• United States
Jon Gold
Senior Writer

Wireless growth, IoT, and cars will drive semiconductor demand

Mar 07, 20223 mins
Technology Industry

Supply chain issues and talent retention remain top challenges for chip makers, according to KPMG.

smart city and communication network concept 5g lpwa wireless picture id1176054530

The ongoing deployment of 5G networks, IoT, and demand from the automotive sector are the three biggest drivers of semiconductor revenue in the coming fiscal year, according to a new survey and analysis issued by KPMG.

The accounting firm noted that semiconductor makers had shifted their organizational structures in response to those trends, with 53% of respondents reporting that they had increased their focus on specific operational requirements for hot applications—and away from general-use chipsets that can be used in multiple products.

“Indeed, the top challenge in terms of developing products and taking them to market, as cited by 30% of respondents, is the fact that customers are requiring more complex solutions,” the firm said.

The results are from a KPMG survey of 156 senior executives from global semiconductor companies who in the fourth quarter of 2020

IoT creating demand for more powerful sensors

The industry views sensors and micro-electric mechanical systems as the hottest growth category for its products, according to KPMG, with microprocessors in second place and analog/RF chips in third. The continued strong growth in sensor/MEMS (micro-electro-mechanical systems) demand is being driven in large part by the growth of IoT deployments, which tend to require lots of sensors.

The top source of demand, however, was wireless communications, specifically 5G, which requires denser placement of base stations that its predecessor 4G, meaning that more silicon is needed to service a given geographical area. Hence, it’s easy to see how 5G has bolstered semiconductor demand.

Talent retention a top priority

Unsurprisingly, given the  supply problems that have plagued the industry, well over half of respondents said that the supply chain is a top strategic priority — but more surprising is the fact that it’s not the most common response. Instead, fully 77% of companies surveyed said that talent retention was among their top priorities, compared to 60% who said the same about supply issues.

“The industry has been dealing with a talent shortage for several years, as nonsemiconductor companies started developing their own chips and silicon capabilities,” the report stated.

Part of the reason that talent is such a high priority, according to KPMG, is simple math — when nearly nine in 10 semiconductor companies expect to grow their workforce in the next 12 months, and roughly a third expecting to do so by a factor of 10% or more, it’s difficult to know where these new semiconductor workers are going to come from.

“In this environment, companies would do well to think seriously about upskilling and reskilling existing workers, initiating apprenticeship programs, and partnering with colleges and universities to increase the number of graduates with relevant technology degrees,” the report’s authors said.