Accelerating Semiconductor Production through Digitalization

Digital transformation is a must for semiconductor manufacturing companies as they contend with everything from labor shortages to geopolitical challenges. In this resource, ABI Research summarizes the latest market data regarding semiconductor manufacturing and digitalization technology investment. Then, we provide the best course of action for both technology providers and manufacturers that aim to capitalize on the opportunities created by digital transformation in the semiconductor industry.

Market Overview

• The market for semiconductors is forecast to grow by 66% over the course of the decade from US$600 billion in 2021 (according to McKinsey) to US$1 trillion in 2030.
• Technology suppliers have many opportunities to engage in different parts of the value chain to anticipate demand, provide traceability of wafer lots, and optimize processes. ABI Research forecasts that Integrated Device Manufacturers (IDMs), foundries, and external providers of assembly, test, and packaging services will increase their spending on digital technologies by a 9.6% Compound Annual Growth Rate (CAGR) over the next 10 years and reach US$6.2 billion in 2033.
• Turning attention to improving yield and throughput, semiconductor manufacturers will increasingly look to Artificial Intelligence (AI) to improve their operations. This is driven by the need for visual inspections (e.g., object defect detection), preparation for order changeovers and control of operations, and to optimize the factory layout.
• ABI Research forecasts that these applications, as well as the need to monitor and improve operations from a sustainability standpoint, will underpin the 12.6% CAGR increase in spending on data analytics over the forecast period and reach US$1.1 billion in 2033.
• Spending on security will account for the second highest growth rate (11.2% CAGR), with IDMs looking to protect their Intellectual Property (IP) and foundries, and Outsourced Semiconductor Assembly and Test (OSAT) providers needing to ensure they are a secure custodian of their customers’ IP.
• Despite the efforts of the U.S. Government and the European Union (EU), the Asia-Pacific region will remain dominant when it comes to producing semiconductors. SEMI reports that 20 new facilities have been announced in China, 14 in Taiwan, 6 in Japan, and 3 in South Korea.

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“Chip designers must accelerate their development processes to meet the needs of Integrated Device Manufacturers (IDMs) and fabless chip providers. IDMs’ front end manufacturing facilities and independent foundries need to work closely with their equipment providers so that the machinery/tools can be calibrated as quickly as possible. Providers of assembly, test, and packaging services and IDMs’ back end facilities must optimize their processes to meet customer schedules.” – Michael Larner, Research Director at ABI Research

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Table 1: Semiconductor Manufacturing Digital Factory Revenue by Region and Key Country

World Markets: 2023 to 2033

(Source: ABI Research)

Region	Revenue	2023	2024	2025	2026	2027	2028	2029	2030	2031	2032	2033	CAGR 23-33
North America	(US$ Millions)	310	335	398	454	488	509	541	574	598	622	650	7.7%
Latin America	(US$ Millions)	0.248	0.268	0.291	0.327	0.351	0.354	0.386	0.400	0.388	0.382	0.378	4.3%
EMEA	(US$ Millions)	235	249	265	298	335	349	367	400	437	446	458	6.9%
Asia-Pacific
China	(US$ Millions)	607	664	793	923	1,033	1,109	1,214	1,333	1,462	1,556	1,654	10.5%
Taiwan	(US$ Millions)	534	581	708	811	904	971	1,073	1,180	1,285	1,374	1,462	10.6%
Japan	(US$ Millions)	390	407	471	534	569	596	626	667	709	749	780	7.2%
South Korea	(US$ Millions)	101	110	131	153	165	160	169	180	188	188	195	6.8%
Other Asia-Pacific	(US$ Millions)	302	332	393	462	541	622	715	795	859	936	994	12.7%
Total	(US$ Millions)	2,480	2,678	3,161	3,635	4,034	4,317	4,705	5,129	5,539	5,871	6,194	9.6%

 

Key Decision Items

When it comes to digital transformation in semiconductor manufacturing, ABI Research has provided strategic recommendations for technology suppliers and manufacturers themselves.

