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    1. Markets
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    Forecasting Industry Growth For 2009 And Beyond

    Jan. 15, 2009
    In his editorial, Electronic Design's Joe Desposito writes about the five drivers of the semiconductor industry for 2009 and beyond based on a presentation by Brian Halla of National Semiconductor gave at electronica 2008.
    Joe Desposito

    Welcome to our 2009 forecast issue. In deciding what to write for this issue, one presentation from last year stuck in my mind. During November’s electronica show, National Semiconductor chairman and CEO Brian Halla outlined the products and industries that would be the next big drivers of the semiconductor industry.

    Halla used a very interesting graph of the cyclical growth of the semiconductor industry. Most engineers are familiar with a damped sine wave. This graph was the opposite (see the figure). Since as far back as 1970, the semiconductor industry has relied on primary drivers for its success. But all of those drivers eventually sputtered out and gave way to new ones that propelled the industry to greater heights than before.

    Mainframe computer DRAM drove the industry back then, yet the industry was reeling by 1975. The advent of the PC, though, brought the industry to new revenue heights of $26 billion by 1984. When the industry had its dénouement in the late 1980s, connected PCs and cell phones brought the industry back, reaching $204 billion by 2000.

    Then the cyclical nature of the industry reared its ugly head and revenues slid downward until 2003 or so, when the graph turned around and again marched higher than before to surpass $255 billion in 2007, riding the wave of consumer applications. Since that time, the consumer electronics binge has begun to run out of steam and the graph is headed downward again.

    The industry needs something to replace the consumer electronics driver to turn the graph around and propel it to new heights. In other words, it’s in search of the next big thing. To his credit, Halla came up with five “next big things” that are expected to drive the semi industry to new heights in 2009 and beyond. He calls these drivers “quality of life megatrends.”

    WHAT'S NEXT? • First on the list is renewable energy. Solar panels and wind turbines create electrical energy, with semiconductors playing a role in control. Halla pointed out a problem with solar panels that a neat dose of analog semiconductors can fix.

    Like a battery, a bad cell in an array of solar panels can compromise the amount of power generated by the array. Also, if just one panel in a string of solar panels sits in the shade from a tree or chimney, the electrical output of the entire array is affected. Adding electronic modules to the panels can lessen this problem and improve efficiency.

    A second driver is electric vehicles. While the populace as a whole has an interest in alternative-energy autos, interest seems higher among design engineers. Whenever we post stories about these cars on the Electronic Design Web site, our page views go through the roof. If we receive any negative comments, it’s usually because we haven’t provided enough technical details.

    Of course, semiconductors have been playing a major role in the automotive industry lately, but the advent of electric vehicles will be an even bigger boon to the market. With the price of a barrel of oil dipping below $40, one might wonder if the electric vehicle industry will stop dead in its tracks.

    Not so this time, in my opinion. The experience of getting slapped around by oil prices in the $150 per barrel range and its effect on gasoline and home heating oil prices isn’t easily forgotten. Semiconductors that enable quick charging and battery management will lead the efforts in this area.

    The next driver will be in health care. Halla believes distributed medicine will replace centralized care in the future. This translates into lower-cost, higher-performance, batterypowered electronic devices for the home. For example, you might monitor your health with an iPod or similar device, log that information, and send any alerts to a doctor or a medical team via the Internet.

    A fourth driver will be sensors and detectors, especially for security applications. Halla mentioned applications like far-field noise suppression to detect breaking glass and gunshots, as well as cargo security sensors, airport passenger screening, and wireless security sensors. I think another hot area for sensors will be in tracking inventory and people.

    Led by RFID devices, sensors will be on every product you can imagine. This may well usher in a new cultural era where privacy goes out the door, replaced by a new type of community. Think of it as Facebook or Twitter on steroids.

    The fifth driver in the next few years will be portable mobile devices, but in financial transactions, not just entertainment and communications. You may already have a mobile phone with a near-field communications (NFC) chip inside. NFC chips let your phone essentially replace today’s ubiquitous credit and debit cards.

    Halla’s presentation outlined the drivers for the next big economic surge in the semicondutor industry. It’s hard to believe that there can be any bigger driver than the previous one—consumer electronics. But maybe that’s why we need five drivers to move forward in this industry.

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