Semiconductors Trends

To make things easier for us, technologies must become more complex. Consider the latest advances in mobile phones. On the outside, handsets are increasingly functional and reliable; on the inside they are a tangle of chips and processors that grows increasingly complex with each new function added. That complexity comes from companies in the semiconductor industry. From microprocessors to integrated circuits, the tiny products of the semiconductor industry are the engines that drive technology.

The semiconductor industry lives –- and dies –- by a simple creed: smaller, faster, and cheaper. The newest chips have circuits with lines less than 0.13 microns across – less than one-thousandth the width of a human hair. The benefit of being tiny is pretty simple: finer lines mean more transistors can be packed onto the same chip. The more transistors on a chip, the faster it can do its work. Thanks in large part to fierce competition and also to new technologies that lower the cost of production per chip, within a matter of month, the price of a new chip can drop by half.

As a consequence, there is constant pressure on chip makers to come up with something better and even cheaper than what re-defined state-of-the-art only a few months before. Chips makers must constantly go back to the drawing board to come up with superior goods. Even in a down market, weak sales are seen as no excuse for not coming up with better products to whet the appetites of customers who will eventually need to upgrade their computing and electronic devices.

Traditionally, semiconductor companies controlled the entire production process, from design to manufacture. Yet many chip makers are now delegating more and more production to others in the industry. Foundry companies, whose sole business is manufacturing, have recently come to the fore, providing attractive outsourcing options. In addition to foundries, the ranks of increasingly specialized designers and chip testers are starting to swell. Chip companies are emerging leaner and more efficient. Chip production now resembles a gourmet restaurant kitchen, where numerous chefs line up to add just the right spice to the mix.

Broadly speaking,