~ ETE 411.
3 ~ Term Paper (Final) ~
Recent Challenges in Semiconductor Industry and the Future
M Manzur Ul Islam [ID# 072190045] [Sec: 03]
Abstract—this writes up gives us some ideas on the topic
“Recent challenges in the semiconductor industry & its future”.
I. INTRODUCTION
The semiconductor industry lives - and dies - by a
simple creed: smaller, faster and cheaper. The
benefit of being tiny is pretty simple: finer lines
mean more transistors can be packed onto the same
chip. The more transistors on a chip, the faster it
can do its work. Thanks in large part to fierce
competition and to new technologies that lower the
cost of production per chip, within a matter of
months, the price of a new chip can fall 50%.
As a result, there is constant pressure on chip
makers to come up with something better and even
cheaper than what redefined state-of-the-art only a
few months before. Chips makers must constantly
go back to the drawing board to come up with
superior goods. Even in a down market, weak sales
are seen as no excuse for not coming up with better
products to whet the appetites of customers who
will eventually need to upgrade their computing and
electronic devices. [1]
II. WHAT SEMICONDUCTOR IS
A semiconductor is a material that has an electrical
conductivity between that of a conductor and an
insulator, that is, generally in the range 103
Siemens/cm to 10−8 S/cm. Devices made from
semiconductor materials are the foundation of
modern electronics, including radio, computers,
telephones, and many other devices. Semiconductor
devices include the various types of transistor, solar
cells, many kinds of diodes including the light-
emitting diode, the silicon controlled rectifier, and
digital and analog integrated circuits. Solar
photovoltaic panels are large semiconductor devices
that directly convert light energy into electrical
1
energy. An external electrical field may change a
semiconductor's resistivity. In a metallic conductor,
current is carried by the flow of electrons. In
semiconductors, current can be carried either by the
flow of electrons or by the flow of positively-
charged "holes" in the electron structure of the
material.
Common semiconducting materials are crystalline
solids but amorphous and liquid semiconductors are
known, such as mixtures of arsenic, selenium and
tellurium in a variety of proportions. They share
with better known semiconductors intermediate
conductivity and a rapid variation of conductivity
with temperature but lack the rigid crystalline
structure of conventional semiconductors such as
silicon and so are relatively insensitive to impurities
and radiation damage.
Silicon is used to create most semiconductors
commercially. Dozens of other materials are used,
including germanium, gallium arsenide, and silicon
carbide. A pure semiconductor is often called an
“intrinsic” semiconductor. The conductivity, or
ability to conduct, of common semiconductor
materials can be drastically changed by adding
other elements, called “impurities” to the melted
intrinsic material and then allowing the melt to
solidify into a new and different crystal. This
process is called "doping". [2]
III. USE OF SEMICONDUCTOR
1. Memory: Memory chips serve as temporary
storehouses of data and pass information to
and from computer devices' brains. The
consolidation of the memory market
continues, driving memory prices so low
that only a few giants like Toshiba,
Samsung and NEC can afford to stay in the
game.
2. Microprocessors: These are central
processing units that contain the basic logic
to perform tasks. Intel's domination of the
~ ETE 411.3 ~ Term Paper (Final) ~
microprocessor segment has forced nearly
every other competitor, with the exception
of Advanced Micro Devices, out of the
mainstream market and into smaller niches
or different segments altogether.
3. Commodity Integrated Circuit:
Sometimes called “standard chips”, these
are produced in huge batches for routine
processing purposes. Dominated by very
large Asian chip manufacturers, this
segment offers razor-thin profit margins that
only the biggest semiconductor companies
can compete for.
4. Complex SOC: “System on a Chip” is
essentially all about the creation of an
integrated circuit chip with an entire
system's capability on it. The market
revolves around growing demand for
consumer products that combine new
features and lower prices. With the doors to
the memory, microprocessor and commodity
integrated circuit markets tightly shut, the
SOC segment is arguably the only one left
with enough opportunity to attract a wide
range of companies. [1]
IV. SEMICONDUCTOR FABRICATION PLANT
Semiconductor device fabrication is the process
used to create the integrated circuits (silicon chips)
that are present in everyday electrical and electronic
devices. It is a multiple-step sequence of
photographic and chemical processing steps during
which electronic circuits are gradually created on a
wafer made of pure semiconducting material.
Silicon is the most commonly used semiconductor
material today, along with various compound
semiconductors.
The entire manufacturing process from start to
packaged chips ready for shipment takes six to eight
weeks and is performed in highly specialized
facilities referred to as fabs. A semiconductor
fabrication plant (commonly called a fab) is a
factory where devices such as integrated circuits are
manufactured.
A business that operates a semiconductor fab for the
purpose of fabricating the designs of other
2
companies, such as fabless semiconductor
companies, is known as a foundry. If a foundry does
not also produce its own designs, it is known as a
pure-play semiconductor foundry. [3]
Figure 1: NASA’s Glenn Research Center clean room
V. RECENT CHALLENGES IN INDUSTRY
The challenges applicable to the construction of
semiconductor industries are:
A. Threat of New Entrants
In the early days of the semiconductors industry,
design engineers with good ideas would often leave
one company to start up another. As the industry
matures, however, setting up a chip fabrication
factory requires billions of dollars in investment.
The cost of entry makes it painful or even
impossible for all but the biggest players to keep up
with state-of-the-art operations. It comes as no
surprise, then, that established players have had a
big advantage. Regardless, there are signs that
things could be changing yet again. Semiconductor
companies are forming alliances to spread out the
costs of manufacturing. Meanwhile, the appearance
and success of "fables" chip makers suggests that
factory ownership may not last as a barrier to
entry.[1]
B. Power of Suppliers
For the large semiconductor companies, suppliers
have little power - many semiconductor companies
have hundreds of suppliers. This diffusion of risk
over many companies allows the chip giant to keep
the bargaining power of any one supplier to a
minimum. However, with production getting hugely
expensive, many smaller chip makers are becoming
~ ETE 411.3 ~ Term Paper (Final) ~ 3

