This is a guest post by Kelvin Lim, chief operating officer of Innovative Global Solutions & Services
2020 was supposed to be the year for rapid transformation in the global semiconductor industry. Investments in new fabrication plants were expected to grow by $12bn to nearly $50bn.
Industry observers had expected China to generate additional capacity dedicated to foundries. This was followed by Europe and the Middle East, with semiconductor fabrication developments valued at over $11bn.
As of 2018, US-listed firms accounted for 48% of the global market while China was responsible for approximately 20% of global revenue. The trade war between the US and China, however, has prompted multinational manufacturing firms to move production to other countries such as Vietnam.
Undeniably, the ongoing challenges from the coronavirus have become the tipping point, accelerating the need for alternative supply chains amid the evolving geopolitics, increased protectionism and rise of smart cities and niche technologies.
The new imperative is for industry players to rethink the traditional approach to semiconductor fabrication, which costs an average of between $3bn and $5bn today.
The good news is, the advent of Industry 4.0 and digitalisation has given rise to smart fabrication plants that are better equipped to optimise their capital and operating expenditure – by digitalising design and construction processes, as well as tapping the internet of things (IoT) and real-time data to enable and automate tasks such as predictive maintenance.
Besides being more reliable, smart fabrication plants also allow for product customisation to meet market needs. This includes the ability to mix CMOS production with emerging technologies such as silicon photonics, gallium nitride and micro-electromechanical systems.
“Servitisation” as a competitive advantage
Product-based strategies had driven technological innovation, quality improvement and cost reduction. But “servitisation”, or the move to services, is gaining traction as more manufacturers look to embrace customer- and market-centric business models rather than product-dominant ones.
Servitisation in turnkey and greenfield fabrication projects offers public and private sector stakeholders an opportunity to tap key industrial strengths while ensuring those projects are aligned with a country’s national aspirations.
To that end, Innovative Global Solutions & Services (IGSS) has developed a build, operate and transfer (Bot) programme to guide semiconductor manufacturers in their servitisation journey, starting with tool refurbishment, real estate management and other forms of capital expenditure.
As for operating expenditure, the Bot programme leverages Industry 4.0 and IoT technology to enable services such as process control. These services, including robots-as-a-service and sensor-as-a-service, can be consumed on a pay-per-service basis with clear deliverables and key performance indicators, making greenfield projects more commercially feasible.
As production becomes highly automated, servitisation can become a high-margin revenue stream and key source of employment, particularly in advanced “last mile” development support in the pre-fabrication stages. These include consultancy, R&D, as well as design and prototyping.
Meeting sustainability goals
Running a semiconductor fabrication plant is a resource-heavy endeavour and the industry is under tremendous pressure to minimise their environmental impact from heavy consumption of energy and wastewater. Manufacturers are also expected to reduce greenhouse gas emissions.
In a complex balancing act, along with the demand for reporting transparency, industry players are incorporating relevant operational strategies as they align themselves with targets such as the United Nations’ sustainable development goals.
Through servitisation and tapping emerging technologies such as big data and IoT, manufacturers can extend the lifespan of their fabrication assets, create less waste and implement more optimised electrical distribution systems, capitalising on the promise of Industry 4.0.