Integration Overtakes Supply as the Primary Semiconductor Challenge, reveals HCLTech Research

HCLTech a leading global technology company, launched The Silicon Shift: When Every Industry Becomes a Chip Industry, a global research report on evolving semiconductor requirements across automotive, medical devices, network equipment and industrial automation verticals. The survey included 300 senior leaders across engineering, R&D, semiconductor/hardware, product, innovation and technology strategy in the United States, Europe and Asia. 

As AI accelerates demand for computing power, semiconductors are becoming increasingly central to business strategy. As per the report, 98% enterprises are more dependent on semiconductors than three years ago and 99% expect that dependency to increase over the next five years, while 71% say AI is increasing the importance of semiconductor architecture as a strategic business decision. The dependency is most acute in industrial automation, where 75% report being much more dependent on semiconductors than three years ago, the strongest acceleration of any sector in the study.

However, integration emerged as the industry's biggest challenge, cited by the largest share of respondents as the primary reason current solutions fall short, outpacing supply chain constraints and performance limitations. Integration was the leading concern in medical devices and industrial automation and featured in the top two across all four sectors studied.

To overcome these challenges, enterprises are looking to engineering service providers that can deliver greater value through hardware and software integration (67%), supply chain and lifecycle support (61%) and deeper industry expertise (59%). The findings suggest that competitive advantage is increasingly being shaped by the quality of engineering partnerships and integration expertise, rather than silicon performance alone.

"Semiconductor dependency now shapes corporate strategy, not just engineering roadmaps. What this research reveals is that enterprises are no longer asking which chip to buy. Rather, they are asking how to build a durable capability around silicon across long product lifecycles, high regulatory stakes and complex integration environments. The companies that solve that problem, and the partners who help them, will define their sectors for the next decade," said Ameer Saithu, Executive Vice President & Global Head, Semiconductor Business, HCLTech.

“Industries that once primarily consumed semiconductor technology are now helping define what the next generation of silicon must deliver. This silicon shift is happening now, and it creates a tremendous opportunity for deeper collaboration across our ecosystem,” noted Ajit Manocha, President and CEO, SEMI, in the guest foreword of the report.

While 79% of the enterprises rely entirely on off-the-shelf silicon or mostly commercial silicon with limited customization today, 66% expect to move to a different model within five years. The majority are choosing partner-led routes: 59% of all respondents expect their future approach to involve external engineering partners, hybrid models, co-development, or engineering services. Just 3% expect to increase internal investment in custom silicon and 4% expect greater reliance on off-the-shelf components.

This research builds on over 30 years of HCLTech’s experience engineering across every layer of the semiconductor ecosystem designing and delivering turnkey silicon from specification to parts, co-engineering the tools and platforms of the world's leading equipment makers, and running, optimizing and digitalizing fab and OSAT operations around the world. HCLTech serves 90+ global semiconductor clients, including all top 5 equipment companies and 8 of the top 10 chip companies and over $70 million invested in advanced semiconductor labs.