Overtaking Taiwan, Korea, home of Samsung, SK, is expected to absorb 19 percent of global production, becoming the second largest country after China
The Semiconductor Industry Association (SIA), in partnership with the Boston Consulting Group (BCG), released a report on the global chip supply chain that projects the United States will triple its domestic semiconductor manufacturing capacity from 2022 - when the CHIPS and Science Act (CHIPS) was enacted - to 2032.
The projected 203% growth is the largest projected percent increase in the world over that time.
Photo: cover of the report. Official website SIA
The study, titled “Emerging Resilience in the Semiconductor Supply Chain,” also projects the U.S. will grow its share of advanced logic (below 10nm) manufacturing to 28% of global capacity by 2032, up from 0% in 2022. Additionally, America is projected to capture over one-quarter (28%) of total global capital expenditures (capex) from 2024-2032, ranking second only to Taiwan (31%). In the absence of the CHIPS Act, the U.S. would have captured only 9% of global capex by 2032, according to the report.
While the report finds investments from the industry - facilitated by CHIPS incentives - are on track to reinvigorate semiconductor manufacturing in America and reinforce U.S. chip supply chains, it also identifies policy actions that will further strengthen supply chains, support R&D and chip design, grow the semiconductor workforce, and ensure CHIPS delivers maximum benefits to America’s economic and national security.
The report also analyzes the efforts underway in other countries to incentivize chip production and innovation and the criticality of ensuring chip companies have open access to global customers and suppliers, among other topics.
“Effective policies, such as the CHIPS and Science Act, are spurring more investments in the U.S. semiconductor industry. These investments will help America grow its share of global semiconductor production and innovation, furthering economic growth and technological competitiveness,” said Rich Templeton, Chairman of the Board at Texas Instruments and SIA board chair. “Continued and expanded government-industry collaboration will help ensure we build on this momentum and continue our next steps
forward.”
Other key report findings:
America’s world-leading 203% projected increase in fab capacity from 2022 to 2032 stands in stark contrast to its modest 11% increase from the previous decade (2012-2022), which ranked last among all major chip-producing regions, according to the SIA/BCG report.
The U.S. share of the world’s chip manufacturing capacity will increase from 10% in 2022 - when the CHIPS and Science Act was enacted - to 14% by 2032, marking the first time in decades the U.S. has grown its domestic chip manufacturing footprint relative to the rest of the world. In the absence of CHIPS enactment, the U.S. share would have slipped further to 8% by 2032, according to the report.
The U.S. continues to lead the world in its overall contribution to the global value chain, with strong leadership positions in high value-added areas of semiconductor technology, including chip design, electronic design automation (EDA), and semiconductor manufacturing equipment.
The report also finds industrial policies have the potential to create additional bottlenecks that increase supply chain risk. Certain segments of the semiconductor supply chain are at risk if incentive programs and large-scale industrial policies lead to non-market-based investment, which can result in overconcentration or oversupply. Government incentives should focus on enabling targeted, distributed, market-based investments.
Further, the study highlights the ways in which governments and companies are taking concerted action to increase resilience. The U.S. CHIPS Act committed $39 billion in incentives for semiconductor manufacturing, plus a separate advanced manufacturing investment tax credit. The European Union unveiled the European CHIPS Act, China initiated the third phase of its Integrated Circuit (IC) Industry Investment Fund, and various other incentive programs have emerged in Taiwan, Korea, Japan, India, and around the world. In parallel, companies have made significant investments, in both established and new regions. The report projects around $2.3 trillion in capex in 2024-2032, compared to $720 billion in the decade prior to enactment of the CHIPS Act (2013-2022).
Despite the progress made to strengthen U.S.-based semiconductor manufacturing, additional government policy actions are needed to help ensure America stays on track to address lingering supply chain vulnerabilities and grow its share of fabrication capacity, while also increasing its strength in areas such as advanced logic, design, EDA, and equipment in the face of growing global competition.
“The CHIPS and Science Act has put America on course to significantly strengthen domestic semiconductor production and R&D, but more work is needed to finish the job,” said John Neuffer, SIA president and CEO. “We look forward to working with government leaders to advance policies that broaden the STEM talent pipeline, invest in scientific research, promote free trade and access to global markets, and expand and extend critical CHIPS incentives.”
The CHIPS Act’s manufacturing incentives have sparked substantial announced investments in the U.S. In fact, companies in the semiconductor ecosystem have announced more than 80 new projects across 25 U.S. states—totaling nearly $450 billion in private investments—since the CHIPS Act was introduced. These announced projects will create more than 56,000 jobs in the semiconductor ecosystem and support hundreds of thousands of additional U.S. jobs throughout the U.S. economy.
Korea projected to outpace Taiwan in chip production by 2032
South Korea is projected to account for nearly 20 percent of global semiconductor production in 2032, reaching an all-time high in output, a US report showed on Thursday.
Asia’s fourth-largest economy is predicted to take up 19 percent of global chip production eight years later, according to a report by the Semiconductor Industry Association, in partnership with the Boston Consulting Group.
The report evaluated that Korea invested in the development of the semiconductor industry from the early stage, helping the two domestic chip makers -- Samsung Electronics and SK hynix -- grow into global semiconductor powerhouses.
They each occupy more than half of the global NAND flash memory and DRAM markets, the report said.
It would represent an increase of two percentage points from the 17 percent tallied in 2022 and mark a record high to place second in the world after China, which is forecast to account for 21 percent in 2032.
Korea is also expected to overtake Taiwan, which currently holds second place. In the meanwhile, Taiwan and the US are expected to take up 17 percent and 14 percent, respectively, in the same year, the report showed.
As of 2022, Korea shared third place with Japan in global chip production, after China and Taiwan, who currently account for 24 percent and 18 percent, respectively.
The report forecast that Korea is expected to reach 19 percent with a significant increase in its production capacity through the construction of semiconductor factories.
The report divided chip production regions into seven regions: Korea, the US, Europe, Japan, Taiwan, Mainland China and others.
It is interpreted that Korea’s product share is increasing as production capacity has increased significantly compared to other regions through the construction of semiconductor factories.
The report estimated Korea‘s semiconductor production capacity growth rate between 2022 and 2032 to reach 12 percent, while the world average is expected to be 108 percent.
The predicted figure is the second highest after the US (203 percent), ahead of Europe (124 percent), Taiwan (97 percent), Japan (86 percent), Mainland China (86 percent) and other regions (62 percent).
Compared to 2012, Korea‘s semiconductor capacity growth rate in 2022 (90 percent) was second only to China’s record which stood at 365 percent.
The production capacity growth rate in other regions was highest in that order, including Taiwan (67 percent), Europe (63 percent), and Japan (36 percent) during the same cited period. The United States was the lowest at 11 percent, while the rate excluding these regions came to 72 percent.
However, Korea‘s share of chip production below 10 nanometers including cutting-edge processes, is expected to fall significantly from 31 percent in 2022 to 9 percent in 2032. Taiwan’s rating was also expected to decline from 69 percent to 47 percent over the cited period.
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