Semiconductors and Related Devices

SIC 3674

Companies in this industry

Industry report:

This category covers establishments primarily engaged in manufacturing semiconductors and related solid-state devices. Important products of this industry are semiconductor diodes and stacks, including rectifiers, integrated microcircuits (semiconductor networks), transistors, solar cells, and light sensing and emitting semiconductor (solid-state) devices.

Industry Snapshot

The U.S. semiconductor industry, which was no longer wholly dependent on personal computer sales, provided components for a wide range of consumer and industrial electronics in the late years of the twenty-first century's first decade. Although the personal computer segment continued to hold more than a third of market share, data and telecommunications equipment sales were driven by the demand for cell phone handsets and digital televisions. In all areas of the market, the semiconductor industry continued to attempt to meet consumer demands for products that were stronger, faster, and less expensive.

This industry is notoriously cyclical. After worldwide semiconductor sales grew 40 percent in 1995 to nearly $150 billion, sales dropped in 1996 and were flat through 1998. The industry reported record sales of $204 billion in 2000. However, they fell sharply the following year, dropping to $139 billion as the industry experienced the worst year in its history. The dramatic decline in 2001 caused tens of thousands of industry workers to lose their jobs. However, the industry rebounded during the next few years. After remaining relatively flat in 2002 and 2003, the industry reported year-on-year growth of 28 percent in 2004, posting record global revenues of $213 billion.

In 2008 the U.S. semiconductor industry accounted for nearly half of the global market with $72.4 billion in U.S. sales. The U.S. and global computer microprocessor sector was dominated by Intel, which held 75 percent of the worldwide market. Of shipment values, more than 60 percent of U.S.-produced chips were exported. The Annual Survey of Manufactures reported that industry shipments were valued at $55.93 billion in 2009 and $71.08 billion in 2010. According to the U.S. Census Bureau , in 2010 the U.S. semiconductor industry had approximately 155,000 employees and industry-wide employment totaled approximately 102,069 workers receiving a payroll of nearly $8 billion. Of the 102,069 employees, a total of 58,500 employees worked in production in 2010, putting in nearly 112.8 million hours to earn wages of $3.41 billion.

Organization and Structure

Sometimes referred to as "the crude oil of the information age," semiconductors are a pervasive but generally unseen aspect of everyday life. The tiny electronic circuits etched on chips of silicon are critical to the operation of virtually all electronics, from automatic coffee makers and antilock braking systems to cellular phones and supercomputers.

The computer industry is by far the largest market for semiconductors. In the early years of the first decade of the 2000s, sales to computer manufacturers and related enterprises accounted for about 50 percent of overall U.S. sales of semiconductors. Consumer electronics and the automotive industry were also important users of semiconductors and related products. The fastest growing market for semiconductors was related to communications, which accounted for more than 25 percent of sales in the early years of the first decade of the 2000s, reflecting the rise of a global networked economy that relied on the electronic transfer of data.

Semiconductor chips are manufactured in "clean rooms" that are free of contaminating dust, where thin, round silicon wafers are processed in batches. Chipmakers buy polished blank wafers from companies that specialize in growing silicon crystals, from which the wafers are cut. Each wafer is about half a millimeter thick. Microelectronic circuits are built up on the wafer layer by layer.

Circuit patterns, which are the collection of transistors, capacitors, and associated components and their interconnections, are inscribed on large glass plates called photomasks. The photomasks are later reduced and projected by photolithography onto the silicon wafers. Each mask comprises a complete integrated circuit design.

The two types of products that semiconductor companies primarily design and manufacture are integrated circuits (ICs) and discrete devices. A discrete semiconductor is an individual circuit that performs a single function affecting the flow of electrical current. For example, a transistor, one of the most common types of discrete devices, amplifies electrical signals; rectifiers and diodes generally convert alternating current into direct current; capacitors block the flow of alternating current at controlled levels; and resistors limit current flow and divide or drop current.

