Siemens’ New Semiconductor Lifecycle Management PLM Product Is Ideally Suited for the Developing ASEAN Market

Siemens recently released its new cloud Software-as-a-Service (SaaS) Teamcenter X industry solution, Semiconductor Lifecycle Management. Specifically designed for the semiconductor industry, the Product Lifecycle Management (PLM) system offers semiconductor manufacturers data management through all stages of the product lifecycle. Semiconductors are massively complex products to manufacture, taking place over many weeks in beyond sterile conditions, and manufacturers will increasingly look to digital technologies to meet product demand and operational challenges, with ABI Research forecasting a 9.6% Compound Annual Growth Rate (CAGR) in spending, up to US$6.2 billion in 2023 (see ABI Research’s Digital Transformation of Semiconductor Manufacturing report (AN-5017)). Manufacturers must have comprehensive operational visibility and traceability to minimize disruptions due to equipment issues and supply chain shocks, and PLM solutions support this company-wide oversight.

The Semiconductor Lifecycle Management software provides a new product introduction management solution that allows for rapid development cycles, and in conjunction with Siemens’ extensive software ecosystem, a truly end-to-end digitalization of the production process. Siemens has designed the software to create immediate impact, with substantial Out of the Box (OOTB) functionality for accelerated deployment, such as pre-defined, automated project templates, metrics and Key Performance Indicators (KPIs), project status reports, and unified program and project delivery management. With its cloud design, the Semiconductor Lifecycle Management software can be quickly deployed and scaled up and down as needed. This is supported by the SaaS nature of the product, ensuring that customers are always using and reaping the benefits of functionality from the latest iteration of the software.

However, such capacity can only be truly leveraged by semiconductor manufacturers that cover the entire span of the production process, including chip design, front end manufacturing, and back end manufacturing, such as Intel, Infineon, and Samsung. Customers that merely represent one specific point of the chain, such as fabless companies, including AMD, Huawei, and NVIDIA, may find it harder to derive such meaningful gains from the software due to the unwillingness of all parties in the supply chain to share data, resulting in the inability to build truly comprehensive digital threads.

The market for semiconductors is forecast to see significant growth from US$600 billion in 2021 to around US$1 trillion in 2030 (according to McKinsey), with many companies investing significant sums in new production, assembly, and test facilities and technologies, particularly within the Asia-Pacific region. Key examples of expansion include SMIC’s announcement in August 2022 of a US$7.5 billion investment in Tianjin to manufacturer 12-inch wafers, ASE investing US$300 million on a packaging plant in Malaysia, and Amkor Technologies spending US$200 million to build a packaging facility in Vietnam. India is also positioning itself as a major player in the semiconductor market, with Prime Minister Narendra Modi speaking at SemiconIndia 2023 highlighting that encouraging global players to set up their plants and supply chain in India is one of the government’s top priorities. The success of this position is exemplified by U.S. chipmaker AMD saying it will invest US$400 million in India over the next 5 years.

ABI Research identifies that, despite significant market curtailment of the Chinese semiconductor manufacturing market by the U.S. government, the Asia-Pacific region will remain the dominant producer of semiconductors, with SEMI (the global industry association supporting the electronics and semiconductor industries) reporting 20 new facilities announced in China, 14 in Taiwan, 6 in Japan, and 3 in South Korea. The trend will likely only continue, with the Chinese government aiming to domestically produce 70% of its semiconductor needs by 2026, up from 16% as of 2020, supporting this with the imminent launch of its new state-backed investment fund by the China Integrated Circuit Industry Investment Fund of around ¥300 billion.

It is critical for technology vendors to not remain laser focused on the Northeast Asian semiconductor market. As ABI Research highlights in its Digital Transformation of Semiconductor Manufacturing report (AN-5017), the fastest growing areas for digitalization spending, with a CAGR of 12.6%, are Southeast Asia and India, as these economies aggressively climb the manufacturing value chain. Nations like Malaysia, Vietnam, and Singapore are hotbeds for new facilities to deliver assembly, test, and packaging services. Malaysia and Vietnam, in particular, are increasingly a focus for Open-Source Appropriate Technology (OSAT) providers due to low operating costs, combined with a skilled labor force, representing a significant untapped market for global manufacturing technology vendors.

There are a number of key actions and trends that technology vendors should adopt to succeed in targeting the Asia-Pacific market and sharpening their competitive edge:

• Chinese Challenges: While China remains an obvious target for technology vendors looking to supply the semiconductor market, the challenges of doing business there will likely only continue to grow in the coming years. The geopolitical split between China and the United States around semiconductor technology will mean that suppliers will struggle to adhere to both countries’ requirements. Vendors like Siemens that serve both the U.S. and Chinese markets will face difficulties, and competitors should place high strategic priorities on evaluating the value of committing significantly to either the U.S. or Chinese market. This situation only increasingly highlights the growing value of the ASEAN region for technology vendors.
• Rapid Deployment of Industry-Specific Software: Manufacturers in the ASEAN region have significant financial resources and labor forces to deploy technology solutions; however, they can sometimes lack industry best practices knowledge that can delay and mitigate short-to-medium term successes of new solution deployments. The pre-configuration element of Siemens’ Semiconductor Lifecycle Management software provides strong value to the ASEAN region, with the solution designed as an almost turnkey software for ideation, planning, design, verification, and manufacturing. Competitors should identify the significant value in designing software products that revolve around a specific market vertical and encapsulate market-leading best practices that enable customers to rapidly engage digital transformation within their production processes.
• Effectively Growing Greenfields: Many of the opportunities within the ASEAN semiconductor market come in the form of new greenfield establishments. It is important to recognize that these facilities will likely experience a host of teething problems, and technology vendors must be pragmatic as to what levels of technology can be incorporated early on. Cloud solutions are particularly strong in this regard, allowing customers to drip feed digital transformation into their production process and then rapidly scale when they find success. The same trend should be recognized for brownfield sites as well, and technology vendors should take a crawl, walk, run approach to complex software deployments. It is much easier for manufacturers to derive value from first incorporating demand forecasting into operations, rather than a facility-wide digital twin. Technology vendors should keep close tabs on the industry and regional manufacturers’ digital maturity so they can correctly position elements of their vast modular software ecosystems.