According to World Semiconductor Trade Statistics (WSTS), semiconductor manufacturing is expected to be a US$557 billion industry in 2023. In the wake of sweeping demand for semiconductors, manufacturers and their technology suppliers must accelerate their production processes, while balancing a tightrope between geopolitical trends and adhering to sustainability initiatives. The Asia-Pacific region remains a critical aspect of the semiconductor value chain; however, huge efforts in reshoring production plants (foundries) to North American and Western European soil are shaping a very different-looking industry.
The chart below forecasts revenue generated from the various technologies that digitize semiconductor factories.
Semiconductors are a blend of thousands, even up to millions, of tiny transistors and electronic components arranged in a circuit on a silicon wafer. The function of the semiconductor is to execute a variety of tasks, such as managing electronics or processing, transmitting, and storing data.
There are four primary categories that semiconductors can fall under, including:
The production of semiconductors involves eight major processes, as listed in the steps below:
Wafers are manufactured within controlled environments called cleanrooms, which are significantly cleaner than even a hospital operating theater. The primary material for wafer production is polycrystalline silicon, derived from sand. Initially, a cylindrical crystal ingot is formed, which is then meticulously ground to ensure a consistent diameter. Using a diamond saw blade, the ingot is sliced into thin wafers, completing the fabrication process.
The next step in the semiconductor production process involves cleaning the wafers using high-purity deionized water and carefully selected low-particulate chemicals. Subsequently, the silicon wafers undergo a heating process in an oxidation furnace, reaching temperatures of around 1,000° Celsius (C), while being exposed to ultra-pure oxygen. This controlled environment facilitates the formation of a uniform silicon dioxide insulator film on the surface of the wafer, ensuring consistent thickness throughout.
To initiate the photolithography process, a light-sensitive film is applied to the wafer, imbuing it with properties akin to a photographic film. This crucial step of semiconductor production involves transferring the circuit's design onto the wafer's surface. A photo-negative equivalent is produced by developing the wafer, ensuring that the desired circuit pattern is accurately replicated.
Excess materials are etched away from the wafer either via a wet etching process (with chemical solutions) or dry etching, which involves the use of gases or plasma.
In this step, a uniform thin film is applied to the wafer to give the chip electrical characteristics.
This step enables electricity to flow through the wafer by depositing a thin metal film made of aluminum, titanium, or tungsten.
EDS is the process of testing the functionality of each chip.
The final step of the semiconductor manufacturing process is packaging. This includes cutting wafers into individual semiconductor chips that can be placed on a Printed Circuit Board (PCB) or in a device.
Based on market share, the largest semiconductor manufacturer worldwide is Intel, with a 12.9% market share as of 2021. The next four largest semiconductor manufacturers are Samsung (12.7% market share), SK hynix (6.2% market share), Qualcomm (5% market share), and Micron (4.9% market share).
Reference the table below to see the top-12 biggest producers of semiconductors.
Table 1: Semiconductor Manufacturing Market Share, 2021 (Sources: ABI Research; Infineon (2022/11/15 Infineon Investor Presentation, 2021 Market Size US$592 billion))
| Vendor |
2021 Market Share |
| Intel |
12.9% |
| Samsung |
12.7% |
| SK hynix |
6.2% |
| Qualcomm |
5% |
| Micron |
4.9% |
| Broadcom |
3.6% |
| NVIDIA |
3.5% |
| MediaTek |
2.9% |
| Texas Instruments |
2.9% |
| AMD |
2.7% |
| Infineon |
2.3% |
| Apple |
2.2% |
Everything from a new vehicle to a smartphone requires a semiconductor. In our digitally-fueled world, countries with a foothold in the global semiconductor market will gain a leg up over their geopolitical adversaries. Therefore, we are in the midst of a transformational phase in which Western nations, notably the United States, are taking the necessary steps to manufacture chips within their own borders.
The United States and China are trading blows to each other’s chip manufacturing capabilities. Regulations, tariffs, and sanctions run rampant within the semiconductor market, with the U.S. government considering bans on firms investing in and supporting China in technological innovation, including semiconductors.
For a better overview of the political themes interwoven into the semiconductor industry, consider the following government programs that encourage the design and production of semiconductors in their own countries:
Between 2021 and 2022, the investment in new semiconductor production plants exceeded US$300 billion, as per Semiconductor Engineering. Notable examples of these new facilities being developed include the following:
Something to be mindful of is that, as ambitious as these investments are, it takes roughly 2 to 3 years for new semiconductor plants to be fully operational after being built. Skills shortages are one of the biggest hurdles, with demand for workers in the semiconductor industry expected to increase by a million in the next decade, according to Deloitte.
Between 2021 and 2030, the market for semiconductors is expected to grow by 66%, making it a US$1 trillion industry, according to McKinsey. As semiconductors become more imperative to enabling digital experiences and embedding themselves into everyday life, fabless chip designers, manufacturers, and independent foundries must work closely with one another and digitally transform their equipment. Only then can the soaring demand for semiconductors be met by the chipset industry.
The development process of semiconductors, however, hinges upon numerous strategic considerations, such as having accurate demand planning, equipment predictive maintenance, operational visibility, etc. To gain the best course of action for both technology suppliers and semiconductor producers, download ABI Research’s Digital Transformation of Semiconductor Manufacturing research report. This content is part of the company’s Industrial & Manufacturing Markets Research Service.