Deloitte-GSA Study: Transformation in Semiconductor Industry Driven by More Than Pandemic and Supply Chain Challenges
NEW YORK, Oct. 21, 2021 /PRNewswire/ --
Why this matters
A spotlight on the semiconductor industry from manufacturers, governments, and even consumers has emphasized a shortage of semiconductors as the main growth and supply constraint for certain end markets. Yet, many semiconductor companies, recognizing a need for change even prior to the pandemic, already had transformation strategies underway before the onset of these shortages. In order to understand the cause of semiconductor company transformation, Deloitte, in collaboration with the Global Semiconductor Alliance (GSA), conducted a survey in spring of 2021 of more than 40 top semiconductor industry executives. The "Deloitte-GSA Semiconductor Transformation Study" revealed four primary characteristics of industry transformations, including: market disruption, new technology-driven markets, innovative business models, and digital transformation.
A plethora of industry disruptions such as new end markets driven by trending technologies, customers emerging as competitors with in-house chip design capabilities, and global trade dynamics and investment have made a forceful impact. While these factors were all in play pre-pandemic and forced semiconductor companies to rethink products, operating models and capabilities, the pandemic simply magnified many of these factors, resulting in an accelerated period of change.
"As the Deloitte-GSA study spotlights, the need for semiconductor industry transformation goes far beyond supply chain challenges and COVID-related disruptions. As with any time of crisis, opportunities exist for companies to address inefficiencies. By instituting fundamental change, organizations can position themselves to boost their resiliency, thereby being better equipped to face future obstacles."
- Paul Silverglate, vice chairman, Deloitte LLP and U.S. technology sector leader
Sales and marketing teams are driving over one-third of semiconductor transformations, largely focused on expanding into new technology-driven markets and gaining a competitive edge and market share. However, Moore's Law constraints are still driving some transformations, which is expected because companies must invest to retain and improve core operational competencies, even as they expand into new markets.
Chip and hardware companies are offering non-traditional revenue and transaction models including "X-as-a-service," indicating a major shift in the relationships that semiconductor companies expect to have with their customers. This is a profound shift toward non-traditional models with these new go-to-market strategies providing an innovative way for semiconductor companies to engineer products and generate revenue.
- Brandon Kulik, principal, Deloitte Consulting LLP's U.S. technology, media and telecommunications industry practice, semiconductor industry lead
Semiconductor companies seek to substantially change their operating models in their transformation by advancing their digital footprint, skills and collaboration capabilities to support an expanding portfolio of products, offerings and markets. Digital adoption will provide actionable insights from the increasingly vast amounts of product and customer data curated from expanding markets and portfolios.
Deloitte provides industry-leading audit, consulting, tax and advisory services to many of the world's most admired brands, including nearly 90% of the Fortune 500® and more than 7,000 private companies. Our people come together for the greater good and work across the industry sectors that drive and shape today's marketplace — delivering measurable and lasting results that help reinforce public trust in our capital markets, inspire clients to see challenges as opportunities to transform and thrive, and help lead the way toward a stronger economy and a healthier society. Deloitte is proud to be part of the largest global professional services network serving our clients in the markets that are most important to them. Building on more than 175 years of service, our network of member firms spans more than 150 countries and territories. Learn how Deloitte's more than 345,000 people worldwide connect for impact at www.deloitte.com.
GSA is Where Leaders Meet to establish an efficient, profitable, and sustainable high technology global ecosystem encompassing semiconductors, software, solutions, systems, and services. A leading industry organization that represents more than 25 countries and 250 corporate members, including 100 public companies, GSA provides a unique, neutral platform for collaboration, where global executives interface and innovate with peers, partners, and customers to accelerate industry growth and maximize return on invested and intellectual capital. Members of the GSA represent 70 percent of the $450B+ semiconductor industry and continue to grow. Follow GSA on LinkedIn, Facebook, Instagram, Twitter, YouTube and WeChat. Learn more about GSA at www.gsaglobal.org.
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