Koen Verhaege, CEO, Sofics
December 20, 2023.
The challenging year 2023 is finally wrapping up… Predictions were that it would be a transition year towards a better 2024. So, let’s welcome 2024!
First, let’s look back. 2022 was notable, albeit for the wrong reasons: warehouses were being filled to brace against new shortages. In 2023, these overstocks created a steep drop in production. Consider the foundry capacity utilization numbers: they are near 80% today, compared to being at all-time highs, above 100%, last year.
The key factors shaping 2024 will likely be geopolitics and the subsequent influx of tax dollars, as well as, the evolving role of Artificial Intelligence in our workplaces.
Geopolitics
Geopolitical tensions will be fought and lost through the use of dollar monsoons – not by war. All (wannabe) powers are releasing tsunamis of dollars (euros, won, yen…) to bring semiconductor production “home”. Politicians are sharpening their scissors to cut ribbons at new manufacturing plants. Many if not all of these plans will fail, at least they will fail to create autonomy or independence.
Why? Because the semiconductor industry relies on international collaboration: there is no single region capable of producing everything needed to build advanced ICs. Allow me to cut some corners to paint the picture: the fabs are in Taiwan, but the chemicals are produced in Japan, the production equipment comes from the Netherlands and the design software is sourced from the USA.
China will not invade nor occupy Taiwan because the money therefore (it would cost a world war) can be better invested in building a competitive semiconductor industry – and China may very well succeed as recent market reports are pointing out.
Anyone wanting an autonomous “home fab” should also build an entire ecosystem to make it economically viable. One needs engineers (who are in short supply worldwide), a rich design (service and IP) ecosystem, packaging and testing services, manufacturing equipment, raw materials and supplies, in order to become truly independent. I believe that this is not going to happen, not any time soon, sorry.
As an IP provider, I can attest that significant investment, in addition to the multi-billion dollar/euro fabs, will be necessary for producing in the long term ICs “at home”. I am positive that others in the semiconductor food/supply chain will testify to the same for their fields of expertise.
Artificial Intelligence
AI will not rule the world, but people that use AI with (human) intelligence will rule their market. Everyone has 2 choices for their business today: (1) don’t care about AI or (2) figure out if and how AI can make a difference.
If you’re too busy, that’s unfortunate, but it’s crucial to figure it out regardless. AI will not replace companies, but companies applying AI will. AI’s integration is inevitable and crucial also in our industry.
This brings us back full circle to semiconductors: every day in 2024, more compute power, data storage and networking will be needed, more than ever before. Therefore, the hope for the semiconductor industry lies in advanced ICs and technology, benefiting all players in the supply chain, including design, IP, CAD, manufacturing (with all the tools and supplies), packaging and testing, ICs and systems, as well as software and hardware.
Happy 2024, another exciting new year!
Koen Verhaege (https://linktr.ee/koenverhaege)
CEO of the Sofics team – your trusted supplier of on-chip robustness IP solutions
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