Integrated Circuits.
Also called chips, integrated circuits are a collection of microminiaturized electronic components, such as transistors and capacitors, placed on a tiny rectangle of silicon. A single integrated circuit can perform the functions of thousands of discrete transistors, diodes, capacitors, and resistors. The three basic types of integrated circuits produced by U.S. semiconductor manufacturers in the late years of the first decade of the 2000s were memory components, which are used to store data or computer programs; logic devices, which perform such operations as mathematical calculations; and integrated circuits, which are made of components that combine the two. The latter is the most sophisticated and includes microprocessors, the computer "brain" that manipulates a wide range of data, and microcontrollers, which perform repetitive tasks.

The two largest selling types of memory integrated circuits are DRAMs and SRAMs. A DRAM (dynamic random access memories, pronounced DEE-ram) stores digital information and provides high-speed storage and retrieval of data. It is called a "dynamic" circuit because the data is stored in a temporary medium that allows it to fade, so it must be constantly refreshed electronically.

SRAMs (static random access memories, pronounced ESS-rams) perform many of the same functions as DRAMs, but at higher speeds. Unlike DRAMs, they do not require constant electronic refreshing, and are therefore classified as "static." They also contain more electronic circuitry and are more expensive to produce than DRAMs.

Both of these integrated circuit products are manufactured in large quantities, so they are considered to be "process drivers." That is, the manufacturing processes used to produce them are constantly refined, and those refinements often affect manufacturing processes of other products.

Two other important semiconductor memory products are EPROMs (erasable programmable read-only memories) and EEPROMs (electrically erasable read-only memories). EPROMs are used to store computer programs. Unlike older read-only memories (ROMs) that carried fixed programs, EPROMs are programmed by the customer. EEPROMs are easier and faster to update than EPROMs because they are programmed using electricity. While EPROMs are usually programmed only once, EEPROMs can be reprogrammed without removing them from their applications, so they can be updated anytime.

ASICS.
Most logic semiconductors are customized products tailored to the specific needs of each customer. In fact, ASICS (application-specific integrated circuits) have become the most commonly manufactured non-microcomponent logic semiconductors.

There are four basic classes of ASICs, each of which has a different degree of customization of the chip. Full-custom ASICs are designed from scratch; standard cells are designed by combining modular cells from a cell library; semi-custom chips are customized in only one or two areas; and programmable logic devices are programmed by blowing fuses in a device to alter the logic function. Because of high design costs and the often limited quantities produced, ASICs tend to be more expensive than integrated circuits built from off-the-shelf components. However, because they combine several specialized functions on a single chip, they offer some important advantages, including being smaller and simpler, so fewer of them are needed. In addition, they allow a greater degree of integration, which leads to more efficient use of circuitry, and they require few interconnections since they contain less circuitry, which enhances overall performance.

Microprocessors and Controllers.
Microprocessors (MPUs) are the central processing units in all microcomputer-based systems. These products perform a variety of tasks by manipulating data within a system and controlling input, output, peripherals, and memory devices.

The two major types of MPUs are CISCs (complex instruction set computing) and RISCs (reduced instruction set computing). Though CISCs used to be the basis for all MPU operations, RISCs became increasingly popular in the 1990s because of their faster operating speeds, their ability to run more sophisticated software, and their ability to deliver better graphics. MPUs are used in local area networks (linked personal computers and workstations called LANs) and satellites. In the late years of the first decade of the 2000s, these circuits operated at speeds of 40 to 50 million cycles per second.

Microcontrollers (MCUs), which combine a microprocessor, memory circuits, and input/output circuitry, are used as embedded controllers in virtually every electronic product. They perform such repetitive tasks as controlling the antilock brake systems in automobiles.

