A computer microchip is a closed unit containing computer circuitry which may be used for logical or memory related functions in an electronic device. The market growth may be attributed to factors including increasing demand and continuous product innovations. However, the set-up cost for manufacturing facilities is high, which may continue to act as a challenge to the industry. The increasing use of microchips in smartphones is also expected to drive demand over the next seven years. Modern day devices such as smart televisions and health monitors also make use of microprocessors, and may positively impact growth.
Innovation is anticipated to be one of the strongest growth points for this industry. Mobile phone manufacturers make extensive use of these semiconductor chips in their products and with their healthy sales these companies keep an active pressure on chip manufacturers to supply them with quality components which lead to innovative offerings from various manufacturers who aim to achieve supply contracts from such tech giants. The ongoing reduction in the size of electronic components is another factor which may fuel industry growth owing to rise in demand for compact and light-weight devices.
Key industry participants such as Intel and Samsung have begun collaborating with various device designers to understand the involvement a semiconductor chip have on different devices. These companies create market opportunities fabricating new systems which make use of microchips.
Semiconductor chips manufacturing plants called Fabs (fabrication plants), require state-of-the-art facilities which come with substantial investments coupled with rapidly changing production technology creates a challenging situation for the market and allows a few well-established manufacturers to penetrate into the market successfully, making the power of new entrants low. Further, any innovation in design calls for changes in the manufacturing process regarding updating the existing machinery and poses an economic challenge. The industry is identified by intense competition and technology development which creates uncertainty in regards to the launch of new product, which results in firms developing core competencies in specific domains, which leads to a bifurcation of technologies and subsequently challenges industry growth.