How semiconductor companies can thrive with a focused industry strategy – TechCrunch

Semiconductors are critical to the economy of almost every country in the world. However, the industry faces significant challenges.

Even with factories operating at full capacity, companies have struggled to keep up with demand, pushing delivery times to six months or more. What’s more, the impact of the pandemic, a shortage of talent and the increasing complexity of design mean that an industry that should be on the rise is under increasing pressure.

Amid growing demand, semiconductor markets have boomed, with sales growing by more than 20% to around $600 billion in 2021. However, global chip shortages have caused manufacturing slowdowns from auto industries to agriculture and led to debates about the reliability of an industry that is vital to the global economy.

In the US, the federal government has responded with a series of laws, including the CHIPS for America Act, which authorizes $52 billion in financing for the expansion of the domestic semiconductor industry. The new rules aim to protect industries against supply shortages and reduce their dependence on factories in Asia. Companies like Intel, Samsung, Texas Instruments and GlobalFoundries are planning to add more capacity in the US, and Europe is also seeing significant investment.

The recent increase in production capacity reflects the consensus that, despite the current environment, the long-term prospects for the semiconductor industry remain positive. From home kitchens to the most advanced factories, semiconductors are embedded in modern economies. Combine that with the rise of working from home and it’s not hard to predict the direction of travel for the industry.

We estimate growth of 6% to 8% per year through 2030, amid expanding demand for digital services, the growth of artificial intelligence and machine learning (AI/ML) and the mass migration to electric mobility. On this trajectory, we predict a trillion dollar industry by the end of the decade.

Image credits: McKinsey & Company

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