Semiconductor industry
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The semiconductor industry is the aggregate collection of companies engaged in the design and fabrication of semiconductor devices. It formed around 1960, once the fabrication of semiconductors became a viable business. It has since grown to be the $249 billion dollar industry it is today.[1]
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[edit] Industry structure
The global semiconductor industry is dominated by Taiwan, South Korea, USA, and Japan. Despite experiencing a downfall in the semiconductor market, Japan is still major leader in the industry. The U.S. industry faces challenges to development by some forms of government regulation. The U.S. government regulates exports and certain uses of some types of semiconductors due to their potential dual use in military applications.
Based on KPMG report it will be a $260 billion market by 2009. A few major players in this segment are Taiwan Semiconductor Manufacturing Company, United Microelectronics Corporation, Intel, Toshiba, NEC, Sony, IBM, Samsung, Texas Instruments, ST Microelectronics, NXP Semiconductors, Freescale, Infineon, ISSI etc.[citation needed]
[edit] Features
This industry features a number of distinct characteristics that position it uniquely in the economy and in the global competitive arena. These include:
- Very high intensity of research and development (up to 20% of annual revenues) and the required level of capital expenditures in semiconductor plants or fabs (up to 25% of annual revenues).
- The role of the industry as technology enabler. The semiconductor industry is widely recognized as a key driver for economic growth in its role as a multiple lever and technology enabler for the whole electronics value chain. In other words, from a worldwide base semiconductor market of $213 billion in 2004, the industry enables the generation of some $1,200 billion in electronic systems business and $5,000 billion in services, representing close to 10% of world GDP.
- Maximal exposure to international competition.
- Continuous growth but in a cyclical pattern with high volatility. While the current 20 year annual average growth of the semiconductor industry is on the order of 13%, this has been accompanied by equally above-average market volatility, which can lead to significant if not dramatic cyclical swings.
- The need for high degrees of flexibility and innovation in order to constantly adjust to the rapid pace of change in the market. Many products embedding semiconductor devices often have a very short life cycle. At the same time, the rate of constant price-performance improvement in the semiconductor industry is staggering. As a consequence, changes in the semiconductor market not only occur extremely rapidly but also anticipate changes in industries evolving at a slower pace. Yet another consequence of this rapid pace is that established market strongholds can be displaced all too quickly.
