The past year has been defined by breakthrough achievements that have reshaped our industry’s landscape. Despite initial skepticism, Moore’s Law continued to prove its resilience as major chipmakers, including Intel, successfully demonstrated 2nm prototype chips. Having worked closely with leading foundries through our Siemens partnerships, I can tell you this achievement wasn’t just about pushing technological boundaries – it represented our industry’s unwavering commitment to innovation despite mounting complexity and development costs.
Perhaps most heartening, though, was the strong market recovery we observed. We had spent years dealing with supply chain constraints that bore down on our industry, so it was satisfying to see this nice 20% year-over-year growth. Based on discussions with industry leaders, I was informed that this was not a return to previous levels but rather a fundamental shift in demand patterns fueled by widespread penetration of AI and ML technologies throughout the electronics ecosystem.
AI’s integration into consumer electronics has moved far beyond novelty features. We’re now seeing sophisticated AI capabilities becoming standard across everything from home automation systems to advanced automotive platforms, and its use is becoming part of everyday activities. Through our work with major automotive manufacturers, I’ve witnessed firsthand how AI is revolutionizing everything from design verification to production testing. This shift will represent a significant change in how we go about developing a product, in that AI considerations become central to design rather than treated as add-ons. Coupled with the rapidly growing development of the software-defined vehicle, new innovations in the way we interface with our cars are just over the horizon.
Semiconductors are used not only as part of gadgetry but also to fuel the developments of more modern technologies like AI and self-driving vehicles. McKinsey & Company said that the global market for semiconductors has reached $1 trillion by 2030. The industry in India is expected to grow from $23.2 billion to $80.3 billion by 2028 with a growth rate of 17. 10 %, according to estimates from the Government of India. This is not just numbers—it shows the larger picture, how semiconductors are reforming industries, driving innovation, and addressing global challenges. Here is a look at what is shaping the semiconductor industry as we move closer to 2025.
The rise of chaplet architecture has been particularly fascinating to watch. This modular approach to chip design saw remarkable triple-digit growth in 2024, demonstrating that our industry is actively embracing alternatives to traditional monolithic designs. At Siemens, we’ve been at the forefront of enabling this transition through our advanced packaging solutions. I’ve seen how this approach is revolutionizing the way companies think about chip design and manufacturing.
Semiconductors form a core component of modern technology and have been developing fast. In trying to achieve all this innovation, it’s only prudent to include the environment within the ambit of consideration.
The best engineers, analysts, and sustainability experts are being combined to set up the top-of-the- agenda issues that shape the semiconductor’s future. It is further supported by work using data through to 2035 from the suite of tools offered in the sustainability data application Eco Insights which give carbon emission insights on cradle to gate.
Chips are, therefore, the first geopolitical battlefield between China and the United States. Two key dynamics mark this battleground. First, it is trade-the restriction of chip exports and equipment manufacturing to China, especially from the United States and its allies. Second, the development of national capacity in the design and manufacture of semiconductors is being expedited.
The biggest surprise was the Mate 60 Pro phone, which Huawei launched in 2023. The phone is fitted with an advanced Kirin 9000S chip that is based on 7 nanometers technology, which was not something that was anticipated to be available in China. It is not entirely clear whether the sanctions regime that the United States has imposed on the technology of semiconductors is ineffective or whether China has independently developed new technologies for advanced semiconductors.
Semiconductor Talent Attraction Problem
In fact, talent attraction and retention is a challenge faced not only by US-based semiconductor companies but globally as well. This is why:
Ruthless Competition: A variety of sectors can bid for professionals who are capable of the kind of expertise semiconductor jobs demand. Software development and data analytics and consulting firms are some that offer more attractive deals.
Location Problems: Many semiconductor manufacturing and research facilities are concentrated in specific hubs, such as Silicon Valley and Taiwan. Professionals might not want to relocate because of the cost of living. Also, unlike software development, U.S. semiconductor companies can rarely offer remote or hybrid work.
I see a number of transformational forces that will, at their root, reshape our industry. Collaborative platforms will break down the boundaries of traditional organizations, creating unprecedented levels of cooperation across the semiconductor ecosystem. As someone who has led initiatives around digital transformation, I know that this is more than sharing resources-it’s a new model for innovation, tapping into collective expertise and capabilities.
The software-defined silicon-enabled product will become increasingly central to our industry’s evolution. As AI and ML workloads continue to drive requirements, the traditional boundaries between hardware and software will blur. Working with our customers, I’ve seen how this convergence forces us to rethink everything from design methodologies to verification processes. Success in this new landscape will call for thinking differently about one’s role-positing the semiconductor company as the enabler of software innovation through holistic co-optimization approaches.
It revolutionized the world of semiconductors when advanced packaging technologies like 3D stacking and chiplet integration emerged, allowing much more die per chip. This year, by 2025, silicon intensity, or fabricated die required to get a given amount of computing performance, is estimated to continue as the largest constituent of the semiconductor manufacturing environmental footprint.
While advanced packaging technology can lead to energy-efficient use of devices in general, they have little general impact on reducing semiconductor emissions overall. Generally speaking, packaging usually does not add up to more than 10% to the product’s carbon footprint at the whole chip level. Nonetheless, for particular use cases, including automotive and connectivity applications, it tends to play a more dominant role.
With the industry constantly trying to push boundaries of performance and efficiency, there is a need to balance technological innovation with environmental sustainability. Optimization of design, manufacturing processes, and materials usage can help reduce the carbon footprint of semiconductor manufacturers, thus contributing to a more sustainable future.
