History of the Semiconductor Industry
The semiconductor industry is more than a half a century old. It was started in 1960 when it became feasible to produce semiconductors because of advancements in technology then. Over the years, the industry has grown in all aspects and expanded to meet a wide range of electronics needs in the market. For instance, by 2014, the industry was worth $335.8 billion up from $1 billion in 1964, denoting massive growth in about 5 decades.
It is important to note that the industry has grown exponentially because of the ever-expanding use of semiconductors. For example, in early 60s, semiconductors were only used in radio. Today, every electronic that has a switch to put it on and off has a semiconductor. This means, the components have become integral elements in the world of electronics and in human life as well. The main driver of this industry is technology innovation.
Overview of the semiconductor industry
While semiconductors have a deep history, dating back in the early 20th century after the introduction of radio, the semiconductor industry is still young. Today, numerous things have changed. For example, fabrication grown with huge advance emerging daily.
The history of this industry is synonymous with Bell Telephone Laboratories, following their successful invention of transistors in 1948. The components were bipolar, meaning that they processed information using the binary code. The invention was a milestone as it helped reduce the size of devices. The fist semiconductors were made from silicon, which is still used to manufacture transistors today, with other chemicals being added to improve their quality.
Ten years after the invention of transistors, Integrated Circuits, IC were created. They had about 12 transistors. However, today’s IC has approximately 20,000 transistors. Geoffrey Drummer conceived the idea of having an IC while Jack Kilby put this idea into reality when he bonded three transistors in 1958.
Developments in 70s and 80s sparked huge growth in 90s and 2000s, leading to exponential progress in the use of personal electronic devices. Importantly, computers, mobile phones and laptops were developed because of the previous innovations by earlier scientists. Today, these devices define how we communicate.
Classification of the industry
The semiconductor industry has six main classes. This classification depends on the end-user application. In this section, we shall discuss some of these categories. The first one is data processing. This comprises of chips, which have large application in servers, computers, printers, and other hardware. It is the largest segment that uses semiconductors. Notably, Intel (INTC) dominates the section. Over the recent years, the segment has moderate growth with no major breakthroughs expected in the near future.
Communication is the second category of the industry. This consists of chips that are widely used in wired and wireless communication gadgets like Smartphones, tablets and internet equipment. The segment is growing exponentially and has massive potential. Qualcomm (QCOM) and Samsung (SSNLF) are the leading semiconductors.
Consumer electronics also form an important category of the semiconductor industry. It mainly comprises chips that are used in common household appliances such as gaming consoles and LCD TV sets. Moreover, industrial class has chips used in scanning equipment such as power supply equipment, Point of sale terminals, medical imaging devices, and ultrasound machines among others. Other segments are automotive, military and civil aerospace.
The future of the semiconductor industry
As a young industry, there are opportunities of growth and expansion. Today, America, South Korea, Taiwan, the EU and Japan dominate the industry. The International Data Corporation projects slowed growth in the industry from 7.1% in 2014 to 3.6% in 2015. By 2019, it is estimated that the semiconductor industry will hit annual revenue of $389.4 billion. This will grow at a compounded rate of 3.1 percent between 2014 and 2019.
The coming years are likely to be critical for semiconductor companies in the world. There is potential and useful product improvement on the way. Notably, the mobile phone will play a major role in shaping the future of the industry. The shifts that the market is experiencing are not about to end. Vendor share and vendor profits are reshuffling in many markets in the world. This is because of the emergence of new entrants in the market.
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