Semiconductors in the Age of Exponential Growth: AI, Geopolitics, and the European Challenge

The digital economy is based on a very specific physical basis: semiconductors. Advanced chips support artificial intelligence, the cloud, electric vehicles, data centers or the energy transition. At the same time, this industry is experiencing a particularly intense combination of accelerated growth, geopolitical pressure and structural industrial challenges.

This article opens a new series dedicated to the Future Trends Forum (FTF) expert presentations on Semiconductors. A series aimed at analysing the underlying forces that are redefining a sector that is critical for global competitiveness and, in a very direct way, for Europe’s strategic positioning.

The starting point is the vision of Ajit Manocha, President and CEO of SEMI, the leading international association in the sector. Its message is clear from the start: the semiconductor industry has entered a phase of growth and transformation unprecedented in its recent history.

The Future Trends Forum: Understanding the Dynamics That Build the Future

For more than a decade, the Bankinter Innovation Foundation’s Future Trends Forum has brought together international experts, business leaders, technologists and academics to analyse the major technological, economic and social transformations that will mark the next decade.

The FTF’s approach focuses on identifying structural dynamics, beyond the short term, with the aim of providing strategic criteria to companies, institutions and public policy makers. Its reports have established themselves as references in areas such as artificial intelligence, quantum computing, water and, now, semiconductors, a sector that has come to occupy a central place in the global economic and geopolitical agenda.

The real size of the market: forecasts and effective turnover

One of the first points raised by Ajit Manocha is the difference between the industry’s growth forecasts and its real economic dimension already reached.

The most widely cited estimates put the global semiconductor market at around $1.3 trillion by 2030, starting from a current turnover of close to $600 billion. Manocha believes that these figures systematically underestimate the real size of the sector and points to a more ambitious scenario, with an industry that could reach 1.6 trillion dollars by the end of the decade.

The key is in what is measured. Traditional statistics only include chips sold on the market, but leave out an increasingly relevant phenomenon: semiconductors designed for internal use by large technology companies. Companies such as Google, Apple or Meta develop advanced chips that are not commercialized, but that generate direct economic value and sustain critical artificial intelligence and large-scale computing infrastructures.

According to Manocha, this segment represents more than 300,000 million dollars per year that do not appear in official figures. If these developments for own use are incorporated, the industry is already close to a trillion dollars in effective economic activity, well above the turnover reflected in conventional statistics.

This starting point reinforces the strength of the growth forecasts for the coming years and helps to understand why semiconductor has become one of the industries with the greatest economic and strategic impact on a global scale.

An industry marked by exponential growth

After more than 45 years of experience in the sector, Ajit Manocha underlines two concepts that define the current moment: exponential and unprecedented. The industry has left behind an incremental evolution to enter an acceleration phase driven by several consecutive technological waves.

The first was the Internet of Things (IoT), which began to be deployed at the beginning of the century and has connected about 80% of the world’s population. The smartphone has become the control center of everyday life, from home to work or mobility.

Artificial intelligence has joined this wave with force. While AI has been developing at a conceptual level for decades, its mass adoption has come with the availability of advanced hardware: GPUs and CPUs built on nodes of 5 nanometers and below, capable of training and running complex models on a large scale.

According to Manocha, the current development of AI represents only an initial phase. The potential for growth remains high, both in chip volume and in technological complexity.

The Next Wave: Quantum and Advanced Semiconductors

The sequence of growth is clear. After connectivity and artificial intelligence, quantum computing appears as the next great technological wave. Manocha places the next decade as a key period for its progressive deployment, with a direct impact on the demand for specialized semiconductors.

This chain of technologies explains why the growth of the sector is sustained beyond economic cycles. Even in a context of market adjustments or geopolitical tensions, the structural trend points to a continued expansion of the industry.

AI chips and the prominence of foundries

One piece of data sums up the current situation well: 50% of the chips manufactured today incorporate artificial intelligence capabilities. AI has ceased to be a niche to become a transversal component, integrated into all kinds of devices and systems.

This context of accelerated growth is clearly reinforcing the foundry model. Manocha stresses that the development and manufacture of advanced chips requires a very demanding combination of capital, industrial scale and technological capabilities, to the point that very few companies can undertake this effort in a sustained way. Investing billions of dollars in new factories and processes has become a structural barrier to entry for the industry.

On the most advanced frontier of technology, Manocha identifies only two, at most three players, capable of consistently supplying cutting-edge chips: TSMC, Samsung Electronics and Intel, the latter immersed in a process of industrial recovery and transformation. The rest of the manufacturers, he explains, are moving forward and will end up closing part of the gap, but the journey is complex and requires time.

The difficulty increases as the industry approaches nodes of 2 nanometers and below. Manocha recalls that, although the sector has repeatedly announced the end of miniaturization, the current challenge is especially demanding. Each technological leap requires increasing complexity in design, manufacturing, and process control, making reaching these extreme scales both a technological and financial challenge.

Moore’s Law enters a new phase

For decades, the continuous reduction in the size of transistors has fueled Moore’s Law. Today, the sector is approaching increasingly demanding physical limits: going from the current 20 angstroms to 10, 7 or even 2 angstroms means working close to the atomic scale.

This context drives a new stage, known as Moore’s Law 2.0, based on:

• New architectures.
• Advanced packaging.
• Heterogeneous integration.
• Innovation in materials and processes.

The sector’s capacity for innovation remains high, supported by a global ecosystem of talent, research centres and specialised companies.

Geopolitics, resilience and the role of Europe

The growth of the industry occurs in an environment of growing geopolitical tension. The pandemic, the war in Ukraine, and the technological rivalry between the United States and China have highlighted the concentration and fragility of the global semiconductor supply chain .

For Europe, the current context poses a strategic challenge: to strengthen its industrial and technological capacity, ensuring access to key infrastructure for the digital economy and technological autonomy. This objective requires a combination of investment, talent, public-private collaboration and long-term vision.

Semiconductors are thus consolidated as a strategic asset for the continent’s economic competitiveness, industrial innovation and technological security.

An engine of global prosperity

The semiconductor industry has become one of the great engines of global economic prosperity. In just a decade, it has climbed positions to become one of the most important industrial sectors in the world, with a growing weight in GDP, skilled employment and technological innovation.

This leadership responds to decades of sustained investment, international cooperation and scientific advancement. The current phase intensifies that trajectory, driven by the convergence of AI, advanced computing, and new chip architectures.

See the full presentation

To deepen this vision and learn first-hand about Ajit Manocha’s analysis, you can watch his full presentation at the Future Trends Forum:

Ajit Manocha: “Beyond Moore’s Law: Reinventing the Foundations of Innovation” #semiconductors

In the next articles in this series, we will continue to explore the future of semiconductors from the perspective of other FTF experts, addressing technology, industry, and geopolitics with a strategic eye.