The push for machine learning is also fuelling significant growth for established firms and appealing potential for new entrants.
Fremont, CA: The semiconductor business sits at the crossroads of numerous high-growth industries nearing commercialization. The electrical components produced by the many industry participants are necessary to produce the billions of devices that comprise the Internet of Things and mobile device ecosystems.
Chips that power our smartphones and complicated servers that enable cloud services are in high demand. The push for machine learning is also fuelling significant growth for established firms and appealing potential for new entrants.
• The Internet of Things
As previously noted, many companies in the semiconductor business are diversifying their activities to capture value across the technological value chain. Expanding from hardware design to systems and software integration, as well as developing for specialty applications such as wearables, enables these companies to capitalize on the development driving several lucrative industries.
IoT sensor downsizing and tiny form factors are also increasing demand for smaller processors with low power consumption, increased memory count, and wireless connection (the latter being accelerated further by the coming 5G revolution).
However, there are significant downsides to the increased demand. First, developing new competitors and expanding previously established businesses means rising raw material supply costs. This will harm the bottom line and make competing more difficult without ensuring a long-term raw material supply. Furthermore, device diversity is on the way, making it more difficult (from a logistical and operational aspect) for one manufacturer to compete in all important markets.
• The Automotive sector
According to Markets and Markets, the Automotive Electronics component of the Semiconductor M&A industry will develop at the fastest rate from 2016 to 2020, followed by industrial electronics (both at a 6percentage CAGR). The automobile industry is now facing enormous changes as it attempts to blend new digital capabilities with a drive to electrify cars in response to climate change.
Though this creates considerable potential, it also poses a technological challenge due to integrating multiple complicated current technologies, ranging from wireless networking and artificial intelligence to cloud services and IoT.
• Artificial intelligence and machine learning
The AI drive is already spawning actual industry titans, with NVIDIA as a great example. The structure and operation of the neural networks that serve as the foundation for most of the artificial intelligence services and products available today can be made faster and more efficient by utilizing the architecture and hardware previously used for gaming and video processing cards. Combining strong manufacturing capabilities with a desire to build suitable alliances in most industries has proven to be an excellent approach for NVIDIA thus far. Most individuals at all levels of the AI commercialization chain, from academicians and researchers to startups and established businesses, use NVIDIA technologies to operate and create new industry services.