Smaller semiconductor firms hold key to innovation with hybrid chips

Consolidation among the largest semiconductor suppliers will continue, but it is the smaller chip companies working on hybrid designs that will drive innovation in the industry, delegates at SEMICON West have heard.

Tien Wu, chief operating officer at Advanced Semiconductor Engineering, said during his opening keynote that industry consolidation and the high cost of entry to the market will remain key issues for the biggest players in the industry.

However, it is smaller companies developing hybrid chips using industry standards that will move the market forward.

"Around 10 years ago there were 100 people making major back-end semiconductor investments, but that's now down to the tens and could be in single figures in the next decade," Wu said.

"Smaller companies can create new markets by pushing development and integration at lower costs by figuring out smart ways to build high-end hybrid chips."

The sheer cost of developing new chip standards means that the bulk of development will be carried out by large companies that can set standards and invest in manufacturing plants.

However, smaller companies can take those standards and build hybrid chips for a variety of purposes and steal a march on their larger competitors.

The industry is in good overall shape, Wu said, and the next four years are likely to see slow but solid growth rates of around seven per cent, about double global GDP growth.

The next few years will require new discipline for an industry used to rapid swings in fortunes, according to Wu.

Inventory control and dealing with seasonal demand will be vital, he said, as both areas are often neglected by the old guard which is used to rapid swings in demand and spending.

Looking ahead, the next generation of small, smart chips will provide an important growth area. Wu demonstrated a millimetre-sized computer intended to be implanted into patients to monitor glaucoma, and said that the opportunities in such technology are too large to be ignored.