Semiconductor industry in 2016

Fred Dart
Global semiconductor industry in 2016 will be challenging
Fred Dart, CEO, FTDI looks at the semiconductor industry for 2016 and finds it will be challenging, but he wouldn't have it any other way.

The last 12 months have seen the semiconductor business go through major upheavals.

Merger and acquisition activity has been incessant, resulting in the most significant consolidation in the industry for several decades - with Freescale snapped up by NXP, Altera being enveloped by Intel, Avago taking control of Broadcom, ON Semiconductor buying its fierce rival Fairchild, and rumours that both Texas Instruments and Analog Devices are queuing up to acquire Maxim.

On top of this market analysts predict that IC shipments are destined to, at best, be flat next year, and spend on capital equipment will be reined in.

The venture capitalist (VC) community doesn't seem to regard the chip business attractive in the same way that it did in the past (the money they put into it dropping by around 30% in the last year). But is it all doom and gloom - no, far from it. Things are changing, sure, but that's exactly what keeps this sector so interesting.

New developments are allowing start-ups to get financial backing via different methods. For example, the crowdfunding phenomenon has meant that smaller investors (through sites like KickStarter, etc.), can get involved in high tech projects in a way that simply wasn't possible before - getting rewards in return for their financial support.

This is injecting new vibrancy into the industry. Billions are now being pledged on technology based projects every year. One article in Forbes recently suggested that during 2016 crowdfunding will actually generate more cash than traditional VC routes.

Universities are, in addition, spinning out more companies than ever and though VC money may have dried up in Western economies, in the Far East there is substantial private and government investment in semiconductor technology. Around the world a host of new application opportunities are starting to emerge - home automation, IoT and mHealth being amongst the most prominent.

This is still a great industry to work in. Yes things may be going through changes, but it has been change that characterised the semiconductor business from the beginning.

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