochen Hanebeck, marked this commitment by ceremoniously breaking ground on the company's new 300-mm Smart Power Fab in Dresden, Germany, in early May. The move signifies an acceleration towards a greener and more digitised future, not only for Europe but also for the global semiconductor industry. [5]

The Boom of AI:


Image: Envato

AI-powered automation has unleashed a new era of growth in the semiconductor industry in 2023. With AI algorithms streamlining operations and enhancing productivity, businesses can focus on innovation and strategic growth. Embracing AI-driven automation is proving to be a game-changer, increasing accuracy, speed, and efficiency across various sectors. For instance, AI is driving a revolutionary transformation in the healthcare sector, reshaping the landscape of diagnosis, treatment, and patient care. AI-powered diagnostic systems empower healthcare professionals with unmatched precision to analyse medical images, detect diseases, and identify potential risks. [6] Leveraging machine learning algorithms, healthcare providers can efficiently process extensive patient data, leading to predictive and preventive approaches to diseases. This breakthrough enables personalised treatments and ultimately enhances patient outcomes, ushering in a new era of healthcare advancements.

Chip Shortage is Not Over for the Automotive Industry

Image: Envato

Meanwhile, AI-enabled vehicles are revolutionising the automotive industry, with cutting-edge developments redefining the driving experience. Tesla's autopilot technology has advanced significantly, encompassing smart parking, steering, acceleration, and braking. [7] BMW has introduced a powerful AI-powered tool at its Spartanburg plant, leading to substantial annual savings of $1 million. [8]

This transformative adoption of AI will extend its influence across all aspects of the automotive sector, from manufacturing and design to service, maintenance, sales, and marketing, making vehicles smarter, safer, and more efficient. The global automotive intelligence market is already showing significant growth, reaching $26.49 billion in 2022, and it is projected to reach $74.5 billion by 2030, as reported by Statista. [9] These figures attest to the substantial impact AI is having on reshaping the automotive industry.

Source: Automotive AI market size worldwide 2019-2030, Statistica

As AI continues to drive innovation, the automotive industry is poised for unprecedented growth and evolution. In the first half of 2023, there have been notable improvements in the global chip shortage challenge, but the automotive sector continues to face challenges. The chip supply situation has become episodic, affecting specific component types or individual suppliers rather than the entire industry. Despite efforts to address the issue, demand still outpaces supply for several chip types, posing potential risks of further disruptions. [10] Experts in the industry are expressing concerns about the likelihood of another chip shortage, especially in the electric vehicle (EV) sector. The situation is compounded by China's imposition of trade restrictions on crucial metals essential for chip and EV manufacturing. [11] This move has the potential to escalate trade tensions with Washington, creating the possibility of further disturbances in global supply chains.

The multitude of advancements and uncertainties in the semiconductor industry is poised to significantly increase the demand for chips, particularly industry-specific ones. As emerging technologies like AI, 5G, Internet of Things (IoT), and electric vehicles (EVs) gain momentum, the need for specialised chips tailored to these applications will soar. This surge in demand will exert immense pressure on the semiconductor supply chain. By collaborating with independent distributors, companies can effectively navigate the challenges posed by the growing demand for chips and harness the potential of cutting-edge technologies without compromising on quality or delivery timelines. Independent distributors can provide alternative sources for hard-to-find or obsolete components. They maintain extensive global networks, allowing them to access a wide range of suppliers and manufacturers. By diversifying supply sources, independent distributors can help to mitigate the risks of chip shortages, allocation issues, and sudden market fluctuations. In this rapidly evolving landscape, the importance of independent distributors in securing a resilient supply chain cannot be overstated.


[1] Technology That Can Beat Moore’s Law, Medium, 2021

[2] The Next-Gen Transistor: University of Michigan's Breakthrough in Ferroelectric Semiconductors, electropages, 2023

[3] How semiconductor firms are chipping in on sustainability, JLL, 2023

[4] GlobalFoundries, TSMC join Amazon, Microsoft in semiconductor sustainability research, sdxcentral, 2023

[5] Semiconductor Manufacturing on the Way to Net Zero, EE Times, 2023

[6] The Rise Of Artificial Intelligence In Healthcare, eLearning Industry, 2023

[7] How is AI Transforming the Future of the Automotive Industry? Benefits and Use Cases, Appinventiv, 2023

[8] BMW Uses AI to Slash Production Costs at Spartanburg Plant, AI2 News 2023

[9] Size of the global automotive artificial intelligence market in 2019 and 2020, with a forecast for 2021 through 2030, statista, 2023

[10] The semiconductor shortage is – mostly – over for the auto industry, S&P Global Mobility, 2023

[11] China slaps export curbs on chipmaking metals in tech war warning to U.S., Europe, CNBC, 2023

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