The pandemic put the importance of a stable supply of semiconductors to modern economies in stark relief. Additionally, as geopolitical tensions have risen and threatened global supply chains, most developed economies have introduced policies aiming to bolster their domestic semiconductor production
The flagship policy in the EU is the EU Chips Act which will see the EU set aside an estimated €43bn in funding up to 2030.
The act aims to improve the EU’s existing strengths in R&D and reignite the industrial-scale production of chips in the EU, which has lagged behind that of Asian economies in recent decades. In the US, the CHIPS and Science Act provides roughly $52.7bn in new funding to boost domestic research and manufacturing of semiconductors.
The US’s share of global production has fallen from 37% in 1990 to 12% in 2021, and the act aims to reverse this trend. The recently released UK National Semiconductor Strategy has set aside £1bn in funding to focus on the UK’s pre-existing strengths in design, research and advanced chip production. Policymakers hope that improved domestic R&D outcomes and incentivising international cooperation will foster growth amongst domestic chip firms.
In Asia, China is accelerating efforts to close its technological gap: investing around USD 150 billion over the past decade in line with a series of plans and initiatives like the 'Made in China 2025' policy.
Japan has announced public funding of $8 billion for domestic semiconductor investment, with additional funding being made available. South Korea’s 'K-Semiconductor Belt' strategy will support the domestic industry through tax incentives of 20% on new fabs, complementing domestic companies’ private investments in R&D and manufacturing. This will cost the government an estimated $450 billion between 2021 and 2030. Under Taiwan’s 'Invest in Taiwan' initiatives, semiconductor firms get significant tax credits on R&D and reductions on income tax. The policy’s goal is to maintain Taiwan’s dominance in production through technological breakthroughs.
The focus of this report is, of course, the European market. The EU is home to several world-leading equipment and raw materials suppliers, giving it a strong starting base for increasing domestic production. Europe excels at R&D, and firms producing in the EU are global leaders in automotive and industrial equipment – high-growth markets for semiconductor demand.
The European Semiconductor Industry Association (ESIA), an organisation representing the semiconductor industry, believes that the European focus should be on developing a better understanding of global supply chains to monitor their functioning and understand future trends. Policymakers and business leaders would consequentially be better able to anticipate disruptions. The ESIA believes that building international partnerships based on mutual interest is a key strategy in preventing international supply chains from breaking down.
Read the articles within Spotlight: Semiconductors and the logistics sector below.