In recent years, the semiconductor industry has experienced a roller coaster ride of widely swinging changes in both challenges and opportunities. During the pandemic, the mass movement to work-from-home scenarios and heavy reliance on networked applications drove demand up at the same time that global supply chains were severely disrupted. Then, in the past two years, the meteoric rise of artificial intelligence with generative-AI applications popping up seemingly everywhere has been driving another peak in demand for chip makers.

In addition, geopolitical concerns about semiconductor IP and manufacturing are also significantly influencing decisions on where semiconductor foundries and assembly facilities should be located and whether advanced chip designs should be banned from export to certain countries.

According to the Semiconductor Industry Association (SIA), the industry will see a 13% sales rise in 2024, after declining 8.2% in 2023, while Gartner, Inc. forecasts that global semiconductor revenue will grow 16.8% in 2024 to total $624 billion.  International Data Corporation (IDC) also upgraded its Semiconductor Market Outlook, calling for a return to growth, with a 20.2% increase to $633 billion in 2024.

The maturation of pure-play foundries serving chip manufacturing needs for multiple companies has also enabled new fabless entrants to specialize in chip design while outsourcing the capital intensive production processes.  While greatly accelerating the pace of new innovation and lowering the cost of the overall processes, this segmentation of key activities also has added complexity and raised the bar for more agile cooperation between various players.

In the midst of these volatile growth cycles and increasing complexity, new subscription-based, recurring revenue models have also been disrupting relationships as the Digital Solutions Economy Impacts the Semiconductor Sector, 

These new recurring revenue models are impacting how semiconductor companies interact with their customers and also how equipment vendors interact with semiconductor companies.  

For example, semiconductor makers are increasingly looking toward bundling of software, field upgrades, licensing, custom programming, and other services as ways to expand and deepen customer relationships while also opening up new revenue streams.  On the other side of the equation, equipment vendors are turning to bundled subscription models such as lithography machine makers offering recurring consumables services for specialized chemicals, materials, maintenance and more. Also, design support and software design vendors are using subscription-based models.

Bramasol has a long history of serving the needs of key players across the whole semiconductor ecosystem, such as Nvidia, Mentor Graphics, KLA Tencor, IBM, Synopsys, and others, to help bring a holistic digital transformation approach to improving both their inter-company collaborations and their bottom line business results.

Bundling of chips, software and service offerings that involve multiple companies often entails complex revenue recognition and compliance issues, and semiconductor equipment makers offering new usage-based models can benefit from billing and revenue innovation management solutions.  As new chip foundries are being planned and built, advanced equipment lease management solutions come into play.  Also, the ability to leverage comprehensive agnostic analytics tools such as SAP Analytics Cloud will be key to enabling agile decision-making that takes into account timely data from all parts of the end-to-end process.

As  one of SAP's longest serving partners and the recognized experts in SAP revenue compliance and SAP BRIM/OTC offerings, the Bramasol team has deep experience with tailoring a range SAP solutions to specific client requirements.

For example, SAP's Order-to-Cash portfolio, formerly known as BRIM, offers a suite of applications, including Subscription Order Management, Subscription Billing, Convergent Charging, Convergent Mediation, and Convergent Invoicing, along with SAP Revenue Accounting & Reporting (RAR) for revenue compliance.

Since not all of these elements are required for every implementation, or it can make sense to start small and add functionality according to a pre-determined plan, Bramasol takes a unique approach to combining specific SAP BRIM applications with revenue compliance to give companies the exact features they need, along with a clear path forward.

In addition, from an overall perspective, SAP S/4HANA provides a solid roadmap for seamless meshing of all these specific line-of-business capabilities within a high-performance, in-memory architecture that assures both scalability and future-proof extensibility. 

Finally, by leveraging these cross-compatible SAP solutions within the SAP S/4HANA platform, semiconductor companies and equipment makers can create a forward-looking roadmap to achieve game changing digital transformation. With new initiatives for incorporating AI throughout the SAP ecosystem and an incentivized path to the SAP public cloud, semiconductor companies of all sizes and types can rapidly take advantage of S/4HANA's expanding capabilities.

In addition, as detailed in this previous blog post, SAP's RISE and GROW initiatives are key enabling technologies for helping companies migrate to S/4HANA in the cloud.

Summary

It has become quite clear that the future of the semiconductor industry will continue to see rapid change and high growth cycles, along with demands for more agility and faster time-to-market.  To make the most of emerging opportunities in this dynamically evolving environment, companies throughout the semiconductor ecosystem will need to embrace holistic, end-to-end quote-to-cash to compliance solutions that can adapt and scale to enable new recurring revenue business models that both deepen customer relationships and drive new revenue streams.