The semiconductor industry is the aggregate of companies engaged in the design and fabrication of semiconductors and semiconductor devices, such as integrated circuits. It formed around 1960, once the fabrication of semiconductor devices became a viable business. The semiconductor industry is in turn the driving force behind the wider electronics industry. The electronics industry emerged in the 20th century and is today one of the largest global industries. Contemporary society uses a vast array of electronic devices built in automated or semi-automated factories operated by the industry. Products are primarily assembled from metal-oxide-semiconductor (MOS) transistors and integrated circuits, the latter principally by photolithography and often on printed circuit boards.
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The size of the industry and the use of toxic materials, as well as the difficulty of recycling has led to a series of problems with electronic waste. International regulation and environmental legislation has been developed in an attempt to address the issues. The global semiconductor industry is dominated by companies from the United States, Taiwan, South Korea, Japan and Netherlands.
Unique features of the industry include continuous growth but in a cyclical pattern with high volatility. While the current 20 year annual average growth of the semiconductor industry is on the order of 13%, this has been accompanied by equally above-average market volatility, which can lead to significant if not dramatic cyclical swings. This has required the need for high degrees of flexibility and innovation in order to constantly adjust to the rapid pace of change in the market as many products embedding semiconductor devices often have a very short life cycle.
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At the same time, the rate of constant price-performance improvement in the semiconductor industry is staggering. As a consequence, changes in the semiconductor market not only occur extremely rapidly but also anticipate changes in industries evolving at a slower pace. The semiconductor industry is widely recognized as a key driver and technology enabler for the whole electronics value chain. The industry is based on the foundry model, which consists of semiconductor fabrication plants (foundries) and integrated circuit design operations, each belonging to separate companies or subsidiaries. Some companies, known as integrated device manufacturers, both design and manufacture semiconductors. The foundry model has resulted in consolidation among foundries. As of 2024, only three firms are able to manufacture the most advanced semiconductors: TSMC of Taiwan, Samsung of South Korea, and Intel of the United States. Part of this is due to the high capital costs of building foundries.
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