Semiconductor Frenemies

One of the more important underlying trends in the technology industry is one that most people are not following very closely. It has to do with the massive consolidation of the semiconductor industry. For years I have been writing about how this consolidation is in inevitable. It is being driven by the massive expansion of technology into industries that were not technology driven before. Things like healthcare, industrial, all forms of consumer products, and many other industry verticals. These companies, who know all of a sudden have to become technology companies, do not know how to manage a complicated supply chain around components and sensors all compromising of semiconductor industry goods. These companies are more interested in going to one vendor to get the brains they need to put in their products and don’t want to manage many vendors as was the norm. So it makes sense that if a company chooses Qualcomm or Intel, for example, for their main brain that they also hope to get the other sensors and chipsets they need from Intel or Qualcomm as well. This subtle, yet very powerful, nuance is driving the massive consolidation we see in the semiconductor industry.