10 Great Reasons Why Semiconductor Firms Must Rapidly Embrace Cloud

Sep 27, 2021
High-Tech | 7 min READ
The State of the Semiconductor Industry
Semiconductor Market Trends
The semiconductor industry has been growing at a rapid pace for the past few years. IDC notes that, after the initial slowdown through the pandemic phase, the semiconductor industry picked pace in 2020 and grew at a rate of 10.8% compared to 2019 and will reach $522 billion by 2021, growing at a rate of 12.5%. This growth results from the immediate impact of the COVID 19 implications on various industries and an overall change in consumer mindset.
Nitesh Mirchandani
Nitesh Mirchandani

VP and Global Head

Communications, Media & Technology (CMT) Vertical


The demand for semiconductor chips increased manifold owing to the ever-increasing applications of smartphones, tabs, laptops, desktops in industries such as healthcare for telehealth services; in the education sector for online teaching and instruction; and as resources/employees across the industries started working remotely. At the same time, the automotive industry is getting more and more advanced and is using hundreds of sensors to offer all the creature comforts to its consumers as they move towards building the 'connected car' experience.
In the manufacturing sector, too, the pandemic has driven home the values and virtues of setting up connected factories that enable contactless manufacturing and uninterrupted operations in the face of a crisis. All these trends in semiconductor industry show that the demand will steadily rise for semiconductor chips in the coming future. However, considering the most significant movement of the semiconductor industry, which is delivering 2X computing power while reducing the costs by half every few years, the key priority for the industry lies in finding avenues of innovation to have in line with this trend.
It is thus imperative for the industry to invest more and more in R&D to drive innovation while optimizing costs by leveraging technology like Cloud Computing.
Semiconduction Industry: Business Needs
If one accounts for the key constituents of the semiconductor industry – skilled resources, high competition, complex automation tools, data & IP, varied semiconductor industry supply chain, and low shelf-life of the designed chips; it is apparent that these constituents are highly expensive difficult to manage. Given the nature of the investments and expertise required in the industry, there are very few players in this industry. The race for excellence is fierce, and a considerable effort and investment is dedicated to driving R&D to identify areas and avenues for innovation.
Faster time to market through the acceleration of the design cycles, performance enhancements of the chips through upgrades and updates, IP protection through foolproof and flawless security systems are the top three business priorities of this industry. The chip companies invest most of their time, energy, and capital in fulfilling these priorities. However, operational priorities are equally important, such as driving efficiencies in the manufacturing process and throughput through data analytics, optimizing the operations, processes, and costs, and driving productivity through collaboration.
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Cloud computing provides a reliable and seamless infrastructure to address both the business and operational priorities of the semiconductor industry.
Reasons to Embrace Cloud in Semiconductor Industry
#1 Faster Time to Market and Quicker Design & Development
If we consider the ever-increasing demand from the consumers for products with higher compute powers and processing abilities, the product lifecycles have considerably reduced, and the need for semiconductor manufacturing companies to ensure faster time-to-market is growing by the day.
To this end, applying cloud computing in semiconductor industry offers scalable storage, big data analytics capabilities, and enhanced productivity with collaboration tools for reviews and feedback that enable quick product launches.
Cloud also provides a flexible, scalable, elastic, and secure infrastructure for chip designing by providing on-demand compute for EDA tools. It enables the semiconductor manufacturers to set up and access high-performance computing (HPC) power with virtual machines (VM) images, enabling quicker design and development cycles.
#2 Improvement in Foundry Operations and Yield
Cloud offers a single source of truth/data lake or repository that enables storing, processing, analyzing, and inferring the foundry's generated data. Manufacturers use these data insights for predictive performance & analytics and management of resources & semiconductor supply chain, thereby improving the production uptime and yield. It also allows for specific AI and ML use cases for fault detection in the production line using imaging techniques and smart analytics tools.
#3 Smarter Manufacturing Powered by Democratization of Data & Analytics
Chip designs evolve with each release, and the chip design companies have families of chips in incremental progression/evolution cycles. The chip lifecycle data must be logged, analyzed, and processed for value generation. Cloud Service Providers (CSPs) like Amazon Web Services offers unlimited storage and analytics capabilities to chip design companies to apply AI and ML models for systematic data processing and provide the necessary infrastructure to integrate IoT and implement Industry 4.0 solutions for smart and connected manufacturing leveraging the data analysis.
#4 Improved Collaboration, Transparency, and User Productivity
The semiconductor manufacturing industry is highly competitive, and the success or failure of a chip manufacturer entirely depends on the ability of the manufacturer to collaborate effectively with the eco-system that includes suppliers, OEMs, internal teams for design reviews and testing and incorporation of the feedback. Cloud infrastructure provides a centralized system to track the productivity of the different stakeholders enabling transparency and boosting efficiency, especially in the current times of COVID 19 using collaboration tools like MS Teams, Google Workspace, Google Meet, etc.
10 Great Reasons Why Semiconductor Firms Must Rapidly Embrace Cloud
10 Great Reasons Why Semiconductor Firms Must Rapidly Embrace Cloud
10 Great Reasons Why Semiconductor Firms Must Rapidly Embrace Cloud

