If expanding industries typically indicate vibrancy, a race to acquire and consolidate is generally reflective of the opposite – a period of slowed growth in mature, once high-flying categories. And while many industries experience a period of stardom, followed by a sharp and steady decline, we should be extremely worried when they occur in industries that are fundamentally central to our socio-economic vitality.
Enter the semiconductor industry, where in the past 24 months, there have been at least 10 significant mergers and acquisitions, including big name brands such as Avago’s acquisition of Broadcom, Intel’s purchase of Altera, and Infineon’s acquisition of International Rectifier .
Further, since the year 2000, the semiconductor industry as a whole has grown at a mere 5% annually, as compared with 22% in the 1980s (see figure 1). The semiconductor “go-go years” of the 80s have been replaced by the more sedate, incremental growth rate of a mature industry – with fewer and fewer bright lights from product innovation. But does a shrinking semiconductor industry indicate bigger problems for the technology industry as a whole?
End of Moore’s Law
It is not a coincidence that this race to consolidate has coincided with the end of Moore’s Law as we know it. Moore’s Law depends upon the continuous reduction in the size of a transistor to maintain positive momentum in both cost and performance. Today, the realization of this bold prediction made 50-years ago has become an either/or proposition – either deliver on better performance or a lower price.
The problem began to rear its ugly head about twenty years ago: as the size of transistors continued to shrink, the cost to produce them got bigger. Other costs, such as designing, packaging and testing have also escalated, and the overall bill to develop an advanced silicon-based device – now in the 10’s to 100’s of millions of dollars – has become unaffordable to all but the well-funded, established companies.
Why It Matters
New chips are the fuel for the semiconductor industry’s growth, and, as the costs escalate, the number of new semiconductors (and their innovation contribution) decreases. But it’s not just the chip companies that stand to lose from this new reality. Industry luminaries predict that the sputtering of Moore’s Law will likely hinder the innovation and advancement to which we have all become accustomed,putting in peril many of the devices and applications that businesses and consumers covet, including virtual reality glasses, wireless power, autonomous vehicles, 5G mobile communications and advanced medical devices to name a few.
The de-coupling of cost and performance is due to three underlying trends for silicon chips; (1) the slower growth in end markets for semiconductors in general, (2) the cost to develop a new chip, and (3) the capital investments needed to build factories to produce each new generation of product.
Knowing this, it becomes clear why there has been so much consolidation in the chip industry lately: for many of the large semiconductor players, it’s simply less risky to buy existing revenues than to invest in new products and factories to develop and introduce new products. The total market size of the industry “pie” is relatively fixed, so organic growth from technological innovation is high-risk, in addition to being very costly.
The original wellspring of innovation – the venture-funded startup in the chip space has all but disappeared, as there is little venture money available given the poor cost-to-risk ratio for new product development and the less vibrant growth prospects.
Unfortunately, this is not good news for consumers as startups are often the source of the technology industry’s greatest innovations. Given these metrics, advancements in the semiconductor industry will continue slowly, putting us farther and farther behind on the promise of Moore’s Law.
A Glimmer of Light – the Growth of #GaN
Some exceptions can be found, however. Alternatives to silicon, such as gallium nitride (GaN) and silicon carbide (SiC) offer the potential for a refreshing return to the financial metrics the semiconductor industry enjoyed in the 1970s and 1980s. GaN in particular, is facing a period of rapid growth. This growth is coming from both the replacement of lower performing silicon devices and from emerging applications that are enabled by GaN’s superior performance. These applications – from those that make our lives more convenient to those that have life-altering impacts – are critical for the technological advancement to which we have become accustomed.
Given worrisome events of the last two years, I say it’s time for the semiconductor industry and the venture community to come together to rally around innovation – not consolidation. With that in mind, we will be able to fuel product development and propel advancement at the speeds to which Gordon Moore predicted just five decades ago.
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EE Times’ 25th revision of the Silicon 100
started by Daniel Nenni on -
Nvidia CEO meets China’s commerce minister to discuss AI cooperation, foreign investment
latest reply by Daniel Nenni onstarted by Daniel Nenni on -
Times Chip Memory's restructuring failed: The "savior" defaulted, causing the 13 billion 12-inch wafer factory to fall into the abyss again
latest reply by Jert onstarted by Daniel Nenni on -
Intel Nova Lake-S uses TSMC N2 process Tape-Out
latest reply by Xebec onstarted by Daniel Nenni on -
Rapidus Achieves Significant Milestone at its State-of-the-Art Foundry with Prototyping of Leading-Edge 2nm GAA Transistors
latest reply by Daniel Nenni onstarted by Daniel Nenni on -
TSMC Reports Second Quarter Revenue Increased 44.4% Year-Over-Year
latest reply by hist78 onstarted by Daniel Nenni on -
Ex-Intel CEO backs Trump's sovereign wealth fund plan — and says it can help the US keep up with China in the tech race
latest reply by hist78 onstarted by Daniel Nenni on -
Who will dominate quantum computing and at what levels?
latest reply by Arthur Hanson onstarted by Arthur Hanson on -
Synopsys Completes Acquisition of Ansys
latest reply by swka onstarted by Daniel Nenni on -
Intel swings the axe again as it looks to lose 5,000 staff
latest reply by siliconbruh999 onstarted by XYang2023 on
Recent Forum Threads
Recent Article Comments
TSMC N3 Process Technology Wiki
Agreed, marketing numbers are always misleading. Customers know that which is why they rely on PDK derived numbers. Did you…— Daniel Nenni on July 17, 2025TSMC N3 Process Technology Wiki
1.7X density number is misleading as well if we compare the densest library between the improvement is only 1.56X. https://fuse.wikichip.org/news/7375/tsmc-n3-and-challenges-ahead/— siliconbruh999 on July 17, 2025Moore’s Law Wiki
Yes, I am trying to teach AI how to do semiconductor wikis and put the Wiki back in SemiWiki. Should…— Daniel Nenni on July 14, 2025TSMC N3 Process Technology Wiki
I am trying to teach AI to speak semiconductor wikis. The problem is the date of the references. A 2023…— Daniel Nenni on July 14, 2025TSMC N3 Process Technology Wiki
Hmm - what's the source for 0.015-0.016? -- this thread shows 0.0199 (N3B) and 0.021 (N3E) https://semiwiki.com/forum/threads/tsmc-officially-halts-sram-scaling.17223/ Perhaps this source…— Xebec on July 14, 2025TSMC N3 Process Technology Wiki
It should be 25-30% smaller? Process Node Typical SRAM Cell Size Density Improvement TSMC N5 ~0.021 µm² — TSMC N3…— Daniel Nenni on July 14, 2025TSMC N3 Process Technology Wiki
~1.6x denser vs. N5 SRAM I thought the scaling was more like 1.05X? (Various threads here on 'SRAM scaling dead…— Xebec on July 14, 2025Facing the Quantum Nature of EUV Lithography
This presentation considers 5 nm Gaussian acid blur: https://www.youtube.com/watch?v=MYLdE69RDBg— Fred Chen on July 7, 2025
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