The semiconductor market is thriving again -- and the future looks bright. Worldwide semiconductor revenue totaled US$235 billion in 2005, a 6.9 percent increase from 2004, according to Gartner Group  data. It was the first time the semiconductor industry surpassed its record-setting year in 2000 when revenue reached $223 billion.

Of course, there are still plenty of challenges for the semiconductor industry to overcome as it races to accommodate new trends in the consumer and corporate markets. While the NAND flash market drove growth last year, for example, concerns over power consumption are pushing the industry toward virtualization solutions.

The participation in high-growth device markets such as NAND flash and gaining share in existing markets are major trends running through the semiconductor industry, according to Gartner. How does AMD (NYSE: AMD)  see the opportunities and challenges?

TechNewsWorld caught up with AMD's Marty Seyer, senior vice president, commercial business and performance computing, microprocessor solutions sector, to discuss what segments of the industry will be hot this year, the challenges that will dominate the landscape, and how the industry will look five years from now.

TechNewsWorld: What are the biggest business trends for the semiconductor industry that you see this year?

Marty Seyer: When we started focusing on the enterprise about three or four years ago, it was predominantly a technology requirement, in other words we focused on solving the 32-bit and 64-bit dilemma that customers were faced with. But we also had to focus on establishing price performance leadership. What we're seeing now, actually, is a shift more towards the solution side than the technology side. Some of the technology issues are being resolved, such as 32- and 64-bit dilemma, and we're actually seeing a shift toward technology being brought to bear to solve customer problems.

So the CPU vendors are being asked to step up and solve virtualization type issues, security type issues, manageability type issues, as well as power-related issues. If you stand back at the macro level, those aren't CPU issues. AMD is focusing on those issues with our server as well as our client products. So that shift into a solution approach as opposed to a technology approach is a key trend.

Another trend spans both the commercial as well as consumer customers. That's in the area of digital rights management; the protection of IP initial property assets by the movie producers, the audio producers, and the artist. That maps directly into protecting the content inside the enterprise . Everyone from the pure microprocessor company to the chipset companies to the consumer electronics manufacturers are focusing on trying to provide solutions for this. So that's a dramatic shift as well.

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TNW: What big developments are on the horizon?

Seyer: Virtualization is going to be big in 2006. We're going to hear a lot about it ... we already are hearing a lot about it. Virtualization is going to be broadly analyzed and adopted in 2006, but the ramp is 2007-2008 for real virtualization. So on one hand, it's hot.

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TNW: Will the industry look much different five years from now?

Seyer: Definitely. We are going to see a potentially different model of delivering client experiences. Today we think of clients as the fat PC that we're all used to. You're going to see broader uses of silicon in a greater number of devices focused on enriching the experience for both consumers as well as businesses. Expect us to drive new commercial clients and drive choice to the enterprise customers like they've never had before.