Economic and social disruptions has attracted a lot of attention this year. While semiconductor shortages have highlighted the world’s dependence on technology and other resources, 2021 looks more like an inflection point for the semiconductor industry. Suraj Rengarajan, CTO, Applied Materials India shares his thoughts on the semiconductor industry pre and post covid world in this exclusive interview.
What is the scenario of the semiconductor industry in the post-COVID world?
The pandemic has accelerated digital transformation of the economy, and this is fueling semiconductor consumption and driving the need for next-generation silicon technologies. The semiconductor industry is now in the early stages of a new wave of growth – the biggest one yet – and it’s being led by the massive growth of Big Data, artificial intelligence and new Internet of Things devices. Some estimates forecast hundreds of billions of connected devices in existence globally by 2030, and this will require innovations in chip technology for devices at the edge and in the cloud.
Collaborative technology trends are here to stay, and hybrid work will have a lasting impact on semiconductor demand and open new possibilities for existing products and services. The need for semiconductors that enable servers, connectivity and cloud computing will continue to grow as alongside digital transformation.
How to meet the challenges of semiconductor availability in these challenging times?
The underlying trends driving growth in chip demand date back several years. One of the key factors being a massive increase in data generation. 2018 was the first time that machines surpassed humans in creating data and we moved from an application-centric to a data-first world. We predict that by 2025 humans will only account for about 1% of total data generated. The rest – 99% – will come from machines. Also, the secular drivers of the industry have expanded from consumer-oriented devices to non-consumer discretionary spending.
Today the industry is experiencing more demand from drivers in the AI Era as everything is getting smarter – from our phones to our cars to our homes. The chip industry has been working hard to keep up, but it’s not easy given the rapid acceleration of digitalization trends. In the coming years, we expect to see major changes to semiconductor supply chains.
What is the role of AI, IoT in contributing towards the robust growth of the semiconductor industry?
IoT and AI are key drivers for the 4th wave of semiconductors. We went from mainframe computing to the PC/internet era then to mobile/social media, where everyone has a smartphone in their pocket, and now we are in the early stages of the AI era. The demand for more compute power is greater now than it ever was, and this is creating a new wave of growth for the semiconductor industry in the years ahead.
As more and more smart devices are connected at the edge, they are driving exponential growth in machine-generated data that must be stored, moved and processed. Then, to create value from these vast volumes of data, new AI computing approaches are being developed fueling further demand for current and next-generation semiconductors.
How can the semiconductor industry streamline and improve its supply chain processes?
In the years ahead, we expect to see permanent changes in the way supply chains are designed and operated. In the semiconductor industry and beyond, there’s a shift from “just-in-time” to a “just-in-case” approach, which will require higher levels of inventory, more built-in redundancy and more burst capacity. We also expect companies across the ecosystem to collaborate more closely on capacity planning.
In addition, as government incentive programs become available in the U.S., Europe, and Asia, we expect to see a growing trend towards regionalized supply chains that are more resilient.
