ZVEI on the semiconductor market 2020

»Europe's opportunity lies in the Edge«

15. Dezember 2020, 14:50 Uhr   |  Gerhard Stelzer

»Europe's opportunity lies in the Edge«

Climate change, trade conflicts and the Corona pandemic currently pose challenges for microelectronics, but also offer opportunities, explained Stephan zur Verth, Chairman of the Semiconductor Devices Division in the ZVEI.

The world market for semiconductors is developing better than the global economy. However, Europe is falling further behind in a global comparison. The German Association of the Electronics Industry ZVEI sees an opportunity for Europe in edge technologies.

Climate change, trade conflicts and the Corona pandemic currently pose challenges for microelectronics, but also offer opportunities, as Stephan zur Verth, Chairman of the Semiconductor Devices Division in the ZVEI Electronic Components and Systems Association (who works full-time for NXP) explained at the traditional (this time virtual) press conference at the beginning of the Advent season.

Europe has a leading position in efficient and sustainable technologies, so that with regards to climate change, the opportunities outweigh the risks. Against the trade conflicts, Europe must stand up for the preservation and expansion of world trade based on WTO rules and build up a properly understood technological sovereignty. With regards to the Corona pandemic, it is important to make value chains more resistant (resilience).

In 2030, zur Verth expects 50 billion edge devices accessing a few million data centers (cloud). »Europe's opportunity lies in the edge,« he is convinced, because edge devices will increasingly complement cloud services. The Edge can claim several advantages over immediate cloud communications: On-premise computing power paired with AI capabilities such as machine learning (ML) reduces traffic and computational demands in the cloud, protects privacy by transmitting semantic data rather than raw data, and increases the resilience of an entire network through decentralization. At the same time, energy efficiency can be increased because the bulk of the data is processed at the source rather than in the cloud.

As an example of an edge application, zur Verth cites a vehicle with smart radar or lidar sensor technology in which the sensor data is evaluated locally at the edge and thus has a lower latency compared to the cloud. Not to mention any connection problems to the cloud that may occur.

After the semiconductor growth drivers smartphones and server farms in the last decade, the next decade from 2020 to 2030 belongs to edge devices, predicts zur Verth. The last decade was about bringing Big Data to the cloud, the next decade will be about bringing relevant data to the cloud, he said.

European and German Semicoductor Market 2020

Development of the European semiconductor market.
European semiconductor market: Sales breakdown by customer segment.
Development of the German semiconductor market.

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Semiconductor market creates moderate growth worldwide

»Globally, the semiconductor market is growing 4 percent this year to $428 billion«, zur Verth noted. »Thus, despite the Corona crisis, the world semiconductor market has performed surprisingly well, outperforming the global economy«. The European market, however, is experiencing a sharp decline in sales in 2020, he said. In the Europe region, which includes the Middle East and Africa (EMEA), the market is down about 8 percent this year to $38 billion, he said. Germany – in particular– will see a sharp drop in sales of around minus 14 percent to $12.3 billion. Nevertheless, his forecast for the semiconductor market is positive: »In the coming year, we expect global sales to increase by 8 percent to $463 billion and Europe-wide sales to increase by 5 percent to $38 billion,« added zur Verth.

5G, AI and edge technology accelerate global growth

»Europe, and Germany in particular, are experiencing more of a revenue hit from the Corona pandemic than other parts of the world due to their high shares in the automotive market, as well as lower memory segments,« zur Verth explained. Growth drivers for the global semiconductor market, he said, include 5G, AI and edge technology. The latter is the prerequisite for the trend of bringing relevant data to the cloud instead of Big Data. Edge technology favors real-time analytics and actions, for example in the Internet of Things and autonomous driving, because there is no delay due to network latency. »We expect cloud devices to be increasingly complemented by edge devices. This is a great opportunity for Europe«, explained zur Verth.

Strengthening Europe for international competition with IPCEI II

»I am sure that our industry will become even more important in the coming years«, zur Verth emphasized. »The societal challenges resulting from climate change, demographic development and resource scarcity, among others, require new digital solutions.« ZVEI therefore expressly supports the fact that the EU Commission and the German government want to strengthen European and German technological sovereignty in this key area and reduce unilateral dependencies with a second IPCEI (Important Projects of Common European Interest) on microelectronics.

»In order for Europe to take a leading role in key technologies such as 5G, AI and edge computing, the course must now be set anew and investments in future growth triggered with the help of the IPCEI instrument«, explained zur Verth. Politicians must not only set a framework for this, but also create incentives that strengthen the competitiveness of companies in an increasingly volatile world.

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