As the electronics industry looks back at 2025, a clear shift toward efficiency, miniaturisation, and—most critically—more deliberate material choices becomes evident. The year stands out as a pivotal phase in the evolution of electronics, enabling systems tailored to the increasingly demanding requirements of data centres, advanced sensing platforms, electrified systems, and next-generation semiconductor packaging. Rather than chasing raw performance, the industry in 2025 was forced to reconcile ambition with practicality—balancing sustainability goals, high-performance demands, and mounting geopolitical pressures.
Escalating power densities driven by AI-centric data centers and electrification, shrinking thermal headroom resulting from aggressive miniaturization and higher levels of integration, and growing material availability constraints shaped by geopolitics and post–Moore’s Law design dependencies collectively emerged as defining parameters in the system architectures of automotive, industrial, and infrastructure electronics.
“Performance scaling today is increasingly driven by materials-centric advanced packaging,” says Suraj Rengarajan, Head of Semiconductor Product Group, Applied Materials India. As the industry enters a new year, these forces offer a clear lens through which to examine the design choices and innovations that defined electronics in 2025. Further, to give a better idea of how electrical design is changing in its basics, Suraj from Applied Materials India adds that System-level power, performance, area, and cost are now set by co-optimizing the bonding interface, low‑k dielectrics, redistribution-layer etch, barrier/seed, copper fill, and CMP, and thermal interfaces, treating interconnect resistance and heat flux as primary design variables.
In every aspect that we will be examining in the course of our story, we will try and see how the new dynamics of the industry shaped the preferences of the design engineers to sustain the innovations and applications, including data centres, automotives, and industrial applications.
Power Efficiency over Capability!
As the electrification phenomenon rapidly spread its wings, power efficiency, and not power capacity, became the primary constraint. As the demand across the sectors increased, it raised the energy demands significantly while simultaneously tightening thermal and sustainability limits. This realisation brought the power electronics landscape into the core architectural consideration of an electrical design engineer. In such a condition, the industry moved to significantly increase the power handled per unit area- Power Density.
With AI workloads driving processor currents from a few hundred amperes to well over a thousand—without any meaningful increase in board or package footprint—power efficiency emerged as the only viable path to sustain compute scaling.
This enabled the engineers to focus on more basic and intrinsic aspects of power electronics, which as efficiency, facilitating the same at every level of electronics design. To sustain the new dynamic, the industry moved towards Wide Band-gap (WBG) technologies, including Silicon Carbide (SiC) & Gallium Nitride (GaN). This helped the engineers to prevent switching and conduction losses along with heat generation per unit area, while abiding by tighter thermal and packaging constraints. The WBG technology also pushed the efficiency of the electronic product significantly at the system level.
As power density increased, thermal removal became progressively harder, creating a self-reinforcing loop in which higher efficiency was required simply to preserve thermal headroom rather than to improve performance.
Application
In data centres, rising compute density is driving demand for compact, high-efficiency power solutions. Gallium nitride–based power supplies are gaining traction by improving efficiency, enabling higher switching frequencies, shrinking passive components, and reducing cooling needs. In some architectures, GaN also allows simplified or single-stage power conversion, lowering losses and bill-of-materials complexity while supporting higher voltages closer to the point of load.
“With AI workloads, processor current levels have scaled from a few hundred amperes to over a thousand amperes, while the physical footprint has remained largely unchanged. This has fundamentally pushed power density and efficiency to the centre of system design,” says Dr Kaushik Basu, Associate Professor at IISC Bangalore.
Thermal Limits Over Advanced Cooling
As power efficiency improvements enabled higher power densities, overall heat generation continued to rise—driven by increasing absolute power levels and the closer packing of heat sources within shrinking form factors. Under these conditions, heat was generated faster than it could be spread or dissipated, leading to steeper thermal gradients that placed greater stress on materials, interconnects, and interfaces. At the same time, as electronics moved toward more miniaturised, efficient, and reliability-critical designs, the cost, complexity, and reliability penalties associated with ever-more advanced cooling solutions became increasingly prohibitive.
“As power density increases, heat removal becomes increasingly difficult. That is why efficiency is no longer optional—there is simply no thermal headroom to absorb losses,” says Dr Basu. By 2025, the industry reached a clear realisation: cooling complexity could no longer scale indefinitely to offset rising power density. This marked a fundamental shift in design philosophy, with heat dissipation moving from a downstream mechanical consideration to a primary architectural constraint addressed early in the design cycle. “Designers are increasingly treating materials as first-class design parameters. For advanced nodes, device physics is fundamentally materials physics, ” says Suraj from Applied Materials India.
