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September 29, 2023

What's Next for the Global Semiconductor Market | TechSurge 2023

What's Next for the Global Semiconductor Market | TechSurge 2023

At the February 2023 TechSurge Deep Tech Summit, Sanjay Mehrotra, Ronnie Chatterji and Rene Haas participated in a fascinating panel discussion, led by Jason DiLullo which examined what's next for the global semiconductor industry following the COVID pandemic.

You can read a brief transcript of part of the discussion or watch the full interview below.

Q: Why is the semiconductor industry in our public consciousness, now more than ever?

A: Sanjay Mehrotra

I think what everybody recognizes is that semiconductors absolutely form the backbone of everything that is shaping the world today, from data centers to your PCs to smartphones to industrial 4.0, smart factories, autonomous cars, IoT – everything is powered by semiconductors. If you think about it, the global economy is like $100 trillion US dollars. 20% or so is durable goods, which need semiconductors in one form or another. About 20 to 30% by some estimations of the global economy is powered by semiconductors.

Semiconductors are critical for the growth of future economies. Through the rest of this decade, semiconductor industry will outpace GDP. Within the semiconductor industry, by the way, memory, which Micron makes, we are the only US manufacturer of semiconductor, D-RAM and flash storage.

Semiconductor memory will outpace the semiconductor industry growth as well throughout this decade, because everything today is about the data economy. All the trends around AI autonomous, IoT – they all need semiconductors, they all need memory, they all need more data. There's a clear recognition that semiconductors are important for economic growth.


Q: What role going forward will the US government play in semiconductor manufacturing, especially after the supply chain issues we’ve seen?

A: Ronnie Chatterji

In Washington, there was a recognition that the supply chain resilience topic wasn't just an esoteric academic discussion. It had a real economic impact. Second, the effect on national security was a real and present risk for the United States. Chips are on every single one of our defense equipment pieces in our national security. Lastly, the kind of FABS that Sanjay and other people are building around the United States, there's a lot of jobs. You think about manufacturing in this country and how much we get offshored and outsourced to other countries, we had hollowed out a lot of those jobs, particularly for people without a college degree. The ability to bring these FABs to the United States and create those opportunities for folks was also incredibly important.

For those three reasons, we thought this is a great time to make sure that we make strategic public investments in a key industry. That's what the CHIPS and Science Act is all about. Our job is to set the foundation for entrepreneurship, innovation, and technology commercialization to take place.


Q: What are some things driving the next technological expansion that we need to be thinking about from a supply chain and manufacturing perspective?

A: Rene Haas

I think AI is the obvious number one candidate. When you think about these complex large language learning models, what's required in terms of compute capability is very significant. The amount of compute power it's going to take to address these type of AI problems is going to be very substantial. I think that's going to be a huge opportunity. I do think it has to be tempered with efficiency.

 When we look forward in terms of the data center of tomorrow, power efficiency is going to be critical because if you just look at today, 1% to 2% of the world's electricity goes to data centers. In some countries, it's already north of 10%. That's not sustainable at all.

 New plants that are being built are going to have a fixed area in terms of square footage. They're going to have a fixed area in terms of kilowatt hours. Making sure that these new data centers and compute demands are efficient is going to be critical.


Q: How do you diversify the funding for semiconductor projects and make various bets on industries, companies, manufacturing, or the whole broader ecosystem?

A: Ronnie Chatterji

The CHIPS and Science Act appropriated $52.7 billion to fund the construction of FABs and supply chain across the US and to invest in research and development, as well as workforce and defense applications. I've been thinking a lot about how far that money can go. If you look at the contribution from private industry, which is going to be essential here, we've already crowded in about $300 billion of investments from private companies into the semiconductor ecosystem since the CHIPS Act was first proposed. If this is going to be successful, we can't just focus on the government’s piece of it. The government piece of it is supposed to be the foundation by which we build private sector investment on top of it. I think you're already seeing that. You’re also seeing that in electric vehicles and the foundation for a clean economy.

The second thing I'll say is we must be cognizant that there's more than just the fabrication facilities, the FABs. There also has to be a broader supply chain, and that's going to include a lot of small and medium-sized enterprises. We are thinking a lot about mapping the supply chain, trying to understand where those gaps are, whether it's in critical minerals or advanced packaging, and trying to make sure that we also set up a system to support those as well. The challenging thing about supply chains, which everyone in the audience knows, is that you have more information in the private sector than we have in the public sector. A lot of this needs to be done in partnership.

We also want to set up the program to align incentives. We want these investments to be productive and successful because we know that there's skepticism when the government takes on a big project like this.

First and foremost in our mind is: how do you basically place these bets in a way that has good governance, but also has the highest likelihood of paying off?


Q: What is your perspective on how the semiconductor industry can be a force for good? What opportunities or obligations does the semiconductor industry have?

 A: Rene Haas

We have an obligation to solve this power efficiency problem. I think it's a system-wide issue. It's not just the IP that Arm creates, but it's the memory from Sanjay. The industry needs to get more ambitious and aggressive. When you think about states like California wanting to go full EV in the next 15 or 20 years, the power grid is not going to be able to support that, which basically means that the automobiles need to be much more efficient in terms of the computers that are inside them and the batteries that are there. It’s a big issue around sustainability. It can't be solved by one company. It's an ecosystem problem, but I think the industry needs to take it very seriously.

A: Sanjay Mehrotra

I think it is absolutely the responsibility of all businesses to take the right steps in terms of helping the climate and helping our planet in this regard. Micron has made commitments that by 2050, we will be zero emissions, but 2050, of course, is way out there. We have milestones that we have identified. For example, by 2025, 100% renewable operations here in the US.

The FABs that we'll build in Syracuse and another big project in Boise Idaho will be sure that from the get-go, these are targeted toward 100% renewable energy. Of course, in our selection for New York City, access to clean energy, reliable energy, and water was an important consideration.

By 2030, we expect to reduce our emissions versus 2018 levels by 42%, which is in line with the Paris Accord. Absolutely for semiconductor companies like Micron, focus on workforce development, bringing diversity into the workforce, and focusing on sustainability objectives is an important priority.


[Discussion transcript slightly edited for brevity and clarity.]

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