The Semiconductor Ecosystem

A quick intro for the non-techie.

by Farah Ansari

Whether you're a techie or not, you’ve probably heard the word "semiconductor." And if not, here’s a little secret—you’re probably holding one right now. Yup, semiconductors are tiny silicon chips inside your phone that let your phone process data, run apps, and do everything else you depend on. Smartphones, computers, medical devices—you name it, if it’s a modern electronic, it’s got semiconductors inside.

Semiconductors are everywhere.

And as demand for AI, 5G, and electric vehicles continues to grow, the semiconductor industry is growing right along with it. This blog is here to give you a quick intro to one of the most complex and fastest-evolving industries that affects your daily life.

OK, let’s start with some key stats to help you understand just how significant this industry is:

• The semiconductor market is set to grow by 66%, jumping from $600 billion in 2022 to $1 trillion by 2030. This growth is being driven by breakthroughs in AI, 5G, cloud computing, and electric vehicles. More investment in production, chip design, and new industry uses will keep things moving forward.

• OSAT (Outsourced Semiconductor Assembly and Test) makes up about 10% of the semiconductor process. They handle the packaging, assembly, and testing of chips after they’re made, ensuring everything works properly across industries like electronics, cars, and telecom.

• Top companies pour a lot into R&D, spending over 20% of their revenue to stay ahead in a fast-changing field. This is key for developing next-gen chips and staying on top in areas like AI, 5G, and quantum computing.

The semiconductor ecosystem is a global powerhouse, involving a variety of key players. It can essentially be broken down into two main segments: design and manufacturing.

Design is all about creating the blueprint for the chip. This includes figuring out how the chip will function, its architecture, what it will do, and how the different components (like processors, memory, and communication blocks) will work together.

Manufacturing, on the other hand, takes those designs and turns them into real, physical chips. This happens in special factories called "fabs," where complex machines are used to carefully carve tiny circuits onto silicon wafers, creating the chips that power your devices.

Here’s a quick breakdown of the different types of companies in both the design and manufacturing sides of the semiconductor industry (check out the infographic for a list of companies by name):

Manufacturing:

• Foundry: Specializes in chip manufacturing based on external designs.

• Equipment: Provides tools for chip fabrication.

• OSAT (Outsourced Semiconductor Assembly and Test): Handles packaging, assembly, and testing after chip fabrication.

Design:

• Fabless Chip: Designs chips but outsources manufacturing to foundries.

• Fabless Non-Chip Firm: Designs consumer electronics but outsources production.

• IP & Design Software: Develops tools and IP cores to streamline chip creation.

Design & Manufacturing:

•  IDM (Integrated Device Manufacturers): Designs and manufactures chips in-house.

  
  

To sum it up, design and manufacturing are two key steps that work together to create the semiconductors powering our world. Design focuses on developing the chip’s architecture and functionality, while manufacturing brings those designs to life in specialized fabs, where tiny circuits are etched onto silicon. Whether it's through foundries, fabless companies, or integrated manufacturers, both sides play a vital role in driving innovation across industries—from electronics to AI.

Semiconductors are the backbone of modern technology, quietly powering everything we use daily. As the industry evolves with innovations like AI, 5G, and electric vehicles, these tiny chips will continue to shape the future of tech—whether we're aware of them or not.