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SEMICONDUCTORS SECTORS GLOBALSEMICONDUCTORSALESAREFORECASTTOREACH$488BNIN2021


Source: World Semiconductor Trade Statistics (WSTS) IC= integrated circuits, which have collections of electronic components on one silicon chip, such as resistors, transistors and capacitors


on account of the US-China trade conflict, the tightly interwoven nature of the global supply chain limits the ability to pull on strings for fear of seeingwhat else will unravel,” says MsWeiss. According to data fromgreen-


field investmentmonitor fDi Markets, China has historically been the leading destination globally for foreign investment in the semicon- ductor sector. Between 2017 and 2020, some55


greenfield foreign direct investment (FDI) projects have been announced in China’s chip industry – about half of which were into manufacturing. In the same period, the UK raked in 26 projects, followed by the US (22), India (22) and Taiwan (20). Despite China’s dominance,


somesemiconductor companies have begun diversifying their supply chain. In January, Intel invested $475m to expand its manufacturing site in Ho Chi Minh City, Vietnam, where it will increase production of 5G products and core processors. Meanwhile, TSMCis currently


constructing the world’smost advanced3nmchip production plant in the southern Taiwanese city of Tainan,which is due to begin operation in the second half of 2022. Continued production activity in Asia has only added fuel to the calls by advocacy groups to improve the US domestic chip industry.


April/May 2021 www.fDiIntelligence.com “With global demand for semi-


conductor manufacturing capacity projected to increase 56% over the next decade, we believe it is critical to strengthen US semiconductor sup- ply chains by investing in domestic chip manufacturing incentives and research investments,” says David Isaacs, SIA’s vice president of govern- ment affairs. “The semiconductor industry


delivers the greatest growth, innova- tion, and cost savings when it lever- ages well-balanced, resilient global supply chains,” he adds.


Chip nationalism While semiconductor manufactur- ing capacity is needed to increase globally, Mr Manocha says that the chip shortage has “intensified the spotlight on strengthening produc- tion” in both the EU and US. “The recent picture of President


Biden holding a chip during the announcement that he would seek $37bn in funding to boost domestic semiconductormanufacturing speaks volumes on the focus on the strategic importance of these tiny devices,” he adds. President Biden’s efforts add to


the existingCHIPS forAmerica Act passed by Congress in June 2020, which laid out plans to invest tens of billions of dollars in semiconductor manufacturing incentives and research initiatives. As part of the


EU’s DigitalCompass plan, the bloc aims to double its share of chipman- ufacturing output to 20% of the globalmarket by 2030. China is engaging in renewed


efforts to develop domestic capacity too, following the US’s decision in December 2020 to put its largest chipmaker SMIC on a blacklist. In March, it was announced that SMIC will jointly invest with the govern- ment of the southern Chinese city of Shenzhen in a factory costing $2.35bn. As demand and supply dynamics


of the industry combine with gov- ernmental incentives to invest, semi- conductor giants are intent on expanding theirmanufacturing capacity this year. In 2021, capex is expected to


grow by 13%to reach $127bn, according to market intelligence pro- vider Semico Research. For the automakers caught in the


storm, the chip crunch has added to existing concerns about the resil- ience of the industry’s prevailing just-in-timeproduction model – where parts are delivered to factories exactlywhen they are needed. “Carmakers are deepening part-


nerships with the semiconductor industry to have more influence on technology direction and the pace of development, along with seeking greater visibility into the global sup- ply chain,” concludes MsWeiss.■


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