How industrial automation is driving chip demand

As factories become smarter and more automated, the demand for chips in industrial applications is growing. According to PwC’s “Global semiconductor industry outlook 2026” report, expanded automation in manufacturing will lead to a tenfold increase in the value of chips in a factory.

Those chips will perform different functions. At smart factories operating today—with baseline levels of automation—sensors gather data, and programmable logic controllers (PLCs) use chips to remotely control factory equipment. At a smaller scale are microcontroller units (MCUs), which are more customizable and handle precise tasks.

At increased levels of autonomy, connectivity integrated circuits (ICs) link IOT equipment throughout the factory for real-time tracking of raw materials to inventory, handling massive amounts of data. Smarter sensors can take over quality control functions, helping to detect defects and adjust machinery. And power-management integrated circuits help keep these systems efficient. Ultimately, automation requires more than just chips on the factory floor. It’s also essential to have more central computing power to make sense of all the data, along with more chips in logistics functions to coordinate inputs and outputs—all powered by AI.

The demand for automated, smart production also applies to smart agriculture and aquaculture. In smart farms, sensors monitor environmental conditions, transmitting data to AI processors that improve yield. Automated machinery, guided by GPS, MCUs, and CPUs, plants and harvests crops. Smart aquaculture follows a similar model, with water quality probes, machine-vision fish counters, and AI-controlled feeding robots to make operations more efficient and sustainable.

These chips need to be rugged enough to function under tough conditions—vibration, extreme temperatures, electrical spikes, and other factors.

Here’s how COOs can manage their chip needs:

Upgrade manufacturing systems, rather than individual sites. Enable digital strategy and execution across your entire production system, including contract manufacturers, distribution network, and suppliers.

Get smart about semiconductor capabilities and supply chains. COOs, CTOs, and heads of manufacturing need to gain a better understanding of the types of chips that future factories will need, the functions those chips can perform, and how the company can ensure that it has everything it needs to run the factories of the future.

Don’t overlook cybersecurity. An increased reliance on digital technology Ensure your sites and network are protected from cyber and other digital risk attacks—and maintain vigilance as threats evolve.