Be Realistic When Engaging with Greenfield Sites

The temptation when engaging with greenfield sites is to evangelize about the art of the possible, as the facility is a blank canvas. The facilities are not up and running and are likely to experience teething problems. For example, be pragmatic and focus on how the facility can incorporate demand forecasting into its operations, rather than the development of a facility-wide digital twin.

Technology suppliers must balance this opportunity with the local contexts of brownfield sites. Many sites have been in operation for decades. While innovation is important for the future survival of the facilities, it is critical to illustrate that digital technologies can complement, rather than replace existing processes. The crawl, walk, and run approach to innovation will most likely be appropriate in these circumstances.

Team Up with Original Equipment Manufacturers

If improving operations in the clean room is a focus, technology suppliers should build relationships with equipment Original Equipment Manufacturers (OEMs). The machine settings and calibrations for equipment in the clean room can take weeks to implement. The precise nature of the production process should never be forgotten. In fact, staff from equipment OEMs often tune their own equipment.

Track End-Market Evolution and Their Chip Requirements

Digital transformation technology suppliers should carry out their own forecasting for end points for semiconductors and map those demands to individual IDMs and foundries. Then, tailor your engagement as opportunities to meet additional orders or alleviate bottlenecks. Manufacturers will need to be able to track wafers and embed flexibility in their production runs in the same manner as batch changeover in other contexts.

Focus on Facilitating Sustainable Manufacturing

Fit solutions to help semiconductor firms operate in a more sustainable manner. Look to provide solutions that will help manufacturers identify ways to reduce their energy usage or the amount of water involved in their production processes. Sustainability aspects of the semiconductor industry will soon be in the public consciousness, so help prepare customers.

The next four sections provide strategic guidance for semiconductor manufacturers embarking on their digital transformation journey.

Build Customized Semiconductor Production Facilities  

Consider not only customized chips, but also customized production facilities. Shortages of semiconductors have been a clear focus for customers. To secure contracts, foundries and Outsourced Semiconductor Assembly and Test (OSAT) providers should consider repurposing facilities to meet the current and future needs of critical customers.

Broaden the Use Cases for Data Analytics

The benefits of predictive maintenance are well established; however, the application of analytics in other areas, such as quality control and scheduling, is less established. The advancements in the sophistication of chips and the volume of demand should necessitate investments to support productivity and increased yields.

Support Traceability with Robust Digital Threads

Investing in data infrastructure will not only help track order completion, but also improve understanding of current operations and identify the root cause of issues. While equipment OEMs take responsibility for maintaining their equipment performance, they should be encouraged to share applicable performance data.

Choose a Side of the Political Divide

This is a more difficult task than for technology suppliers, given the physical investments in many territories, but semiconductor firms will need to pick a side. Asset swaps will need to be considered. But in the short term, manufacturers must lobby their case to continue the current operating models.

Key Market Players to Watch

• Analog Devices
• Apple
• Broadcom Limited
• camLine
• Eyelit
• Flexciton
• Galaxy Semiconductor
• HiSilicon
• Infineon
• Intel Corporation
• Maxim Integrated
• MediaTek
• Micron Technology
• NVIDIA
• NXP Semiconductors
• PEER Group
• Qorvo
• Qualcomm
• Renesas
• Rockwell Automation
• Samsung
• Siemens
• SK Hynix
• Sony Corporation
• STMicroelectronics
• Texas Instruments
• Toshiba Corporation
• Western Digital Corporation
• Xilinx

Dig Deeper for the Full Picture

ABI Research just published its Digital Transformation of Semiconductor Manufacturing research report, which provides a well-rounded analysis of the current semiconductor industry. Download the report today to see what’s driving investment in semiconductor production, what’s holding it back, as well as identifying key use cases, technology enablers, various projects, and more. Download the report here.

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This report is part of ABI Research’s Industrial & Manufacturing Markets Research Service.