Cybersecurity in the semiconductor industry

With intricate supply chains and new regulatory pressures, integrating robust cybersecurity measures is essential for sustaining innovation and protection.

In brief:

• Across every industry cybersecurity leaders are increasingly expected to transition from a value protection role to one of value creation
• While this development affect all industries, some industries are in the frontline, such as the semiconductor industry.
• The industry's highly specialized supply chains require robust cybersecurity measures to prevent significant disruptions and material shortages.
• New EU regulations, such as NIS2 and the EU AI Act, emphasize the importance of a multidisciplinary approach to cybersecurity, integrating it into organizational strategy.

In an era where technology rapidly evolves and the geopolitical landscape remains unpredictable, cybersecurity is a top priority for stakeholders such as CISOs, boards, and regulators. While these developments affect all industries, some industries are in the frontline, such as the semiconductor industry.

The semiconductor industry is poised for continued exponential growth. It operates through intricate supply chain networks characterized by extreme specialization. Moreover, the direct impact of geopolitical shifts and international conflicts on the sector is escalating. These factors collectively heighten the industry's allure as a target for cyberattacks.

Industry's Massive Expansion

The global semiconductor market is on the cusp of extraordinary expansion, with projections suggesting that revenues could surpass US$1 trillion by 2030. Such robust expansion presents significant challenges for the global supply chain. As the industry prepares for a substantial increase in manufacturing capacity and supply chain breadth, the emphasis on innovation and growth becomes a key driver. Across every industry cybersecurity leaders are increasingly expected to transition from a value protection role to one of value creation (Cybersecurity Leadership Insights: mastering complexity | EY - Global).Reconciling cybersecurity with innovation is a critical challenge that must be addressed to ensure safe, secure growth and resilience during times of change.

Organizations striving for security by design, in tandem with the pace of innovation and change, focus on (but are not limited to) the following:

Establishing clear cybersecurity risk management guidelines and baseline standards:

Each alteration in products, processes, or vendors can impact an organization's cybersecurity posture differently. To keep pace with change, it is crucial to have non-negotiable cybersecurity guardrails that are well-understood and accepted across the organization. Market observations indicate that without these established and embraced standards, each change is subject to repeated reassessment, even for essential must-haves (e.g., standard third-party management controls for vendors), which can significantly delay innovation.

Integrating cybersecurity within the broader organization:

Defining clear roles and responsibilities enables organizations to swiftly adapt to changes and innovation. Cybersecurity is a collective responsibility within an organization. Establishing clarity on the cybersecurity roles and responsibilities for each individual (from the board to employees), based on the aforementioned guidelines and standards, facilitates a quicker pace of innovation.

Utilizing automation and technology in cybersecurity practices:

Organizations are increasingly adopting automation and technology, from the first line to the second line (e.g., DevSecOps, SOAR). The goal of this adoption is not only to improve the maturity of cybersecurity practices but also to accelerate the pace of innovation and change.

Cybersecurity in Complex Supply Chain Networks

The semiconductor industry contends with highly specialized supplier networks. These networks have become exceedingly specialized due to a historical focus on cost efficiency and are now extremely risky due to a mix of vertical fragmentation and horizontal concentration.

In such a complex environment, cybersecurity is essential for resilience. The potential impact of a cybersecurity incident could be as severe as significant downtime or a critical material shortage, which would, in turn, affect numerous other industries reliant on semiconductors.

Gaining visibility into supply chain networks to comprehend the complexity, identify threats and vulnerabilities, and focus on enhancing cybersecurity maturity and digital resilience is becoming increasingly critical.

Organizations are broadening their cybersecurity scope to include the entire supply chain network, aiming for heightened maturity across the ecosystem.

Digital Security in Europe

There has been a growing geographical focus on cybersecurity in recent years. The EU cybersecurity strategy exemplifies a jurisdictional approach to improving the capacity to combat and recover from cyberattacks.

With new regulations such as NIS2, the EU AI Act, and the EU Chips Act coming into effect, organizations are preparing for compliance. As mentioned earlier, cybersecurity is a shared organizational responsibility. Those organizations that view these regulations as an opportunity to boost their cybersecurity maturity and assemble a multidisciplinary team for compliance efforts are the ones that will maximize the value of their compliance initiatives. These regulations cover a wide range of cybersecurity aspects, from governance to control domains, necessitating a multidisciplinary approach from top management to business operations (e.g., supply chain), IT/OT, legal, and cybersecurity functions.

Various organizations are joining forces to strengthen cybersecurity through knowledge sharing and collaborative efforts to address common challenges.

The Stichting CISO Circle of Trust (CCoT) is one such initiative. Established in 2022 by ten major Dutch companies, CCoT collaborates with the Dutch government and other organizations within the legal framework to contribute to the cyber resilience of companies based in the Netherlands.

Cybersecurity into the fabric of the organization

Cybersecurity stands as an unwavering imperative for organizations everywhere, with the collective acknowledgment of each individual's role in cultivating cyber resilience being crucial to success. Embracing a multidisciplinary approach that weaves cybersecurity into the fabric of governance, processes, and technology is not just beneficial—it's essential.

As organizations navigate the complexities of supply chain networks, the task of bolstering cyber resilience becomes more intricate. A proactive stance in assessing and mitigating risks within their expansive ecosystems is key to building a robust defense.

Looking ahead, the landscape of cybersecurity will continue to be shaped by regional dynamics, with a tapestry of regulations and cross-industry collaborations laying the groundwork for a more secure digital environment. These efforts are set to carve a path toward a future where cybersecurity is not just a response, but a cornerstone of organizational strategy.