increasingly dependent on a handful of large profitability of semiconductor manufacturing

foundries. As the suppliers of cutting-edge
equipment and production skills, merchant
foundries enjoy considerable industry bargaining
power. The largest U.S.-based foundry belongs to
none other than IBM – which is also a top chip
maker in its own right. [1]
C. Power of Buyers
companies. According to the NTRS, factory costs
have increased by 20% annually and the
depreciation costs associated with them represent
45% of the wafer cost/cm2. To remain on the
historic improvement curve, operating cost/cm2
must improve 1% annually.
G. Factory Investment Risk Management and Time Factors

Most of the industry's key segments are dominated The rapidly diminishing time allowable to recover
by a small number of large players. This means initial and recurring factory investments requires
that buyers have little bargaining power. [1] that facilities be delivered faster with higher
certainty. To reduce capital expenditures and start
D. Availability of Substitutes up times, facilities should be delivered in modular
The threat of substitutes in the semiconductors units just as they are needed. Several key metrics
industry really depends on the segment. While are:
intellectual property protection might stop the threat
H. Minimum Economical Capacity Increment:
of new substitute chips for a period of time, within a
short period of time companies start to produce Efficient and profitable factories will be sized at 30-
similar products at lower prices. Copy-cat suppliers 40K WSM (wafer starts per month) in the near
are a problem: a company that spends millions, if future. This will require modular “just enough, just
not billions, of dollars on the creation of a faster, in time” additions to capacity.
more reliable chip will strive to recoup the R&D
costs. But then along comes a player that reverse
engineers the system and markets a similar product What Drives Semiconductor Fundamentals and
for a fraction of the price. [1] Stock Prices?
E. Competitive Rivalry
Drivers Impact Measured By
The industry is marked by intense rivalries between Drives
individual companies. There is always pressure on revenue Units shipped
chip makers to come up with something better, Market share gains and vs.
faster and cheaper than what redefined the state-of- earnings competition
the-art only a few months before. That pressure increases
extends to chip makers, foundries, design labs and
Absorptio
distributors – everyone connected to the business of
n of higher
bringing chips from R&D into high-tech equipment. Manufacturin
Higher fixed costs
The result is an industry that continually produces g process
margins/profits contributes
cutting-edge technology while riding volatile efficiencies
to lower
business conditions. [1]
unit costs
F. Factory Cost Stimulates
Performance
greater
Clean room costs for large fabs (9,000 m2) are results based
Higher product enthusiasm
rapidly raising to over $48,500 (US) per square on industry
performance vs. the for end
meter as users demand design and construction benchmarks
competition products
schedules that put from 750 to 950 square meters of
and
clean room ($36-45 million US) in place per month
support
at submicron quality standards. Escalating factory
capitalization and operational costs are impacting
~ ETE 411.3 ~ Term Paper (Final) ~ 4

What Can Go Wrong?

