Most pundits in the semiconductor marketplace expect 2005 to be relatively flat, with expansion returning in '06 and strengthening in '07. Likewise, you engineers designing tomorrow's chips and the products they power are cautiously optimistic about the year ahead. According to a quick Web poll of our readers, the majority of you have a personally positive outlook for the coming year (60% say it will be good with a stable workflow and/or strong growth).
I'm optimistic, too, but my confidence is somewhat tempered. The electronics industry, particularly in the U.S., remains at a crossroads. The Semiconductor Industry Association (SIA) has called 2004 the year that consumer applications "consumed" the majority of semiconductors worldwide, supplanting corporate applications—now using 45% of chips. Government applications, which gave birth to the semiconductor industry, now consume just 5%.
Considering the short lifecycle of consumer goods and the number of chips populating cell phones, digital set-top boxes, and other megasellers like gaming and music machines, the dominance of consumer applications was inevitable. And with SIA defining the consumer market as the silicon content in every product a consumer can purchase, including autos and PCs, that threshold was easier to achieve.
But then I look at the mix of designs that you, as a primarily North American engineering community, are developing. The majority of you are engaged in something other than consumer electronics. While advances in the consumer marketplace drive numerous trends, many other specialized product needs—for healthcare, military, communications, and more—may be adversely affected if too much semiconductor R&D follows the consumer marketplace.
With the rapid product development and obsolescence cycle in consumer goods, are design shortcuts and quick product turnaround taking the focus from quality and reliability? And as consumer goods manufacturing migrates to Asia, what will be the effect on U.S. design centers and our technology leadership?
Consider the increasing importance of automotive electronics, given that the automotive marketplace vets product design via stringent requirements for minimal defects and long product life. The global automotive marketplace is becoming an R&D think tank for the commercial-off-the-shelf (COTS) products used in industrial, commercial, and military applications.
The military's move to purchasing COTS electronics is certainly a good thing, saving billions in tax dollars. But the high prices paid in the bygone mil-spec days helped fund R&D for specialized products for the government.
Some of the billions freed up by going to COTS need to be reinvested in pure technology research to keep the U.S. at the top of semiconductor design for the needs of diverse and specialized market segments like robotics, healthcare, and the space program. I support the SIA's call for increased federal funding for universities and national laboratory research. SIA points out that the 2005 National Science Foundation budget is 1.9% smaller than the 2004 NSF budget.
Provided we work to keep the U.S. at the leading edge of electronics design, for all the market segments you work in, our future looks bright indeed. Here's hoping our 2005 Technology Forecast, with its coverage of technologies for a full range of product designs, will play a key role in keeping you up to date on leading-edge advancements and help spark the next generation of innovative product designs.