What are semiconductors? Why are semiconductor companies so important? What is their purpose? A semiconductor is a type of material. Its electrical conductivity falls between that of a conductor and an insulator. Furthermore, its conductivity can be precisely controlled. This is done through means like temperature, light, electric fields, or adding tiny amounts of impurities. Common semiconductor materials include silicon, germanium, and gallium arsenide. Among them, silicon is considered the foundation of modern electronics.
Key Takeaways
- Semiconductors are materials with conductivity between conductors and insulators, crucial for integrated circuits like processors, memory, and sensors.
- They play a foundational role in modern electronics, acting as essential components in devices from smartphones to military systems.
- The semiconductor market exceeded 500 billion USD in 2023, supporting a vast electronics industry and driving innovation.
- Semiconductors also have strategic importance for national security and technological sovereignty, affecting military and critical infrastructures.
- The semiconductor industry chain consists of upstream, midstream, and downstream segments, each vital for producing and applying semiconductor technologies.
Table of contents
What Are Semiconductors Used For?
The core application of semiconductors is integrated circuits. These encompass various critical components, mainly divided into processors, memory, and sensors.
- Processors: CPU, GPU
- Memory: DRAM, NAND Flash
- Sensors: Camera CMOS, fingerprint sensors, environmental sensors.
These integrated circuit components are essentially the heart and senses of all smart devices. They play a crucial role in the normal operation and functionality of these devices.
Semiconductors can also be categorized by function:
- Semiconductors that control electrical power conversion are used in electric vehicle motor drives, high-speed trains, and wind/solar inverters. They improve energy efficiency and help achieve carbon neutrality. About 70% of the world’s electrical energy is regulated by power chips.
- There are also electronic devices like lasers used in fiber optic communication and medical equipment.
- Core components used for battery power control.
- Communication and RF chips for 5G/6G base stations, mobile phone RF modules, satellite communication chips.
- Semiconductors used in quantum technologies, like superconductors for quantum computers.
Why Are Semiconductor Companies So Important?
First, they have a foundational role in technology. Semiconductors are the core of all modern electronic devices. They are like the “oil of the digital age.” Small devices like phones and computers, large systems like power grids and high-speed trains, and even spacecraft and military equipment all rely on semiconductor chips to function.
Second, their economic and strategic value is immense. The global semiconductor market size surpassed 500 billion USD in 2023. It supports an electronics industry worth trillions of dollars. The semiconductor supply chain is extremely long. It involves design, manufacturing, packaging, equipment, and materials. It drives employment and fosters innovation ecosystems. It is also a marker of national competitiveness. The capability to manufacture high-end chips is directly related to technological sovereignty.
Third, they have become vital for national security. Military radar, missile guidance, satellite communication, and encryption technologies all depend on high-performance chips. A disruption in semiconductor supply could cripple national defense and critical infrastructure.
Fourth, they are a driver of innovation. Breakthroughs in cutting-edge technologies like artificial intelligence, 5G, autonomous driving, and quantum computing all rely on advances in semiconductor performance. For example, the computing power of AI chips doubles approximately every two years.
What Does the Semiconductor Industry Chain Look Like?
The semiconductor industry chain can be broadly divided into upstream, midstream, and downstream segments.
The upstream segment includes semiconductor materials, manufacturing equipment, EDA, and IP cores.
EDA stands for Electronics Design Automation. It includes tools for circuit design and simulation, PCB design software, IC design software, and PLD design tools.
An IP core, or Intellectual Property core, provides pre-designed functional modules for chips. These modules have completed their logic or physical design. IP cores are licensed to customers, who can then integrate them into their own chip designs. These integrated designs eventually become final chip products through a process called tape-out.
The midstream segment includes three main parts: design, manufacturing, assembly, testing, and packaging (ATP).
The downstream segment primarily involves the application of semiconductors. These applications are found in areas like PCs, medical devices, electronics, communications, the Internet of Things (IoT), information security, automotive, new energy, and industrial systems.
Semiconductors are the foundation of the digital world. Without them, all electronic intelligence in modern civilization would vanish. Their strategic importance is comparable to that of steel and oil in the industrial era. They are a core lifeline for a nation’s technological, economic, and security interests. Companies such as Stanford Advanced Materials offer a variety of high-purity semiconductor materials to meet the specialized needs of these applications.
Additionally, semiconductors underpin every facet of modern technology, from consumer electronics to national defense. Their role in powering innovation, securing digital infrastructure, and supporting global industries makes them indispensable. As the foundation of the digital era, advancing semiconductor companies’ capabilities remains essential for economic growth, technological leadership, and long-term national competitiveness.
