HCLTech Report: Integration Surpasses Supply Chain as Top Semiconductor Challenge

HCL Technologies (HCLTech) has released its global research report, "The Silicon Shift: When Every Industry Becomes a Chip Industry." The report highlights that integration has emerged as the primary challenge in the semiconductor industry, cited by more respondents than supply chain constraints or performance limitations. This challenge is most acute in industrial automation, where 75% of companies report significantly increased dependency on semiconductors compared to three years ago. The report surveyed 300 senior leaders across engineering, R&D, and technology strategy in the US, Europe, and Asia.

As AI accelerates demand for computing power, 98% of enterprises are more dependent on semiconductors than they were three years ago, with 99% expecting this dependency to increase over the next five years. Notably, 71% of respondents believe AI is increasing the importance of semiconductor architecture as a strategic business decision. Integration was the leading concern in medical devices and industrial automation, and a top-two concern across all four studied sectors: automotive, medical devices, network equipment, and industrial automation.

Enterprises are increasingly looking to engineering service providers for solutions. 67% of respondents seek providers who can deliver value through hardware and software integration, 61% through supply chain and lifecycle support, and 59% through deeper industry expertise. The findings suggest that competitive advantage is shifting towards the quality of engineering partnerships and integration expertise, rather than solely silicon performance.

Ameer Saithu, Executive Vice President & Global Head, Semiconductor Business at HCLTech, stated that semiconductor dependency now shapes corporate strategy, prompting companies to focus on building durable capabilities around silicon. Ajit Manocha, President and CEO of SEMI, noted in the report's foreword that industries are now helping define the next generation of silicon, creating opportunities for deeper ecosystem collaboration.

Currently, 79% of enterprises rely on off-the-shelf or mostly commercial silicon with limited customization. However, 66% anticipate a shift in their approach within five years, with 59% expecting to involve external engineering partners, hybrid models, co-development, or engineering services. Only 3% plan to increase internal investment in custom silicon, and 4% expect greater reliance on off-the-shelf components.

This research leverages HCLTech's over 30 years of experience in the semiconductor ecosystem, serving 90+ global semiconductor clients, including top equipment and chip companies. The company has invested over $70 million in advanced semiconductor labs. The full report is available at www.hcltech.com/silicon-shift.