Impact on
Risks
Fundamentals
Shipment volumes
Weak economy and/or
may be negatively
product environment
affected
Loss of revenues,
profits and
Delayed delivery of competitive position;
products potential reduction in
demand for current VI. SEMICONDUCTOR INDUSTRY FACES GLOBAL
chips LEADERSHIP CHALLENGES
Shrinking profit Semiconductor Industry Association (SIA)
Sever price competition
margins President George Scalise recently remarked that
Increasing chip “the U.S. semiconductor industry today is strong
complexity requires and healthy, but our world leadership position faces
Failure to keep up with
more advanced a very stern challenge in the years ahead. For more
technology
processes to keep than 50 years, world leadership in technology and
costs under control innovation has been the foundation of American
A slowdown in pace of Depresses industry strategies for economic growth, improved
computer replacement organic growth rates. productivity, a better standard of living, and
national security. U.S. leadership, however, is not a
birthright. Other countries have recognized the
I. Process / Factory Complexity strategic importance of leadership in the
semiconductor industry and are becoming
Processes and factories are constructed and formidable competitors. The U.S. must choose to
operated with increasing amounts of material, compete if we are to retain our leadership position.
process and technology change in an increasingly Maintaining global leadership will require us to
interdependent environment. NTRS lists a goal for address major concerns, including investing in basic
factory effluent reduction of 80% by 2006 and more research, improving our K-12 education system,
importantly of 50% by 1997. Tool manufacturers creating incentives for students to pursue higher
are struggling to make even modest reductions in degrees in the sciences, and maintaining a favorable
effluent. The facility designers and constructors investment climate for capital-intensive industries.
must develop solutions to efficient waste recovery. These issues are our top priorities.”
Tool manufacturers must better understand the
energy costs, waste disposal and input chemical Backing up Scalise’s remarks was a report by the
costs before designing families of tools. Designs Industrial College of the Armed Forces (ICAF) that
with high chemical, gas, water and power usage, detailed the effects of globalization in 2004, which
and effluent are significant impacts on facility first was just as current in 2005 and 2006. The report
costs and operating costs. This research program said the U.S. is now facing the challenge of reacting
will address the information management issues. [4] to an information age becoming more uncertain and
more globalized, particularly in the semiconductor
industry. It can also impact the supply of
~ ETE 411.3 ~ Term Paper (Final) ~
semiconductors employed for national security. A
typical example of this globalization might be:
1. Semiconductor design created in the U.S.
2. Exported to Taiwan for production.
3. Sent to Malaysia for assembly.
4. Moved to Thailand for packaging.
5. To China for incorporation into larger end-items.
6. Then, multiple imports into the U.S. or stay in
China, where there is a growing consumer base.
The ICAF report said that the U.S. semiconductor
industry is a leader in globalized industrialization
with innovators, producers, suppliers, markets, and
users of semiconductors spanning the globe.
Previously, the U.S. competitive advantage was in
the design, construction, packaging, and selling of
microchips. That is no longer completely true
because the U.S. advantage does not necessarily
include production and packaging. [9]
VII. CHANGING SEMICONDUCTOR INDUSTRY
FORCES CHANGES TO GROWTH STRATEGIES
Semiconductor industry profits, opportunities, and
star players are shrinking, according to iSuppli
Corp, which this week painted an honest but
somewhat bleak picture of the market.
According to the research company, the
semiconductor industry is now in a period of
lowered expectations and thinning options, forcing
chip suppliers to rethink their strategies for success.
“Semiconductor profitability has eroded steadily
since mid 2004, with quarterly net profits having
fallen into the single-digit range in 2008, down
from the 17% to 19% range in 2004,” said Derek
Lidow, iSuppli's president and CEO, said in a
statement. “The semiconductor industry now is less
profitable as a percentage of revenue than the
notoriously low-margin PC business, something
that hasn't occurred before, except during a short
period of the severe market downturn in 2001."
What could be considered short-term trends, said
Lidow, are instead examples of a changed industry.
“To a degree, conditions in the semiconductor
industry have been impacted by short-term events,
such as the market volatility in 2006 due to