Background and Development

Semiconductors were invented in the United States in the late 1950s, but the invention that truly began the electronics revolution appeared nearly 50 years earlier. The three-element vacuum tube was invented in 1906 by Lee de Forest in Palo Alto, California. Called the audion, the tube was used as a sound amplifier and generator of electromagnetic waves. Its invention laid the foundation for the development of radio, television, radar, computers, and many other groundbreaking electronic devices. These early tubes, however, were bulky and fragile. For example, ENIAC (Electronic Numerical Integrator and Computer), the world's first large electronic computer, ran on 18,000 vacuum tubes and was the size of a house.

The tubes also played a vital role in the development of early telephone communications networks. However, as those networks expanded across the United States, the unreliability of the tubes became intolerable. Consequently, the main push for a replacement for the vacuum tube came from researchers at AT&T Bell Laboratories in New Jersey.

For a number of years, the company had been studying potential uses of solid materials that were poor conductors of electricity, primarily silicon and germanium. Silicon, one of the world's most plentiful elements, is found in the earth's crust as silica and silicate and is the principal component of sand, quartz, and glass. In its pure form, silicon is a very poor conductor, but Bell Lab researchers found that it could be treated, or "doped," with other materials to act as a conductor under some conditions and as an insulator under others.

These new "semiconductors" allowed the 1947 development of the transistor, which marked the beginning of the age of solid-state electronics. In 1956 William Shockley, John Bardeen, and Walter H. Brattain, who made up the Bell Labs research team and were responsible for the development and refinement of the transistor, received the Nobel Prize for their invention. The same year he was awarded the Nobel Prize, Shockley returned to his boyhood home of Palo Alto, California, and established his own semiconductor manufacturing operation. Shockley recruited many of the country's brightest young scientists and engineers to staff his new company.

Disagreements eventually led seven of Shockley's recruits to set out on their own. The company they founded, Fairchild Semiconductor, would become "the mother of semiconductor companies." According to the Semiconductor Industry Association, more than 23 semiconductor and related enterprises can trace their origins back to Fairchild. Among them were such important and well-known companies as Intel, Advanced Micro Devices, and National Semiconductor.

Probably the most important technological development to come out of Fairchild was the integrated circuit or "chip." Credit for the invention of the integrated circuit is given to Robert N. Noyce, the head of Fairchild and an MIT graduate, and Texas Instruments researcher Jack Kilby, who created the integrated circuit almost simultaneously in 1958. The original Texas Instruments version of the chip required the soldering of tiny gold wires on the outside to connect the components. However, the Fairchild version relied on a thin layer of metal-conducting film, which was sprayed onto the chip like paint. Roadways were then cut by lithography into this metallic layer to create the desired pattern of connections between elements of the circuit. This version of the chip was more readily manufacturable, and Fairchild soon emerged as the early leader of the semiconductor industry.

Noyce left Fairchild in 1968, along with Gordon E. Moore, a respected physical chemist. Together, they formed Intel Corporation and set out to manufacture a computer memory chip. Intel eventually came to dominate the industry as the undisputed leader in semiconductor technology. In addition to the first memory chips, Intel was responsible for pioneering the development of the microprocessor, the so-called "computer-on-a-chip."

U.S. manufacturers continued to dominate the semiconductor industry until the 1980s, when foreign industrial targeting and illegal dumping practices combined to erode U.S. worldwide market share. This "blood bath," as it was referred to in industry publications at the time, drove Intel, Motorola, National Semiconductor, Advanced Micro Devices, and Mostek out of the dynamic random access memory (DRAM) market altogether. Japanese manufacturers, however, who utilized investment cost advantages to conquer the DRAM market, saw that market plunge at the onset of the 1990s.

U.S. semiconductor manufacturers consequently began to refocus their efforts on proprietary products during the early 1990s, capitalizing on their well-known strengths in design and innovation and moving away from commodity products. According to industry observers, two Congressional actions were instrumental in paving the way for this development.

