How Macroeconomics Is Impacting the Semiconductor Industry

March 09, 2016

I recently attended the Fab Owners Association (FOA) meeting in Redwood City, California, where the topic of discussion was the impact of macroeconomics on the semiconductor industry. As usual, I found the discussion very informative, and appreciated the opportunity to interact with existing and potential customers to discuss industry challenges and opportunities, and also offer solutions.

For those of you who don’t know, the FOA is an international trade association of semiconductor owners, MEMS fab owners and industry suppliers who meet regularly to discuss common manufacturing issues. The group’s members are mostly tier-two chip manufacturers that have more mature fabs and different support requirements than tier-one companies such as Intel, TSMC and Samsung. NSTAR has been an active member for the past five years.

Here are some key takeaways from the recent meeting, and how NSTAR plans to address them:

  • Global conflicts, the impact of China on the U.S. economy and election-year banter are cause for concern.
  • However, suppressed oil prices are allowing for increased household spending both in the U.S. and abroad, resulting in solid consumer confidence worldwide.
  • This is good news, as our industry is driven primarily by consumer electronics, which now comprise more than 60% of semiconductor production, in comparison to 5-10 years ago, when the main driver was business.
  • Semiconductor companies have accumulated significant amounts of cash over the past five years, which will likely lead to additional capital expenditure investments and the continuation of merger and acquisition activity by U.S., Korean, Taiwanese and Chinese companies in 2016 and beyond.
  • Analysts expect to see a steady growth cycle for the semiconductor industry in 2016, which will lead to continuous job creation in the U.S. in the high-tech market.

While the increase is significant for skilled engineers, scientists and technicians seeking employment, it often presents a challenge to fabs and OEMs in the position of hiring, and can lead to further tightening of the U.S. high-tech labor market. Investing in STEM education and cross training is more critical now than ever.

NSTAR is prepared to address these employment challenges for the semiconductor industry by deepening our candidate pool, seeking new talent and supporting STEM education opportunities for future generations.

Read the full post on LinkedIn.

By Hardev Grewal, VP Business Development