Did you know that – now more than ever – from the moment we wake up to when we end our day, we are constantly interacting with devices powered and enabled by semiconductors.
A recent Accenture report*, titled “Harnessing the Power of the Global Semiconductor Value Chain”, comprehensively explores the major trends in the industry and market, such as COVID-19 spikes, natural disasters, and power outage induced facility shutdowns that have led to the current well publicized chip shortage.
These disruptions within the semiconductor market have left some wondering just how the world got to this moment, and what could have been done to avoid the current and future shortage. Some are even reconsidering the global nature of the semiconductor value chain entirely.
This report delineates how the industry has evolved into a deeply complex, interconnected web of global partners working to produce one semiconductor chip. It is a truly interdependent value chain on a global scale. In fact, one of the key thesis in the report suggests that no one country or company can achieve end-to-end semiconductor independence, at least not within the next decade. The following graphic taken from the report is a perfect illustration of the industry’s global complexity and interdependence:
Building resiliency in the global supply chain is the only solution to avoid disruptions that can cause tremendous economic impact to everyone in the value chain.
Additionally, America’s leadership in chip industry innovation over the past four decades has been defined by its strengths in complex chip design – and the ability to industrialize them by collaborating with ecosystem and manufacturing partners, both domestically and abroad.
The importance of chip design should not be overlooked as a key element in the semiconductor supply chain. The fabless semiconductor companies have the highest R&D as a percent of sales ratio in the industry, and the design stage of semiconductor fabrication is the most value additive of all stages of chip fabrication. The bottom line is fabs can only manufacture innovative chips that enable 5G, ADAS, and precision medicine if they are first created by chip designers.
The report recommends four specific actions to build resilience and strengthen innovation within a global semiconductor value chain:
1. protect semiconductor intellectual property;
2. promote investing in semiconductor R&D;
3. ensure ecosystem-friendly business conditions; and
4. address the talent shortage through STEM promotion.
The global chip shortage has underscored the vulnerabilities within the global semiconductor industry. Now is the time to strengthen global collaboration among all ecosystem players to continue to harness the power of the global semiconductor value chain in the long-term.
*Report sponsored by Qualcomm Incorporated.
