Where is the Semiconductor Industry Headed in 2017 and Beyond?

Posted on January 19, 2017 by Jack Trompert

semiconductor industry news 2017

As 2016 came to a close, we recapped some of the top industry news as well as our most popular articles from the last year. The new year has not tarried in bringing us news in the semiconductor industry.

The US semiconductor market faces some challenges in this coming year but reports also show optimism for a growing global market. While the end of Moore’s Law may be in sight, China’s industrial policy has taken center stage for the global semiconductor market concerns. And the Internet of Things is believed to take over research and development focus in 2017. From Chinese threats and the incoming administration to market predictions for 2017, we’ve got your news covered.


PCAST Issues Report to Warn Policymakers of Chinese Policy Threats

Concern is on the rise for China’s industrial policies and the threat they pose to the US semiconductor industry. A recent White House report from the President’s Council of Advisors on Science & Technology (PCAST) addresses the threats and advises ways to mitigate them.


Last fall, PCAST along with a Working Group of semiconductor consultants joined efforts to strengthen the US semiconductor industry. The group intended to acknowledge the impending challenges to the US semiconductor industry due to the end of Moore’s Law now in sight and increased chip competition from China. Their report offers recommended strategy to the incoming presidential administration.  


The report’s recommended strategy is built on three main pillars:

  • Push back against the Chinese policies that inhibit innovation in the semiconductor industry.
  • Improve business environment semiconductor producers based in the US.
  • Help catalyze transformative semiconductor innovation over the next decade.

In their report, PCAST acknowledges that competition in principle can be beneficial to the market, but “Chinese industrial policies in this sector, as they are unfolding in practice, pose real threats to semiconductor innovation and U.S. national security.” The Council implores the White House and the US semiconductor industry to innovate and increase its competitiveness against the Chinese semiconductor industry and its industrial policy.


China’s industrial policies are harmful “because they hurt otherwise sound businesses without bringing countervailing economy-wide benefits, raise prices for consumers and other businesses that use semiconductors, and can deter innovation,” PCAST’s report says.


Principles for US Policymakers Dealing with China & the Semiconductor Industry

The report gives six principles to guide US policymakers in handling these challenges the US semiconductor industry faces from China:


  1. Win the race by running faster: Don’t simply try to slow China down. Beat China by being faster here in the US.
  2. Focus principally on leading-edge semiconductor technology: If the US wants to stay ahead, we’ve got to focus on leading-edge technology rather than broad leadership across the semiconductor industry as a whole.  
  3. Focus on making the most of US strengths rather than trying to mirror China: The US and China view government relations with private sector quite differently. As more countries question the benefits of economic openness, the US will play a role in shaping the trend.
  4. Anticipate Chinese responses to US actions: China will likely adjust its actions based on US policies.
  5. Do not reflexively oppose Chinese advances: The US government will need to identify areas in which the diffusion of semiconductor technologies/control of particular companies poses national security risks that cannot be mitigated except by stopping Chinese acquisition.
  6. Enforce trade and investment rules: If China’s actions violate rules of open trade and investment, the US should actively oppose them.

 

How can the US respond to China? PCAST and the Working Group believe a smart response from the Trump Administration would be to, “tie US assessments of the national-security threats posed by particular technology exports, investments, and contracts to Chinese policy.” They acknowledge the range of tools the US has available to respond to this threat including formal trade agreements, informal trade, and investment agreements with other foreign countries.


To see their strategic plans come to fruition, PCAST asks for cooperation from the US government, the semiconductor industry, and the educational community.


Where Does the Semiconductor Market Stand Stepping into 2017?

While China’s policies and the incoming administration stir up concern, there is a bright side to the future of semiconductors. Year-to-year sales in the global semiconductor market is up seven percent—the market’s largest growth since January 2015. Earlier this month, the Semiconductor Industry Association announced worldwide sales of semiconductors reached $31.0 billion for November 2016. This number represents a 7.4% increase from November 2015, with total sales reaching $28.9 billion.


John Neuffer, president and CEO of SIA, looks toward semiconductor sales in the new year optimistically, saying, “the global semiconductor market appears likely to roughly match annual sales from 2015 and is well-positioned for a solid start to 2017.”


While we were not short on mergers and acquisitions in the semiconductor industry in 2016, we could see even more in 2017 under the Trump Administration. Trump’s stance on business, his recent appointments, and his promises to slash corporate overseas profits seem to point to more lenient regulations.

 

“The right federal policy in this area–developed with input from industry–is critical to ensure IOT is enabled by federal policy, not inhibited by it.”


Another boon to the semiconductor industry is the recent introduction of the Developing and Growing Internet of Things (DIGIT) Act. This act will require the Department of Commerce to gather a group of federal stakeholders to meet and provide Congress with recommendations on planning and encouraging the Internet of Things (IoT).


In a statement regarding the DIGIT Act’s introduction, Neuffer said, “The DIGIT Act is an important step forward to help the federal government develop a national strategy that will encourage the Internet of Things. Semiconductors are the foundation of the IOT, enabling ‘smart’ devices that are connected to networks. The right federal policy in this area – developed with input from industry – is critical to ensure IOT is enabled by federal policy, not inhibited by it.”


A lot lies ahead for 2017 and beyond in the semiconductor and tech industries. Electronic Component News Magazine heard from industry leaders, movers, and shakers who shared their thoughts on what’s ahead in the new year. The Internet of Things, including smart houses and voice-controlled devices and appliances, will take the main stage in 2017. These will evolve from siloed devices into fully consolidated smart services and packages.


Instead of focusing on how to connect devices to the web, developers now turn their focus to connect their devices and appliances over a web interface. But with connected devices comes a greater need for focus on security, another major focus you’ll see this year.

 

More from industry leaders:

“The next step of the evolution is about to arrive, including making these devices work with each other, giving them intelligence, and making the entire system easy to use.” -Cees Links, Qorvo


“Voice will be the new interface.” -Debbie Greenstreet, Texas Instruments


“As IoT and 5G enable connected devices on a massive scale, security requirements and complexity increase tremendously. Effective end-to-end security solutions are a major prerequisite for enabling effective IoT solutions.” -Kin-Yip Liu, Cavium

 

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Topics: Semiconductor News, News, Trends

Jack Trompert

In 2010, Jack and Janet Trompert started Talent 101 with a clear new vision on how to deliver talent to the marketplace. To work at Talent 101 is to be a part of something creative and big. From our modest roots as an ambitious startup, to becoming a global workforce solution provider to the world’s most recognized semiconductor companies, our growth and momentum owes a lot to our strong company culture of customer service, can do attitude, sense of urgency and always focus on the client and talent.

jackt@talent-101.com