The first was the 1982 establishment of the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., which was specifically formed to hear patent cases. Previously, patent cases were tried in federal district courts, where an estimated 70 percent of patents were successfully challenged. With the new court, however, that statistic was reversed and about two-thirds of patents upheld.

The second was the Semiconductor Chip Protection Act, passed by Congress in 1984. The law specifically protected semiconductor design, or "mask work," for up to 10 years. As electronics firms began to exercise their rights, the courts continued to provide stronger legal protection for proprietary chip designs. In 1991, Congress extended the act through 1995.

The U.S. semiconductor industry experienced generally sluggish conditions during the mid-1980s but entered a period of renewed growth in the early 1990s. Worldwide sales of semiconductors and semiconductor products grew dramatically from 1991 through 1995, from around $50 billion to $150 billion. Nonetheless, the health of the semiconductor industry is dependent on other historically cyclical industries, especially computers, automobiles, and consumer electronics. Consequently, the industry has a history of erratic earnings. As an international industry, it also is affected by economic conditions around the world.

The trend for strategic alliances and corporate partnering among semiconductor companies continued in the early 1990s. This trend quickly became an important competitive tool, allowing individual firms to share the ever-increasing costs of production. Entering the mid-1990s, U.S. semiconductor manufacturers were shifting their attention from commodity products to the development of innovative proprietary products, which they had begun vigorously protecting with the help of new patent legislation.

Two additional factors were expected to contribute to the continued growth of the semiconductor industry: overall increases in worldwide sales of electronic equipment and the increasing semiconductor content of electronic products. This growth was driven by the increasingly sophisticated nature of consumer electronics. Manufacturers of fax machines, notebook computers, and camcorders, for example, used semiconductors in these products to perform increasingly complex operations.

The continuing development of Integrated Services Digital Network (ISDN) technology was expected to provide an important new market for chipmakers in the future. The ISDN is a high-speed digital communications network capable of carrying voice, data, and video signals simultaneously over existing telephone lines. The network, which was first commercially introduced in the early 1990s, requires large numbers of semiconductors.

Another factor in the industry was the shrinking number of production options available. Many companies that emerged in the 1990s in this industry outsourced production to other facilities with spare capacity in their wafer fabrication plants. Business Week noted that by using these facilities, "U.S. entrepreneurs avoided the main hurdle for a chip start-up: the tens or hundreds of millions in wafer-fabrication costs. A new venture could thus devote its resources to innovative designs . . . By pioneering these cutting-edge products, fabless companies grew faster and earned higher returns than established chipmakers. However, excess capacity disappears in times of high demand, and companies without their own production facilities faced possibly substantial investment to secure guaranteed access to production facilities."

By the mid-1990s, the semiconductor industry had become one of the most explosive segments of the economy as worldwide sales surged from around $100 billion in 1994 to nearly $150 billion in 1995. Historically, the semiconductor industry was cyclical, though, with short life cycles for semiconductor products primarily because of rapid technological innovations and subsequent pricing pressures. Over-expansion of fabrication facilities in times of strong demand also contributed to the cyclical nature of the industry.

The demand for chips was driven not only by the increasing sales of PCs but also by the use of chips in consumer electronics, telecommunications, and networking. As inventory exceeded demand in late 1995, DRAM prices started to plummet, creating an overall impact on the global chip market. Worldwide sales declined in 1996, with DRAM prices remaining low and worldwide sales staying flat through 1998.

Following three years of flat sales and declining prices for DRAM chips, semiconductor manufacturers cut their capital spending budgets in 1998 by 21 percent. As demand began to rebound in 1999, chipmakers began utilizing more capacity, causing tightened supplies. That prompted some of the major manufacturers, such as Texas Instruments in the United States and others in the Pacific Rim, to expand their capital budgets.

