Semiconductors are back, especially in AI and 5G

Semiconductors in 5G; 5G AI, memory, and power amplifier (PA) semiconductor market is speedily metamorphosing from the nascent to growth stage.


Semiconductor applications especially in AI and 5G witnessed unprecedented growth due to a push from increasing data traffic and hardware improvements. According to Frost & Sullivan’s recent forecast to 2025 of Growth Opportunities for Memory, Power, and Artificial Intelligence (AI) Semiconductors in 5G; 5G AI, memory, and power amplifier (PA) semiconductor market is speedily metamorphosing from the nascent to growth stage. This reason behind this rapid transformation is exponential increase in data traffic, technological advancements and capability improvements, and development of new applications. Experiencing a growth at compound annual growth rate (CAGR) of 74.3%, the market for semiconductors is visioned to obtain revenue of $15.03 billion by 2025 compared to $536.9 million in 2019.

With a wide spectrum of applications, the main prospects of AI and 5G semiconductors lie in the following sectors:

Manufacturing Sector: To control rising production costs, network equipment and robotics system manufacturers can use PA, and AI chips and capitalize.

Healthcare Sector: The pandemic has increased the adoption of robotics in the healthcare sector. AI and PA market participants can optimize the existing products.

Automotive Sector: 1vehicles need ultra-fast, reliable networks that process huge volumes of data which need 5G AI and PA devices.

Agriculture Sector: Cost-effective, application-specific circuits are needed to enhance farm productivity. 5G and AI can help bring about this transformation.

It is predicted that Memory integrated circuits (ICs) supporting 5G end-user markets will contribute the most. AI is still in the seed stage and is forecasted to develop significantly in the next five years. A surge in semiconductor test volumes and increasing demand from the communication, consumer electronics, automotive and healthcare sectors will possibly help in the revival of the semiconductor industry. The future generation requires technological advancements and innovations to absorb artificial intelligence (AI) and 5G networks.

Investments in 5G network infrastructure and innovations in the semiconductor industry can induce growth in the market. Expansion and innovation in AI, automotive and 5G communication is currently boosting the manufacture of high-end IC chips and other semiconductor equipment. Start-ups are also trying to leverage the power of AI to improve the IT help desk experience and better sales forecasting, increasing the demand for chips. 

Data shows nearly 320 million 5G subscribers are forecasted in the U.S. by the end of 2025. Semiconductors will help improve cellular networks enabling consumers to access the internet at extraordinary 5G speeds leading to a more connected world. It will also enhance video on-the-go quality and develop technologies like virtual reality.

The global semiconductor market was in a slump in 2020 due to the fallout owing to the US-China trade dispute. Though the demand side looks uncertain, the market is expected to make a gradual recovery with increase in demand related to 5G, AI, and automotive applications. 

Smruthi Krishnan
Smruthi Krishnan
Smruthi interviews and writes on inspiring entrepreneurs and the success stories of start-ups. She is currently pursuing Economics major from Delhi University.

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