In this article, IDEA president, Georg Steinberger, lays clear the challenges facing the electronics component industry over coming year.
Looking at 2020 and the disruption Covid -19 brought, you wonder what else is in store? For supply chain professionals, the visibility for market requirements has been lost: short-term. Surprisingly, 2020 will not turn negative but grow by a few per cent. In fact, for some products, lead times have gone up. Provided we are not brought down by a second wave the outlook for 2021 is positive rather than negative.
However, considering that some major societal problems are still present, climate change for example, it may be worth looking at longer-term trends in the high-tech sector, an industry that constantly tries to convey the promise of innovation for the greater good and the myth that only technology can change the game. Here are six challenges.
Physical limits of semiconductor manufacturing: Semiconductor scaling may reach its limits soon. Mass production of 5nm devices has started and plans for 3 and 2nm are in the pipeline. 2030 may mark a watershed as 1.5nm devices hit the market and it is widely speculated this will be the last node size before physical limits prevent further scaling. Even today, the speed of introducing new geometries is splitting the market in haves and have-nots. Currently, only Samsung, TSMC and Intel seem to have the investment to follow this super-expensive path.
Semiconductor production cost: In 2020 TSMC announced investment of $15B into 5nm devices. Assuming the same for other foundries or manufacturers, the $20B mark for 3nm chips or below is in sight. You could only wonder what this means for 1.5nm: $30B for one fab? In 2030, the semiconductor market will, at best, be $1T. How many $30B fabs can that justify?
Protectionism: The spread of IP, technology and production equipment across the global regions will not allow monopoly across the value chain (IP, wafers, manufacturing equipment, chemicals, production, assembly etc) but contains choke points that could create political disruptions. We have seen disruption in the US/China relationship over technology, which could become worse. Taiwan as a leading-edge foundry location and with its 53 per cent share of chip assembly could be a focal point of this bilateral trade war.
Raw Materials: Technology consumes raw materials which face challenges regarding availability: politically and geologically. Conflict minerals from Congo are the tip of the iceberg. Beyond that the conflict is around rare earth materials, 90 per cent of which currently comes from China (2018). Production is difficult and costly, and reserves don’t automatically mean easy exploitation at break-even. Regarding cobalt and lithium, imagine the multiplication of electric cars and the pressure for cost-effective batteries.
Waste: Electronics is one of the biggest global waste issues, besides plastic, because so many materials are found in electronic products that throwing them away is not just hazardous to the planet and us, it is also a waste of resources. More than 50 million tons of electronics products are disposed of each year, and only 12.5 per cent are recycled. Precious resources not used and missing for future generations.
Global Supply Chain: Covid-19 has shown perfectly how easily the global production supply chain can be disrupted. We have not seen the end of this disruption and others are looming. Also, the global supply chain comes with a giant carbon footprint. Arguably far from sustainable.
So, where to go from here? If we want to be a real contributor to human and planetary betterment, a giant joint effort is required to make the high-tech industry as circular as possible.