The global market for semiconductors is growing at 20 per cent a year and looks like it will continue to do for some time to come.
Worldwide sales of semiconductors are said to have reached more than $412 billion in 2017.
One of the biggest buyers of semiconductors now is the automotive manufacturing sector.
The average new car now has several hundred chips installed into it for all sorts of reasons, including mobile internet connectivity and autonomous functions.
The vast majority of the top chipmakers in the world – Intel, Samsung, Taiwan Semiconductor Manufacturing Company, Texas Instruments, and so on – are from either the US or the Far East, Taiwan, to be precise.
And yet a German industry body claims the country to be a “major electronics force”.
In its latest report on the microelectronics industry, Germany Trade & Invest claims Germany to be “a major microelectronics force”.
GTAI says Germany is “Europe’s leading semiconductor production location”, and that the sector is the second-largest in manufacturing in terms of the number of people employed.
GTAI’s latest figures, which are are for 2015, suggest that the microelectronics sector in Germany has a turnover of around $223 billion annually and employs approximately 85,000 people.
That’s the supply side of the German economy when it comes to microelectronics.
On the demand side, if we look at figures produced by the German electrical and electronics industry association ZVEI, which GTAI cites, we are told that microelectronics consumption will reach $180 per person in Germany by the year 2021.
This is some way behind Japan, where they spend $293 per person, and the USA, where the average person spends $202.
Per capita microelectronics consumption in China is forecast to reach $91 in the same period, but when multiplied by the 1.3 billion population, that’s a lot of people consuming microelectronics.
Semiconductor sales in China reached $108 billion in 2016; in the US, it was $60 billion; and in South Korea, it was $46 billion.
In Europe, however, GTAI claims that Germany is in a very strong position, with one in three chips produced being German-made.
The global market for microelectronics and semiconductors is expected to grow at a rate of more than 5 per cent, and GTAI expects German producers to benefit from growing demand from across the industrial sector.
The above pie chart, produced using data from Marketline, shows the semiconductor market share of leading countries in Europe.
Computers on wheels
The three specific industrial segments from which GTAI expects significant increases in demand for microelectronics are:
- automotive;
- industry; and
- medical.
The automotive sector is particularly hungry for microelectronics components and devices. It is said that the typical new car now packs as many as 600 chips.
Cars and vehicles of other types are increasingly becoming primarily electronics systems – like smartphones and computers – with mechanical operations being reduced to the bare essentials.
The German auto industry is, of course, massive, accounting for a turnover of more than $500 billion in 2016.
Some researchers suggest that semiconductors account for around 80 per cent of the innovations in modern vehicles, which now offer mobile internet access, digital driving controls, and electronic assistance systems, or advanced driver assistance systems.
Automotive is the main customer for the semiconductor industry in Germany, accounting for 45 per cent of sales.
The industrial sector, with its various industrial internet or Industry 4.0 initiatives, wherein all machinery is being connected to computer networks and the internet, is also a huge customer for semiconductor components and devices suppliers.
Second only to the automotive sector, industrial companies collectively account for 24 per cent of sales.
While many still remain unsure how best to use all this connectivity technology and data analytics to improve their factories and other facilities, even the simplest applications can help improve efficiencies.
Among the simple applications industrial internet is good for is network visibility – you can see all your machines and what they‘re doing on one screen if you want.
From there, you can either manually switch off machines when they are not being used or program the software to do the same thing – probably more efficiently than you could.
The medical sector in Germany is the largest in Europe, which is understandable since the country has the biggest population on the continent, with more than 82 million inhabitants.
A new generation of medical devices is emerging which requires semiconductors in their operations.
These devices include sensors and monitoring devices, many of which are mobile and connected to a computer network so medical staff can monitor patients’ health from remote locations.
Though not currently among the largest buyers of microelectronics, the medical sector is expected to increase its use of internet-connected devices significantly over the next few years.
Important technological advances in electronic component miniaturisation, autonomy and communication are said to be enabling the development of intelligent and networked medical devices.
The range of these devices will include electronics-based diagnosis systems for hospital patients, wearable electronics that monitor vital signs as well as specific conditions, and sensor systems for mobile diagnosis and therapy.
The above pie chart, using data from ZVEI, shows the main markets which purchase the most semiconductors.