Popularity of AI Chips is Increasing
The boundaries of research labs are no longer the limits for AI technology. It is in devices, including smartphones and smart homes as well as vehicles. Chip manufacturers are even developing hardware to meet the rising requirements of AI applications. Such chips are not number-crunching devices. Instead, they are designed to process volumes of data with minimal power consumption. That means smarter voice assistants, faster image recognition, and more responsive autonomous systems.
Focus on Sustainability
The production of semiconductors is not that friendly to the environment since it requires a lot of energy and water; however, things are changing, companies now are using eco-friendly materials and processes that save energy and encourage recycling to reduce their negative impact on the environment. It aligns with regulatory requirements and appeals to consumers who consider concerns about sustainability. Manufacturers consider this as an important factor for them to maintain their competitiveness and bring environmentally conscious.
Revamping Chip Design Using 3 D Stacking Techniques
Chips are no longer flat. Technologies such as 3D stacking are layering them to pack more power into smaller spaces. Imagine building skyscrapers instead of spreading out horizontally. Another innovation is chiplets, breaking down chips into modular pieces that are easier to customize. This approach saves space and enhances performance, particularly for devices requiring high efficiency, such as smartphones and IoT gadgets.
Advanced Packaging Will Be the Next Stage for Chip Innovation
In addition to AI, there have been innovations in new advanced packaging processes that come as one of the breakout stars in 2024. The industry of semiconductors hits against what seems to be Moore’s Law and “the observation that the number of transistors on an integrated circuit will double every two years with minimal rise in cost.
As we shrink to smaller node sizes, chip performance improvement through packaging is being explored by OCMs. All these years, Nvidia has been using the advanced capabilities of TSMC to help improve the performance of the chips. This was done with TSMC’s CoWoS, enhancing performance while reducing footprint and making it power efficient.
CoWoS assists in the promotion of semiconductor innovation by having chips stacked on a single substrate. Now that advanced nodes are reaching the size of a single nanometer, chip stacking developments are the next step into semiconductor capabilities. The benefits of CoWoS technology, coupled with its ability to scale rapidly, ensure its widespread use in mass production.
These aspects significantly benefit the emergent needs of AI applications, such as generative and large language models. TSMC is going to increase its capacity of advanced packing operations as it spreads globally. It is said that TSMC plans to build new CoWoS advanced packing plants in the United States and Japan to fulfill this increasing demand.
The main driver of this approach is the increasing requirement for Nvidia chips in AI applications.
Similarly, CoWoS technology’s smaller form factor contributes to better thermal management in more advanced cooling solutions such as heatsinks and axial fan designs. This will most likely contribute to increased demand for advanced packing applications as data centers expand to meet the rising use of AI.
Research indicates that continued integration of CoWoS technology will help OCMs push boundaries of traditional limitations within chip packaging, improving applications through higher performance and greater interconnectivity. Similarly, the increasing usage of 3D stacking in memory, DRAM and NAND flash, will likely increase in 2025 to better support AI applications.
Edge Computing
Gradually, the era of dependency on servers is coming to an end with edge computing gaining momentum. In edge computing, data processing occurs closer to the source whether it is a self-driving car or a smart home device. Delays are minimized and real-time decisions become possible. To make this work, semiconductors need to be faster and more efficient. Innovation is required in manufacturers’ lines. This trend will play a bigger role in sectors like healthcare, where instant data analysis can save lives.
Open Source Chips
In the past chip design was a closely guarded secret. Now open source designs enable collaboration among engineers and researchers as they share ideas and resources. This change reduces costs. It accelerates innovation. Smaller players who previously faced challenges in competing can now. Today, even smaller players can design and tailor chips for niche applications, thereby democratizing access to advanced technology, not allowing breakthroughs to be in the hands of just a few big names.
Security becomes a priority
In today’s world of cyber threats and attacks, which are growing in sophistication by the day, safeguarding data is top priority for sectors such as finance, healthcare, and national security, where breaches can have wide-ranging impacts. Manufacturers are now integrating security mechanisms into the hardware at the chip level to ensure protection against unauthorised access or tampering.
A graphics processing unit, or GPU, is a type of microprocessor that renders graphics for the smoother display that most consumers of electrical devices expect in modern videos and games. GPU rendering is the use of a GPU in the automatic generation of two-dimensional or three-dimensional images from a model, done by computer programs.
A GPU can be used in combination with a CPU, where it can increase computer performance by taking some more complex computations, such as rendering, from the CPU. This is a big improvement, since it accelerates how quickly applications can process data; the GPU can perform many calculations simultaneously. It also allows development of more advanced software in fields such as machine learning and cryptocurrency mining.
These semiconductor trends will catalyze significant changes across the electronics industry. AI and ML capabilities will become ubiquitous at the edge, enabling new levels of device intelligence and autonomy. The continued rollout of 5G infrastructure will create opportunities for truly hyperconnected applications, from smart cities to advanced healthcare systems. I’m particularly excited about how these technologies will enable new use cases we haven’t even imagined yet.
The push for sustainability will extend beyond chip design to encompass the entire electronics manufacturing process, driving innovations from material sourcing to product recyclability. Meanwhile, advances in flexible electronics and wearable technology will open new frontiers in how we interact with electronic devices, creating opportunities for entirely new product categories.
As we enter 2025, it’s clear that the semiconductor and electronics industries are converging into an intelligent, connected ecosystem driven by AI, 5G, software-defined products, sustainable practices, and advanced packaging technologies. Success in this new landscape will require embracing cross-domain collaboration and co-optimized system design approaches. At Siemens, we’re committed to enabling this transformation, providing the tools and platforms to help our industry realize this exciting future vision.