5
inventory write-offs and price wars in major
product segments like DRAMs and
microprocessors,” he said. “However, the long-term
trend indicates that the semiconductor industry—
which historically has been good at capturing
profits in the electronics value chain—seems to
have lost its money-making touch.”
As profit has diminished, the semiconductor
industry has re-segmented itself into new groups,
iSuppli said. What once was an industry divided
into companies that outperformed the market and
preyed on mid-performing suppliers and low
performing companies for additional market share,
now no longer allows for the lowest rank of
suppliers, minimizing growth opportunities for top
performers.
“The number of low performing companies
decreased by so much that there now are only two
major distributions in the industry: a few
outstanding performers and the rest,” Lidow said.
“The number of competitors achieving growth of
more than 100% during the period of 2004 to 2007
declined to nine, down from 19 during the period of
2001 to 2004. This shows semiconductor companies
can no longer break out of the pack by taking
market share away from weaker rivals.” [10]
VIII. SEMICONDUCTOR INDUSTRY
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.
Semiconductor device manufacturing has spread
from Texas and California in the 1960s to the rest
of the world, such as Europe, India, Israel, Japan,
Taiwan, Korea, Singapore and China. It is a global
business today.
The leading semiconductor manufacturers typically
have facilities all over the world. Intel, the world's
largest manufacturer, has facilities in Europe and
Asia as well as the U.S. Other top manufacturers
include ST Microelectronics (Europe), Analog
Devices (US), Atmel (US/Europe), Freescale
~ ETE 411.3 ~ Term Paper (Final) ~
Semiconductor (US), Samsung (Korea), Texas
Instruments (US), Global Foundries (Germany,
future New York fab in construction), Toshiba
(Japan), NEC Electronics (Japan), Infineon
(Europe), Renesas (Japan), Taiwan Semiconductor
Manufacturing Company (Taiwan), Chartered
Semiconductor Manufacturing (Singapore), Fujitsu
(Japan/US), NXP Semiconductors (Europe), Micron
Technology (US), Hynix (Korea) and SMIC
(China). [5]
IX. SEMICONDUCTOR INDUSTRY IN OUR
NEIGHBORING COUNTRIES
Our neighboring countries like India, Indonesia,
Korea and Pakistan improved their capabilities of
semiconductor and day by day they improving their
technologies through the help of the blessings of
semi-conducting materials. This following
examples will illustrate the bit of present scenario
of our neighboring countries that how they
affectively used semiconductor to enhance their
technology.
A. Semiconductors in India:
Sony Computer Entertainment Launches Slimmer,
Lighter PS3 in India. India is on a clicking spree.
Now that taking years ago. Nikon also has a large
semiconductor business. We first started looking at
India, a leading provider of highly integrated
semiconductor products that enable intelligent
processing for networking, design team locations in
California, Massachusetts and India.
B. Semiconductors in Japan:
Datamonitor's Semiconductors in Japan industry
profile is an essential resource for top-level data and
analysis covering the semiconductors industry. It
includes detailed data on market size and
segmentation, plus textual and graphical analysis of
the key trends and competitive landscape, leading
companies and demographic information contains
an executive summary and data on value, volume
and/or segmentation. It provides textual analysis of
the industrys recent performance and future. Its
prospect incorporates in-depth five forces
competitive environment analysis and scorecards.
It includes a five-year forecast of the industry. The
6
leading companies are profiled with supporting key
financial metrics. It’s supported by the key
macroeconomic and demographic data affecting the
market.
Other south-Asian countries like Korea, Pakistan
are also established semiconductor based
technology in their countries. They also
manufacture semi conducting devices which are
leading them to the process of success and
development
X. TOP SEMICONDUCTOR SUPPLIERS REPORT:
MEMORY MAKERS SLIP IN RANKINGS
Plummeting chip prices resulted in DRAM and flash memory
makers suffering revenue declines in 2007.
Intel and Samsung - two companies that supply a
lot of chips to the computer industry - remain the
top semiconductor suppliers, but chipmakers that
supply to cell phone makers are moving up in the
rankings. Meanwhile, memory IC makers are
slipping. “A couple companies that showed some of
the strongest growth last year and in the first quarter
were Qualcomm and Broadcom in terms of
percentage growth,” says Brian Matas, vice
president of research for IC Insights in Scottsdale,
Ariz. Qualcomm grew sales 29% in the first quarter