In 2001 the semiconductor industry came crashing down from a record year in 2000. Sales fell from $204 billion to $139 billion. In the February 4, 2003, issue of Electronic News, IC Insights President Bill McClean provided information about the conditions that led to the industry's woes in 2001. The publication explained: "For the first time ever the semiconductor industry found itself simultaneously facing each of the four major causes of a downturn: global recession, inventory surplus, overcapacity issues, and a decline in electronic systems sales." A period of recovery began in the last quarter of 2001 and continued during 2002. Subsequently, the industry achieved a modest 1.3 percent improvement in 2002 as worldwide sales grew to nearly $141 billion.

The growth of a global, networked economy, and the resulting demand from data and telecommunications markets, was an important growth factor for the semiconductor industry. Demand in the communications market stems from the need for greater bandwidth and faster transmission of data as well as from the growth of the Internet and wireless communication and the resulting buildup of a communications network infrastructure. In 2002 and 2003, wireless local access networks (WLAN) were an especially strong market for the semiconductor industry.

Along with a proliferation of wired and wireless information appliances, the cellular handset market also was an important growth category for semiconductors in the early years of the first decade of the 2000s. This category achieved double-digit growth in the fourth quarter of 2002, fueled in part by new subscribers in Asian nations, especially China where the SIA reported that some 5 million new wireless users were added monthly.

Despite the growth afforded by demand from the communications sector, PC sales remained an important factor in the growth of the semiconductor industry during the early years of the first decade of the 2000s. While PC sales showed strong growth in the late 1990s, by early in the decade, the PC industry was struggling in a weak economic climate that presented challenges in business as well as consumer markets. This factor contributed to the problems of the semiconductor industry.

The U.S. semiconductor industry suffered as a result of the global economic recession, which began in 2008, posting sales of $54.4 billion in 2008, down from $72.4 in 2007. Sales decreases were driven by reduced spending on consumer products, including cell phones, MP3 players, and HDTV sets. The overall industry was expected to eventually rebound based upon, in part, the development of semiconductors that offer increased function at lower costs.

Current Conditions

According to the 2011 Annual Survey of Manufactures, U.S. semiconductor and related devices shipments were valued at nearly $56 billion in 2009, a reflection of the struggling world economy. The worst appeared to be in the rear view mirror as the U.S. semiconductor industry's shipments reached almost $72 billion in 2010. Demand for semiconductors within the industrial and automotive segments grew 50 percent and 44 percent, respectively. More importantly, the momentum was expected to carry over into 2011, as the harsh economic climate continued to recover.

Demand for semiconductors was spurred by the return to corporate spending, smartphone demand, as well as China' appetite. Thus, "�the industry saw a 3.7 percent increase in the first half of 2011 sales compared to the same period last year which saw record breaking growth," according to Brian Toohey, president of the SIA in August 2011. Toohey added, "Overall semiconductor sales are on track with growth projections of 5.4 percent growth for 2011," and that in the coming years, the U.S. semiconductor industry would play a huge role in automotive electronics, especially when it comes to innovative products centered around "green" and "smart" technology.

Despite a few challenges, such as the tsunami and earthquakes in Japan, floods in Thailand, and the generally sluggish worldwide economy, semiconductor sales reached a record $299.5 billion, an increase of 0.4 percent from $298.3 billion the prior year. While viewed as the smallest semiconductor category, demand for sensors and actuators grew 15.5 percent. Robust demand for logic semiconductors was the top performing sector followed by MOS Microprocessors mainly for PCs driven by the enterprise computing sector that grew 7.5 percent to $65.2 billion in revenue in 2011.

Industry Leaders

The semiconductor industry is truly international, with major manufacturers in Japan, Korea, and Europe, as well as the United States. The top three U.S. manufacturers in 2008 were Intel Corporation of Santa Clara, California with sales of $37.6 billion and status as the world's leading chip manufacturer; Motorola Inc. of Schaumburg, Illinois, with sales of $30.1 billion; and Texas Instruments Inc., headquartered in Dallas, Texas, with sales of $12.5 billion. AMD of Sunnyvale, California, Intel's rival in PC chips, posted revenues of $5.8 billion. All sales figures represent a decline from those of 2006.

