Reichenbach provides a nuanced perspective on the multifaceted challenges confronting semiconductor manufacturers and the global impact of these challenges.
Challenges Facing Semiconductor Industry
1. Political Situation:
Reichenbach highlights the significant impact of the political situation, particularly the uncertainties stemming from the geopolitical tensions between the US and China.
“From our perspective, a big challenge and uncertainty is the political situation, particularly between the US and China. If the conflict intensifies, this will impact the Western market. This will lead to uncontrolled interruptions for equipment manufacturers, suppliers, and end-users.”
2. Expansion Capacities:
“If there's an eruption between China and Taiwan, the semiconductor world will come to a standstill. TSMC in Taiwan currently produces two-thirds of the leading-edge, sub-10-nanometer chips. If that stops, we're missing more than 60% of all the chips for mobile phones or high-performance chips.
3. Supply Chain Disruptions:
Reflecting on the challenges faced during the pandemic, Reichenbach discusses the potential supply chain disruptions due to trade interruptions.
“During the last three years, the shortage of goods was not caused by political reasons but due to the global pandemic. This resulted in cost shortages or even the fear of a shortage, which led many customers to place orders. If there are any trade sanctions imposed on China, it could lead to a similar situation in the future.”
4. Material Shortages:
While the current period sees a relaxation in material shortages, Reichenbach points out the possibility of shortages resurfacing as the market experiences an uptick.
“There are fewer material shortages as the situation has significantly improved. However, both the demand for semiconductor chips and the demand for wafer fabrication equipment have slowed down. If the market recovers, we may face allocation issues and experience again more severe material shortages.”
5. Ever-Evolving Technology:
Reichenbach delves into the dichotomy of bleeding-edge technology versus mature technology nodes and the challenges of keeping pace with technological advancements.
“The bleeding-edge technology represents the tip of the iceberg, and very few companies are equipped to deal with it. TSMC, Samsung, and Intel are still the technology leaders in this field. However, most companies are still using mature technology nodes of >20 nanometers. These two worlds are completely different from each other.”
“The requirements and specifications for various applications are becoming increasingly stringent. However, many applications, such as automotive and telecommunication, rely on mature nodes. The latest technology is mainly necessary for high-performance computing applications like AI.”
6. Sustainability:
Highlighting the industry's role in sustainability, Reichenbach discusses the trend toward decreasing the carbon footprint.
“The semiconductor industry is playing a crucial role in the sustainability movement. The only viable solution to reducing our carbon footprint is eliminating fossil fuels and electrifying processes where possible. However, this shift towards electrification requires a significant number of semiconductors.”
“There are still certain gas-powered processes, particularly in exhaust treatment. Some companies are already replacing gas burners where possible, although it requires huge investment and is ultimately a business decision.”
7. Skilled Workers:
The ongoing challenge of securing a skilled workforce is explored, with Reichenbach noting regional disparities.
“Compared to other regions, especially in Asia, it will be a greater challenge to set up a semiconductor fabrication fab in Europe due to the demographic situation. The lack of a skilled workforce is a major concern, although it also depends on the region you are considering. In countries like India and China, this is less of a problem.”
8. Global Competition:
The semiconductor market is highly competitive, and Reichenbach offers insights into it.
“On a global level, there has always been intense competition, and as a result, the market is very much consolidated. It will be challenging for new players to enter the market and compete with the five big players.”
“In the past years, we have seen a growing differentiation between production and design of components as companies specialize in either skill set. Designing and manufacturing are two separate skills, and this trend is likely to become more pronounced in the future.”
9. Research and Development (R&D):
Reichenbach sheds light on the challenges of approaching structural limits in nanometer structures and chip stacking.
The industry faces a major challenge as structures approach their size limit.
“The industry faces a major challenge as structures approach their size limit. It is becoming increasingly difficult to overcome single-nanometer structures. Shrinking structures smaller than two or three nanometers is challenging; new methodologies and designs are needed to achieve this. As we approach the single atom level in structure size, which is currently the limit, the density of storage information on a chip needs to be increased in different ways.”
“Currently, the trend is to stack different chips on each other, increasing density on the same footprint. This is comparable to the move from 2D to 3D memory structures introduced 10 years ago. On the logic side, high-performance computing chips are stacked with more chipsets on one chip. This is the way to go for the next few years.”
“In the future, diamond-based materials may be used instead of silicon. However, this is currently too expensive and not economically feasible, and the transition will take years, if not decades.
Looking ahead
Despite the challenges faced by the semiconductor industry, Reichenbach predicts an upswing in the near future.
“The market is expected to experience an upward trend in the second half of next year, driven by increased demand for AI chips, the intensification of digitalization, and the comeback of the memory market. As seen during the pandemic, there might be a surge in demand for all kinds of chips while companies making risk-buys might lead to shortages.”
“Additionally, there will be a higher demand for chips for the EV industry. The automotive sector will contribute to this demand as converting fossil fuel to electric power gains momentum,” Reichenbach concluded.