Semiconductor firms say integration is now the industry’s main hurdle

The semiconductor industry’s central problem is changing. Integration has replaced supply constraints as the challenge most often identified by enterprises, according to a report from HCLTech carried by money.rediff.com.

The findings come as companies across industries become increasingly reliant on chips. HCLTech surveyed 300 senior executives in the United States, Europe and Asia, spanning engineering, research and development, semiconductor and hardware, product, innovation and technology strategy roles. Almost all respondents—98 per cent—said their organisations depend more heavily on semiconductors than they did three years ago. A further 99 per cent expect that reliance to grow during the next five years.

That dependence means decisions about chips are moving beyond technical teams. For 71 per cent of the enterprises surveyed, the rise of artificial intelligence has made semiconductor architecture a more important strategic business issue. Architecture decisions can affect how products are developed and supported, making chip choices part of wider corporate planning rather than a narrow procurement matter.

Integration moves ahead of supply concerns

Although shortages and supply disruptions have shaped the semiconductor industry in recent years, respondents now point to a different weakness. Integration was cited more often than supply chain problems or performance limitations as the main reason existing solutions do not meet business needs.

The concern was especially prominent in medical devices and industrial automation. It ranked among the two leading challenges in all four sectors included in the research, HCLTech said. The result indicates that securing a chip is only one part of the task. Companies also need hardware and software to work together and fit within products, operations and longer-term development plans.

Industrial automation recorded the sharpest increase in dependence. Three-quarters of respondents in that sector said their organisations were much more reliant on semiconductors than they had been three years earlier. The report therefore places automation among the areas where chip-related decisions are becoming particularly consequential.

The findings do not suggest that supply chains have ceased to matter. Instead, they show that businesses are confronting a broader challenge after obtaining semiconductor components: making them function effectively within complex products and systems. That challenge is becoming more visible as chip use spreads across industries.

Companies seek broader engineering support

The surveyed enterprises said they were increasingly looking to engineering service providers for help. Hardware and software integration was the most frequently cited area of expected value, selected by 67 per cent of respondents. Supply chain and lifecycle support followed at 61 per cent, while 59 per cent highlighted deeper knowledge of their industries.

Together, those priorities point to a demand for assistance that extends across the life of a product. Businesses are not only seeking access to components; they also want support with combining technologies, managing supply and maintaining systems over time. HCLTech’s findings suggest that the strength of an engineering partnership may increasingly influence competitiveness alongside the capabilities of the silicon itself.

Ameer Saithu, HCLTech’s executive vice-president and global head of its semiconductor business, said the research showed that companies were considering how to create lasting capabilities around semiconductor technology. He linked that shift to long product lifecycles, regulatory demands and complicated integration environments.

Customisation becomes a five-year question

The report also points to a possible change in how companies buy and develop chips. At present, 79 per cent of enterprises rely completely on off-the-shelf silicon or mainly commercial components with only limited customisation. However, 66 per cent expect to adopt a different approach within five years.

The report does not specify a single replacement model for those businesses. Its findings instead show a movement away from dependence on standard components alone. As semiconductor use becomes more central to products and operations, companies may place greater emphasis on adapting silicon to their own requirements and on building the engineering capabilities needed to support it.

For the industry, the shift changes the basis on which solutions are judged. Performance and availability remain relevant, but they are no longer the only measures of value identified by the research. The ability to connect hardware and software, navigate supply and lifecycle issues, and apply sector-specific expertise is becoming just as important to enterprises planning their next generation of products.