Intel Corporation maintained its dominant position as the leading semiconductor manufacturer in the U.S. in 2010 posting revenues of $53.99 billion with 82,500 employees. About two-thirds of Intel's revenues were derived from the Asia/Pacific region. Up next, Texas Instruments generated $13.7 billion in revenues in 2010, up slightly from $12.5 billion reported in 2008 with 28,412 employees. Motorola Corporation generated $8.2 billion in 2010 with 5,000 employees. The company changed its name to Motorola Solutions, Inc. when it spun off its handset and "set-top box units" as Motorola Mobility in 2011. Advanced Micro Devices reported revenues totaling $6.5 billion in 2010 with 11,100 employees.

Intel.
Intel was the leader in the electronics and electrical equipment industry and was also ranked as one of the 10 most admired U.S. companies by Fortune. Intel holds greater than 80 percent of the microprocessors market because of the success of its Pentium chip. Founded in 1968 in what would become California's Silicon Valley by industry pioneers Robert N. Noyce, Gordon E. Moore, and Andrew S. Grove, and starting with 12 employees, Intel pursued research that led to the development of the first computer chip. The company also played an instrumental role in the development of metal oxide semiconductor (MOS) technology.

Intel was originally a supplier of semiconductor memory for mainframe computers and mini-computers, but eventually became a leading supplier of microcomputers. The company sells its microcomputer components, modules, and systems directly to companies that incorporate them into their products. These buyers are primarily computer systems manufacturers, but they also include makers of automobiles and a wide range of industrial and telecommunications equipment. The company also sells personal computer enhancements and networking products through distributors, resellers, and retail stores worldwide. Intel has design, development, production, and administration facilities throughout the western United States, Europe, and Asia.

Texas Instruments.
Texas Instruments (TI) ranked fourth in the world semiconductor industry during the early years of the first decade of the 2000s. Headquartered in Dallas, Texas, the company has manufacturing, sales, or engineering services in more than 25 countries. In 2008, semiconductor sales represented 85 percent, or $12.5 billion, of TI's revenues.

The company was founded in 1930 as the "Geophysical Service" by J. Clarence "Doc" Karcher, and Eugene McDermott. It was the first independent contractor to specialize in reflection seismograph methods of exploration. The firm's name was changed to Texas Instruments, better known as TI, in 1951. The company entered the semiconductor business in 1952 with the purchase of a license from Western Electric Company to manufacture transistors. In addition to semiconductors, TI products and services include software productivity tools, computer and peripheral products, electrical controls, and consumer electronics products.

Motorola Corporation.
Motorola Corporation ranked eighth among the world's semiconductor companies in the early years of the first decade of the 2000s. Paul V. Galvin founded the company in 1928 in Chicago. As the Galvin Manufacturing Corp., the company's first product was a "battery eliminator" that allowed consumers to operate radios directly from household current instead of the batteries supplied with early models. In the 1930s the company successfully commercialized car radios under the brand name "Motorola." The company's name was changed to Motorola Inc. in 1947, the same year it began research into solid-state electronics.

Motorola's semiconductor division designs and produces a broad line of discrete semiconductors and integrated circuits, including microprocessors, microcomputers, and memory products. These products are sold to computer, consumer, automotive, industrial, federal government/military, and telecommunications markets. By 2003, the company had developed expertise with specialized embedded semiconductors used in the wireless communications market as well as the networking and transportation industries. In addition to being one of the world's leading providers of semiconductor technology, Motorola also provides wireless communication and advanced electronics equipment and services to worldwide markets. The company maintains sales and service offices around the world.