of 2008 after posting a 24% revenue increase in
2007. While Broadcom increased its 2007 revenues
only 2.1%, its sales grew 14% in the first quarter of
2008 to crack IC Insight's list of the top 20
semiconductor companies. Both companies supply
chips to makers of high-end cell phones. Of course
Intel remains the top semiconductor company. It
owns more than 80% of the microprocessor market
and grew sales 7.8% in 2007, according to
researcher iSuppli's list of the top 25 semiconductor
companies for 2007. Its sales increased 16% in first
quarter of 2008. AMD's sales dropped 21% in 2007
due in large part to its price war with Intel.
However, in the first quarter AMD grew its sales
22% as the price war cooled. AMD's ranking
slipped from eighth in 2006 to 10th in 2007, says
iSuppli. Samsung, which is the leading memory IC
supplier, saw its sales slip a little less than 1% in
2007. However, its revenue increased 19% in the
first quarter of 2008 as memory prices began to
~ ETE 411.3 ~ Term Paper (Final) ~
firm. Many memory IC makers slipped in sales
rankings because of low prices for DRAM and flash
in 2007. “A lot of them are way down the list
because of brutal pricing,” says Matas.
XI. FUTURE OF SEMICONDUCTOR:
Energy has become a big factor in this developing
world. We need energy for technology, invention of
modern industries, new innovation. The demand of
energy is increasing day by day with the increase in
population so we should think of an alternate
energy source. Solar power energy will be the most
suitable one. Solar cells represent the fundamental
power conversion unit of photovoltaic system. They
are basically p-n junctions made of semiconductors.
The process is described below:
When enough photons are absorbed by the negative
layer of the Photovoltaic cell, electrons are freed
from the negative semiconductor material. Due to
the manufacturing process of the positive layer,
these freed electrons naturally migrate to the
positive to the positive layer creating a voltage
differential, similar to a household battery. When
the 2 layers are connected to an external load, the
electrons flow through the circuit and create
electricity. Each individual solar energy cell
produces only 1-2 watts. To increase power output,
cells are combined in a weather-tight package called
a solar module. These modules (from one to several
thousand) are then wired up in serial and/or parallel
with one another, into what’s called a solar array, to
create the desired voltage and amperage output
required by the given project.
Mobile phone is the common gadget we can find in
everyone’s hand. We can earn a lot of money if we
establish a semiconductor industry which will
provide the hardware requires. In this way we can
also save the money which we spend every year to
export the hardware and mobile sets from foreign
country. [6]
A. Future aspects of Bangladesh
The present status and future prospect of these
widegap semiconductor high-power devices are
very important, in the context of applications in
wireless communication and power electronics
which is widely spreading in Bangladesh. In
7
Bangladesh, now there are companies producing
semiconductor materials which can lead us as a
technically developed country. POWER IC ltd. Is
such a fab-less semiconductor company which is
developing US qualities analog and mixed signal
power management IC’s. So we can say we are
getting along the modern communications by
developing semiconductor materials of good quality
by our own and will develop more integrated IC’s,
diodes, transistors in near future.
Though the contribution of Bangladesh in the
semiconductor industry is very few some research
projects are going. The projects under Dr. A.B.M
Harun-ur Rashid at Bangladesh University of
Engineering & Technology, Dhaka include:
● Very High frequency (25 GHz) Transceiver
circuit design for on-chip wireless interconnect
using integrated antenna.
● Fault detection and localization in Analog and
Mixed-signal integrated circuit
● Si on-chip wireless channel modeling
● Signal processing chip design using ASIC and
FPGA
● High Speed and Low power design of Content
Addressable Memory
● Early detection of Breast cancer using MIST
beam forming
● Novel circuit design using Carbon Nan tube
Cadence VLSI Design tools is designed and
implemented at the Robert Nayce Simulation Laboratory
at the department of EEE, BUET which is the first its
kind in Bangladesh. [7]
We have a Semiconductor Technology Research
Center (STRC) at University of Dhaka. The
Department of Physics at Rajshahi University has a
reputation of research in different fields of Physics.
Some of the current research areas include:
• Condensed Matter Physics: a) Perfect and defect
crystals - computer simulation studies (theoretical).
b) Solid state reaction (experimental)
• Superconductivity
~ ETE 411.3 ~ Term Paper (Final) ~ 8

