The semiconductor industry is the aggregate collection of companies engaged in the design and fabrication of semiconductor devices. It formed around 1960, once the fabrication of semiconductors became a viable business. It has since grown to be the $249 billion dollar industry it is today.

This industry features a number of distinct characteristics that position it uniquely in the economy and in the global competitive arena. These include:

  • The role of the industry as technology enabler. The semiconductor industry is widely recognized as a key driver for economic growth in its role as a multiple lever and technology enabler for the whole electronics value chain. In other words, from a worldwide base semiconductor market of $213 billion in 2004, the industry enables the generation of some $1,200 billion in electronic systems business and $5,000 billion in services, representing close to 10% of world GDP.

  • Continuous growth but in a cyclical pattern with high volatility. While the current 20 year annual average growth of the semiconductor industry is on the order of 13%, this has been accompanied by equally above-average market volatility, which can lead to significant if not dramatic cyclical swings.

  • The need for high degrees of flexibility and innovation in order to constantly adjust to the rapid pace of change in the market. Many products embedding semiconductor devices often have a very short life cycle. At the same time, the rate of constant price-performance improvement in the semiconductor industry is staggering. As a consequence, changes in the semiconductor market not only occur extremely rapidly but also anticipate changes in industries evolving at a slower pace. Yet another consequence of this rapid pace is that established market strongholds can be displaced very quickly.

What is a Semiconductor?

CPU Chip of a computer, relying on semiconductor technologies
CPU Chip of a computer, relying on semiconductor technologies

A semiconductor has electrical conductivity intermediate to that of a conductor and an insulator. Semiconductors differ from metals in their characteristic property of decreasing electrical resistivity with increasing temperature.Semiconductor materials are useful because their behavior can be manipulated by the addition of impurities, known as doping. The comprehensive theory of semiconductors relies on the principles of quantum physics to explain the motions of electrons through a lattice of atoms.

Current conduction in a semiconductor occurs via mobile or "free" electrons and holes, collectively known as charge carriers. Doping a semiconductor with a small amount of impurity atoms greatly increases the number of charge carriers within it. When a doped semiconductor contains excess holes it is called "p-type", and when it contains excess free electrons it is known as "n-type". The semiconductor material used in devices is doped under highly controlled conditions to precisely control the location and concentration of p- and n-type dopants.

Semiconductors are the foundation of modern electronics, including radio, computers, and telephones. Semiconductor-based electronic components include transistors, solar cells, many kinds of diodes including the light-emitting diode (LED), the silicon controlled rectifier, photo-diodes, and digital and analog integrated circuits.

What is a fab?

Semiconductor fabrication plant
Semiconductor fabrication plant

In the microelectronics industry a semiconductor fabrication plant (commonly called a fab) is a factory where devices such as integrated circuits are manufactured.

A business that operates a semiconductor fab for the purpose of fabricating the designs of other companies, such as fabless semiconductor companies, is known as a foundry. If a foundry does not also produce its own designs, it is known as a pure-play semiconductor foundry.

The central part of a fab is the clean room, an area where the environment is controlled to eliminate all dust, since even a single speck can ruin a microcircuit, which has features much smaller than dust. The clean room must also be dampened against vibration and kept within narrow bands of temperature and humidity. Controlling temperature and humidity is critical for minimizing static electricity.

(Adapted from