Integration, Not Supply, Now Biggest Semiconductor Challenge For Industry: HCLTech Study

Integration has overtaken supply chain constraints as the semiconductor industry's biggest challenge, according to a global research report by HCLTech released on Friday.

The report, titled "The Silicon Shift: When Every Industry Becomes a Chip Industry", surveyed 300 senior leaders across engineering, research and development (R&D), semiconductor and hardware, product, innovation and technology strategy functions in the United States, Europe and Asia.

According to the report, 98% of enterprises said they are more dependent on semiconductors than they were three years ago, and 99% expect this dependency to increase over the next five years.

About 71% said AI is increasing the importance of semiconductor architecture as a strategic business decision.

The dependency is most acute in industrial automation, where 75% of respondents reported being much more reliant on semiconductors than three years ago, the strongest acceleration among the sectors studied, the report said.

"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," HCLTech said.

To address these challenges, enterprises said they are turning to engineering service providers that can offer greater value through hardware and software integration (67%), supply chain and lifecycle support (61%) and deeper industry expertise (59%).

The report said this suggests 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.

The report found that while 79% of enterprises currently rely entirely on off-the-shelf silicon or mostly commercial silicon with limited customisation, 66% expect to move to a different model within five years.