Semiconductors made from silicon, germanium or gallium arsenide are found in most electronic devices. The $300 billion industry produces memory chips, microprocessors, basic integrated circuits and complex systems on chips. Despite small profit margins, the industry is expected to grow by 12% annually over the next decade.
The semiconductor industry designs and manufactures semiconductors which are small electronic devices made from compounds of silicon, germanium or gallium arsenide. Semiconductors are found in nearly all electronic devices, including televisions, computers, medical diagnostic equipment, cell phones, and video games. Thanks to developments in the semiconductor industry since the 1960s, the large and cumbersome vacuum tube technology of the past has been replaced by modern and increasingly restrictive semiconductor technology that allows electronic devices to be made smaller, faster and even more reliable. Currently, the US $300 billion semiconductor industry is made up of electronics companies and manufacturers located in the United States, Japan, China, South Korea, France, and Italy.
Four basic types of products—memory chips, microprocessors, basic integrated circuits, and complex systems on chips (SOCs)—are designed and manufactured by the semiconductor industry. Memory chips are devices designed to store data and enable the efficient passage of information to and from all types of computers and electronic devices. In recent years, this part of the industry has become so competitive and prices have been so low that only the biggest players have been able to compete. Microprocessors are probably the best known products of this industry. These are the central processing units that contain the logic needed to complete all tasks in a computer or other more complex electronic devices such as cell phones and digital cameras.
The third type of product manufactured by the semiconductor industry is the basic integrated circuit, also referred to as the standard chip. These off-the-shelf chips are the workhorses of the computing world and are typically used in electronic devices and products, such as small appliances, product scanners, and single-use devices that perform simple, repetitive processing routines. Complex SOCs are really the only place newcomers to the semiconductor industry are likely to enter due to stiff competition, tight profit margins, and large companies involved in manufacturing memory chips, microprocessors, and basic integrated circuits. Complex SOCs are integrated processing chips with the capacity and power of a complete system. These chips are used in electronic and digital devices which have a large number of features and capabilities.
The semiconductor industry is very competitive and the profit margin for some products is quite small. This tiny profitability prevents all large manufacturing companies from competing in this sector. Despite all the stiff competition, the outlook is for more growth over the next decade with modest annual revenue increases averaging about 12%. Since semiconductors are part of the many electronic devices that are part of everyday life, the semiconductor industry also serves as an indicator of overall technological progress and determines how people live, work, communicate and travel.
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