Under the impact of trade wars, raw materials shortages, and factory shutdowns, 2020 has been a challenging year for the semiconductor industry. As we enter 2021, many analysts are concerned that the new year will bring new challenges. As a leader in electronic component distribution, Aegis Components knows the importance of market awareness and staying up to date on the latest events and news in the electronics industry. In today’s article, we will unpack the factors we believe will have the largest influence on the semiconductor industry in 2021
Germany, France, Italy, Belgium, The Netherlands, and twelve other countries have signed up to reinforce Europe’s electronics value chain. This joint declaration is meant to enable Europe to develop its own high-performance processor chips by 2025. The impetus of the movement is to localize the supply chain, after a year filled with supply chain fragility. The money for this joint initiative will come from the EU and national pandemic recovery funds.
In 1965, Intel co-founder Gordon E. Moore predicted that the number of transistors on a chip would double every two years. For decades, this prediction known as “Moore’s Law”, has driven the semiconductor industry to develop components with greater transistor density and higher performance. However, as multiple chipmakers have already crossed the 5nm threshold, it seems that Moore’s law is approaching its end. Manufacturers can no longer improve their hardware by making it smaller, therefore companies like Samsung and TSMC are addressing this issue by developing new chip packaging techniques. For instance, TSMC has begun stacking and linking several different types of chips, such as processors, memory, and sensors into one package. This new approach offers reduced latency with greater performance and energy efficiency. As this new technology is deployed in consumer electronic device processors, if end-market demand is sufficient, this technology will likely quickly enter commercial and industrial chipset production.
Due to the Coronavirus outbreak, the first four months of 2020 have seen an unprecedented drop in global car sales. However, by Q3 of 2020, automotive manufacturing began to resume, and demand recovered. During this period, electric vehicles (EVs) emerged as the driving force behind the recovery, and market analysts expect this wave to continue throughout 2021 in the U.S. and especially throughout Europe. Electric vehicles in particular house many complex electronic systems composed of advanced semiconductors. Because of this, many analysts expect changes in demand, changes in the types of components used, and changes in the logistics processes used to move them.
Read more: Electrification Set to Trigger Massive Changes in the Automotive Supply Chain
Telecommunications companies around the world are racing to deploy the best 5G networks, and providers in Africa, Asia, North America, Australia, and Europe have already begun to roll out 5G mobile data networks. 5G will likely become much more accessible in 2021 and will be a catalyst for a multitude of technological revolutions, all of which would require higher performing components that are 5G compatible. Many analysts agree that in 2021, the consumer electronics sector could deplete the semiconductor industry as every 5G compatible device will require significantly more semiconductors.
Read more: 5G Set to Transform the Semiconductor Industry
The U.S.-China trade war has persisted for several years and has made the import and export of certain goods very expensive. The trade war has cost electronics companies billions of dollars, and the situation consequently prompted many major electronics part manufacturers to shift their production capacity outside of the affected areas. Both the U.S. and China are dedicating billions of dollars to developing independent component supply chains. Countries like Taiwan, India, South Korea, and others began funding incentive initiatives to bring semiconductor manufacturing to their regions. These major shifts in production in the semiconductor industry will come to fruition in 2021, as the construction of these facilities begin. The transition is expected to result in some logistics and sourcing disruption, but as the electronic component supply chain becomes more evenly spread, manufacturers incur much lower shipping costs.
The semiconductor industry has had a chaotic year in 2020, and as we approach Q1 2021, how can purchasers of semiconductors fortify their supply chain? Supplier diversification is a simple but critical measure to ensure a supply chain’s resilience through turbulent times. At Aegis Components, our global network of suppliers has been vetted and refined over the last decade. We also maintain strategically placed locations all around the world to help us locate and secure products globally and offer you the most competitive pricing and terms according to your delivery schedule. Even the most minor supply chain hiccup can produce a ripple effect of delays and withered profits.
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