While internal manufacturing made sense in the earlier days of the industry, consolidation and speed-to-market success in foundries have enabled leading semiconductor companies to compete successfully without their own manufacturing fabs. Most semiconductor companies nowadays do not have their own fabs — and they don’t need to. Foundries provide the scale, breadth and diversity needed. In fact, even non-semiconductor companies such as Facebook, Amazon and Apple are now taking advantage of the fabless model to design their own chips and integrate vertically.
The continued emergence of opportunities for semiconductors such as 5G, the Internet of Things (IoT) and autonomous driving, along with the proven success of the foundry model is driving semiconductor companies to reconsider their growth and manufacturing strategies.
The manufacturing value chain is shifting away from complex, integrated circuits (ICs) and silicon engineering to advanced packaging such as 2.5D, 3D-IC, fan out, and system-in-package. The goal is to reduce costs, enable customization and improve yields by vertically stacking modular components while circumventing limitations in semiconductor manufacturing. The decades long ability of Moore’s Law to double wafer capacity, while holding strong, does not offer as compelling of an advantage as it once did to an increasingly diverse customer base.
Customers are seeking higher levels of customization to meet increasingly specific market needs. These don’t necessarily require the smallest and most advanced chips, which means semiconductor companies can optimize manufacturing to balance customer needs against wafer costs.
A recent model from the Center for Security and Emerging Technologies (CEST), showed that a single 300mm wafer built on 5nm costs almost $17,000.
Avoiding these high costs is an obvious advantage for companies. Coupled with the realization that not everything has to go inside a singular chip, semiconductor companies are focusing manufacturing innovation on modular designs that cater to the application and customer needs rather than building the most advanced nodes. The key is to create 10-15 modular building blocks that can be used in designs across different products to meet many application needs. With this approach, the priorities and skillsets shift to engineering compatibility, quality and reliability.
For example, the transition to 5G requires flawless, innovative chips at higher yields. Because of the sensitivity of the 5G signal, engineers must ensure the environment around the chip is properly controlled to eliminate noise and signal interference. With a modular approach, engineers can ensure the highest possible performance for the chip in the environment for which it was designed.
Backend manufacturing improvements will be critical moving forward. In the past, most of spend was on front-end manufacturing, while the backend was more of an afterthought. Now, the backend is getting increased attention along with the implementation of new quality capabilities. How quality organizations detect and troubleshoot defects is complex, but quality organizations can also benefit from the use of older, more stable technology in these modules – allowing them to focus on new quality and traceability requirements.
For example — while silicon quality may be focused on older, more robust technology, it also becomes significantly more important. Combining multiple chips makes any single failure much more costly, and additional care must be taken to ensure traceability and tracking of all the parts of a modular chipset from wafer to final product
Opportunities in Automotive and Industrial IoT
In addition to 5G, the automotive and IoT markets also present considerable growth opportunities. But the manufacturing requirements for these applications differ greatly from the legacy requirements of desktops, laptops and high-compute servers.
A new car requires as many as 8,000 active semiconductors in up to 100 interconnected control units. These will continue to increase as new functionalities, safety, infotainment, and networking capabilities are implemented into future cars—everything from Bluetooth connectivity to sensors and cameras supporting autonomous driving.
With lives at stake, failure is not an option. Extremely high reliability and operability at wide temperature variances are among the most critical needs of automotive applications. Furthermore, the semiconductor chips that go into cars must last 10-12 years, which makes high quality and product longevity more important than using the most advanced technology nodes.
Resiliency is also mission critical for industrial IoT (IIoT) applications. For example, the multiple sensors needed to safely and efficiently operate oil rigs must be cost effective and highly reliable in an environment where immediately replacing parts might not be possible.
We can expect advanced packaging to benefit other IIoT segments as well, with telecom and infrastructure continuing to lead the way. According to Quince Market Insights, the global Industrial Internet of Things market is expected to grow with a CAGR of 21.3% from 2020 to 2028, with advancements in manufacturing as one of the key factors.
With the growth of semiconductor chips for a range of applications that continue to proliferate, there is a place for all types of manufacturing. Older technology has been incredibly resilient. Combining these proven technologies with more advanced ones in a modular package can create innovative designs, help ensure quality and reduce costs.
— Syed Alam is global lead for Accenture’s semiconductor practice. He advises companies in the semiconductor, electronics, and high-tech industries on operations transformation and merger integration. With more than a decade of consulting experience, he specializes in business and operational strategy development, mergers and acquisitions, international expansion, supply chain management, fixed asset management and organizational change management.