Advanced Micro Devices.
Advanced Micro Devices (AMD) competes directly with superpower Intel for the PC microprocessor market. Although it lags far behind Intel's dominant 80 percent global share, AMD has created enough niche markets for its popular Athlon and Opteron chips to make it the second-largest microprocessor company in the United States. AMD also produces flash memory chips for cell phones and digital cameras.

Workforce

Semiconductor jobs more than doubled from 115,200 employees in 1972 to 258,500 employees in 1996. According to the U.S. Department of Labor, the all-time high of almost 300,000 semiconductor workers in 1985 was reached in a robust economy. However, from 1985 to 1993, employment levels declined in spite of a brief upsurge in 1988. U.S. firms employed about 155,000 workers who earned just over $11 billion in wages in 2007, down from 225,000 workers in 2005, according to the U.S. Census Bureau. Production workers numbered 63,096 in 2006 and earned nearly $9.3 billion in pay.

America and the World

In terms of semiconductor consumption, for many years, North and South America formed the world's largest market. However, by the mid-years of the first decade of the 2000s, the United States had lost much of its global market share to the Asia/Pacific, which included China and Taiwan. With sales of $88.7 billion in semiconductor sales in 2004, the Asia/Pacific held 42 percent of the world market consumption, which was double that of its nearest competitor. Europe, North America, and Japan are the other major consumers, each with approximately 20 percent of the global market share.

The United States had a trade deficit in semiconductors throughout the 1990s and into the mid-years of the first decade of the 2000s. In 1995 the deficit amounted to about $16 billion, with U.S. imports valued at $38 billion and exports at $22 billion. By 2000, the deficit stood at about $3.5 billion, with U.S. imports valued at $48.2 billion and exports at $44.7 billion. In 2001, the industry achieved a trade surplus of $2.2 billion, with imports valued at $30.8 billion and exports at $33 billion. However, in 2002, U.S. semiconductor exports fell 15 percent. As of 2008, however, the U.S. returned to a trade surplus with exports totaling $51.1 billion while imports reached less than $27 billion, according to U.S. Supplier Relations. That trend continued in 2010 with U.S. semiconductor exports at $47.9 billion and imports totaling $30.5 billion.

By 2010, China was expected to be the world's second largest market for semiconductors behind the United States. This was expected to be a market with substantial growth potential as semiconductors are the second largest U.S. export to China and are China's top import. Additionally, in 2004 China agreed to lift a 17 percent value-added tax on imports.

Research and Technology

According to the SIA, about 17 percent of U.S. semiconductor industry revenue is spent on research and development, which is the most of any U.S. manufacturer and several times the average. Costs for new semiconductor fabrication facilities are a major capital consideration for many companies. For example, high-end DRAM wafer-fabrication facilities can cost more than $1.5 billion. The SIA revealed that in 2004, the industry was expected to produce roughly 90 million transistors "for every man, woman and child on Earth." The association projected that number to climb to 1 billion by 2010.

High Definition Television.
One emerging technology triggering a boom in semiconductor sales is high definition television (HDTV), which produces pictures that are four to five times clearer than the standard television picture. In addition to commercial broadcast television, HDTV technology also could find applications in areas such as medical imaging and computer graphics. Since the sets require a huge number of semiconductors, they have created a major new market for chipmakers.

Fuzzy Logic.
Another emerging semiconductor technology expected to create important future markets was called "fuzzy logic." As Standard & Poor's Industry Surveys noted, ". . .fuzzy logic allows microcontrollers to create gray areas between the yes/no, on/off choices of the binary world. The result is that engineers can design microprocessors that allow machinery to operate with gradual refinements."

The industry continues to follow "Moore's Law," which states that the technology will allow the doubling of capacity on the same size chip every two years. Despite increasing technological challenges, the industry continued to get smarter, faster, and smaller. In 2000, nanotechnology came into focus when the industry began shipping products that had horizontal features less than 100 nanometers (nm) and a gate oxide thickness of near 1 nm. By 2004, volume production began on a 90 nm chip with a gate length as low as 40 nm.

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