The growing adoption of advanced packaging approaches, including 2.5D and 3D packaging, was driven as much by electrical constraints as thermal ones, as rising currents made long power-delivery paths increasingly untenable due to conduction losses and localized heating. It emerged as the first line of defence against thermal stress, playing a critical role in protecting silicon devices while enabling higher levels of integration and system efficiency. Particularly, in vertically stacked 3D architectures, where multiple dies are interconnected using through-silicon vias (TSVs), thermal challenges become particularly acute due to limited heat escape paths and the formation of localised hotspots.
In such configurations, traditional air- or liquid-based cooling, or the addition of increasingly sophisticated cooling hardware, often proved insufficient, expensive, or impractical—especially in automotive, industrial, and infrastructure applications with stringent reliability and lifetime requirements. While advanced packaging shortened interconnect paths and reduced resistive losses, it also concentrated heat generation within smaller volumes, making thermal constraints more visible rather than eliminating them. “Teams now co‑simulate variability and reliability, electromigration, bias temperature instability, and time‑dependent dielectric breakdown, at the materials level alongside logic and layout,” says Suraj. As a result, thermal-aware system architecture and packaging design became indispensable in sustaining performance and reliability.
“Advanced packaging approaches such as 2.5D and 3D integration are largely driven by the need to minimise current paths and conduction losses by bringing power conversion closer to the load. However, they also make thermal challenges more visible rather than eliminating them,” says Dr Basu. Eventually, to enable the engineers to accurately predict and manage heat generation and dissipation, which is crucial for preventing component failure, optimizing performance, and ensuring safety, Thermal modeling and co-simulation have now become integral to modern electronics design.
Materials as a Design Constraint, Not a Specification
In 2025, materials in electronics moved beyond being passive specifications and emerged as hard design constraints shaping system architecture from the outset. Persistent supply-chain fragility, geopolitical uncertainty, tightening environmental regulations, and the escalating demands of AI, high-performance computing, and electrification collectively forced designers to treat material selection as a primary limiting factor influencing performance, reliability, and manufacturability.
Midway through the year, the surge in AI, HPC, and electrified platforms imposed unprecedented thermal and electrical stress on electronic systems. Materials able to withstand high power density, heat, and long lifetimes became critical design constraints, shaping device selection, power architecture, and packaging. As advanced nodes and 2.5D/3D integration pushed miniaturisation to its limits, thermal conductivity, mechanical strength, and interconnect reliability emerged as central concerns.
By late 2025, regulatory pressures further reshaped material decisions. Stricter sustainability and environmental compliance requirements, including tighter enforcement of RoHS and REACH norms, transformed lead-free, recyclable, and low-emission materials from preferences into mandatory design conditions. While breakthroughs in advanced materials and AI-driven material informatics offered new optimisation pathways, they also demanded deeper material awareness from system designers.
“We are reaching a point where clever system-level design alone is not sufficient. Addressing today’s power and thermal challenges increasingly requires improvements at the material and device level,” says Dr Basu.
Together, these forces marked 2025 as the year when material availability, compliance, and physics converged, redefining what was practically achievable in electronics design. Material choice ceased to be a downstream optimisation exercise and instead became a foundational variable that set the limits for efficiency, scalability, and long-term system viability.
Conclusion: Designing Within Limits Became the New Competitive Advantage
Power density, thermal limits, and materials are no longer independent design considerations; in high-performance systems, each now defines the operating boundary of the others. “Thermal management and power density will remain the most difficult challenges in the coming years, while material-level improvements, although critical, will take longer to mature,” says Dr Basu.
The defining lesson of 2025 was rooted in a collective shift in how electronic systems were conceived and engineered. As power efficiency replaced raw capability, thermal limits supplanted aggressive cooling, and materials evolved from passive enablers to active constraints, electronics design entered an era governed less by ambition and more by physical and systemic realities. “Efficiency is being engineered from the materials up, with interconnects, dielectrics, power delivery, cooling, and packaging treated as a coupled system,” says Suraj of Applied Materials India.
Across data centres, automotive platforms, and industrial systems, engineers confronted hard limits of heat, materials, and long-term reliability, making performance something to be balanced rather than maximised. Power electronics moved to the centre of system architecture, packaging became a critical thermal and electrical optimisation layer, and material choices began shaping designs at the architectural stage. Innovation did not slow under these constraints; it became more disciplined, integrated, and system-aware.
As electronics move forward, the lesson of 2025 is clear: the future belongs not to systems that promise peak performance on paper, but to those engineered with a deep understanding of efficiency, thermal reality, and material limits—marking the year when designing within constraints became a true engineering advantage. In an industry long defined by relentless scaling, 2025 will be remembered as the year when designing within limits became the ultimate engineering advantage.