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#5 High Operational Efficiency
Unlike the on-premise data centers managed by internal IT teams with constraints on skill, availability, and resources, the cloud infrastructure is managed by specialists such as GCP, AWS, Microsoft, etc. These service providers have made huge investments in R&D, infrastructure, resources and have an SLA that assures uninterrupted operations for semiconductor foundries.
#6 Higher Service Levels Due to Better Availability
One of the primary reasons for the semiconductor industry to not adopt or scale cloud has been the business criticality of the operations. However, the modern-day CSPs provide the SLAs that comply with the industry requirements and go beyond that to offer unmatched reliability. For example, GCP provides a robust architecture with high-bandwidth connectivity across 25 regions and 76 availability zones to deliver global services.
#7 Organizational Agility and Flexibility to Scale-up
The use cases for sensors, chips, computing, IoT, and Industry 4.0 are ever-increasing. It is thus imperative for the semiconductor industry to be extremely agile and offer unmatched and on-demand scalability and flexibility to ramp up/down its compute infrastructure to accommodate R&D, design, testing, validation GTM activities. The analytical capabilities to draw insights and make quick decisions is also an expectation that it must fulfill to deliver on its reputation of being agile. Cloud offers all these capabilities to the industry and at the same time drives home the cost benefits, security, and efficiency.
#8 Backbone for Driving Innovation
There are several aspects of the cloud infrastructure that can drive innovation for the semiconductor industry. To begin with, it can provide a leeway for the industry to squeeze in cost efficiency to a perceived rigid cost structure. The possibilities of leveraging IoT, Artificial Intelligence (AI), Machine Learning (ML), Big data analytics for gaining visibility and driving efficiencies throughout the chip manufacturing value chain are tremendous. It can provide EDA support, high-performance design, HPC, and High Volume Manufacturing (HVM) capabilities enabling better outcomes at lower costs.
#9 Cost Efficiencies
Cloud offers instant scale and capabilities to perform and execute operations across the semiconductor value chain from design to yield without investing in physical on-premise data centers, reducing infrastructure development costs. It provides a collaborative infrastructure to the value chain stakeholders to review and test the designs and offer feedback irrespective of the location of the stakeholders. The chip manufacturers can also drive the cost efficiencies on account of improved uptime owing to predictive maintenance capabilities and the foolproof security that the cloud infrastructure offers.
#10 More Secure Environment for IP Protection
The semiconductor industry powers a host of industries, and several of these industries manage data categorized as highly sensitive, IP, business-critical, or compliance-driven. The dedicated investments by the CSPs in ensuring the security of their cloud infrastructure is an added advantage for the semiconductor industry to ensure data and IP protection for its clients. These CSPs provide more secure and reliable infrastructure at lower costs than the on-premise setup. For example, Google's global-scale infrastructure protects billions of users with world-class security through your workloads' storage and information processing life cycle.
The semiconductor industry has been a pioneer in enabling digitalization across industries. With Industry 4.0 and IoT gaining prominence, the use-cases of semiconductor chips have evolved rapidly from device-specific applications to sensorization, integration, and communication areas.
However, the irony of this industry is that despite being the transformation catalyst for all the other sectors to adopt digitalization, the industry on its own has been lagging when it comes to the adoption of technologies such as cloud computing for cost optimization, innovation, and streamlining operations. According to KPMG, even when most other technology industries have been adopting digital transformation at a rapid pace of 89%, the adoption rate of the semiconductor industry remains at a paltry 50%.
Considering the outlook for the semiconductor industry, utilizing the cloud for digital transformation is the only way the semiconductor industry can scale and position itself to meet the consumer demand on the parameters of speed, accountability, security, innovation, and reliability.
This article was first published in Manufacturing Leadership Council insights.
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