• Semiconductors: Thin film deposition and

characterization
• Structural properties of glass and glass ceramics
• Solar Energy [8]

XII. CONCLUSION:

Semiconductor industry is one of the fastest

growing industries in the world. Although it faces
different types of problems in getting established
fully but if we think on Bangladesh’s perspective,
our neighboring countries have achieved new
heights regarding technological development but
our
Bangladesh is yet to fulfill such goals. But with the
help of diligent citizens of the country reaching that
goal will be within our grasp. The equipments
required for setting up a semiconductor plant is
extravagant and on top of that finding the right
people for the skillful job is very difficult. Although
the country has great prospects but in order to bring
about a revolutionary change in the system there are
many factor to be considered which can only come
about from all round development of a nation
which, I for one, hope will materialize in the near
future.

References
[1]
http://www.investopedia.com/features/industryhandbook/semi
conductor.asp
[2] http://en.wikipedia.org/wiki/Semiconductor
[3]
http://en.wikipedia.org/wiki/Semiconductor_fabrication_plant
[4] www.ce.berkeley.edu/~tommelein/.../Sanvido&Mace.pdf
[5] http://www.sia-online.org
[6]
http://www.energybangla.com/index.php?mod=article&cat=G
reenPage&article=2198
[7] http://203.208.166.84/abmhrashid/
[8] http://www.rubd.net/faculty/faculty-of-science/92-
department-of-physics.html
[9] http://www.springerlink.com/content/362603w085883g77/
[10] http://www.edn.com/article/CA6597389.html