Research article

Key take aways

In conclusion, the potential growth of the semiconductor sector could become a not-insubstantial tailwind for the logistics real estate market and broader economy

Semiconductor demand is set to continue to grow sharply over the next decade

Growth is expected to soar amid emerging megatrends. These include AI, electric vehicles, cloud computing, automation in manufacturing and logistics, the Internet of Things (IoT) and other cutting-edge emerging technologies like AR/VR, quantum computing and 6G network connections. Industry analysts expect the global semiconductor market to grow from $574.4bn in 2022 to $1,380.8bn in 2029, exhibiting a 12.2% CAGR.

Europe faces stiff competition with more established markets

Europe has fallen behind relative to other developed markets in terms of fabrication. 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. Unfortunately, offshoring trends in recent decades have seen much of the production of chips move to Asia. Even as the EU looks to stimulate growth through the Chips Act, other economies, including the current market leaders, have introduced similar policies, which may dampen the impact of the Act.

Sensible policy-making will be crucial to successful growth

The semiconductors industry is complicated, with significant land, energy, and labour requirements. If the EU is to be successful in its objectives, it will have to overcome hurdles around land, planning permission, energy, and labour supply to attract semiconductor firms. These requirements have all been significant hurdles to developers in the logistics space in recent years.

The clear links between manufacturing and logistics demand extends by corollary to the semiconductor sector

The link between strong industrial and manufacturing output and growing logistics demand is well-documented. It stands to reason that as more goods move through the economy, we expect to see increased demand for services that use them. The construction of these facilities will also require significant upticks in construction, with all of the associated logistics needs in terms of building materials. In addition to this, we would expect growth in the sector to stimulate household consumption through employment growth.

Part of a wider trend of rising logistics demand

If the EU successfully hits its target of 20% of global output, we expect to see up to 10.8m sq m of additional logistics demand by 2030. While this will only account for an average share of 4.4% of overall logistics take-up, this is not insubstantial and will combine with the wider trend of manufacturers onshoring their production processes into Europe. Bringing semiconductor production to Europe is an offshoot of this trend. In addition to competition from eCommerce firms returning to expansion as the economy recovers, we would expect a strong recovery in logistics demand in the coming years.

Read the articles within Spotlight: Semiconductors and the logistics sector below.

Other articles within this publication

3 other article(s) in this publication