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Where is the semiconductor industry heading? – Opportunities and challenges beyond Moore's law

2014

The semiconductor industry has been plagued with declining growth rates for some time now. Over the past five years, the global market for microchips (sales volume of USD 300 billion) grew on average by just 2.7% a year. From 2000 to 2007, growth was an annual 3.3%. The slowdown is due to overcapacity and strong cyclical fluctuations. And things won't be getting better anytime soon: New Asian companies are taking over the global mass market for computer chips – to the detriment of established European and Japanese semiconductor manufacturers.

"For years, established providers have been confronted with an increasingly difficult international market environment," says Martin Eisenhut, Partner at Roland Berger Strategy Consultants. "Our current analysis outlines four possible scenarios for the future. Clearly, only manufacturers that can sustainably offer high value-added products on the global market will be able to beat the lower-priced competitors from Asia."

The new Roland Berger study, "Opportunities and challenges beyond Moore's Law", reveals that companies do not necessarily have to follow the well-known principle in order to succeed on the semiconductor market. Moore's Law states that the industry will double the number of transistors on a computer chip every one-and-a-half to two years – at the same unit cost. However, this requires high investment, often supported by government aid. For this reason, the center of gravity of this business model has been shifting more and more to Asia.

As our experts see it, the alternative for Europe and Japan's highly developed semiconductor industry lies in new generations of computer chips that offer a broader range of applications. They call this the "More than Moore" approach. This area, which already accounts for about 40% of the semiconductor market, is growing twice as fast as the traditional mass market.

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