Five Facts on the Global Semiconductor Industry
The Big Insight: The U.S. is rapidly losing market share in the global semiconductor sector, and the United States Innovation and Competition Act may help reverse the trend.
Semiconductors are essential to U.S. economic and national security and are one of our top five exports. But now America is at serious risk of falling behind Asia, particularly China.
The U.S. Innovation and Competition Act, which has already passed the Senate 68-32, could provide essential funding needed to jumpstart the U.S. semiconductor sector, but the House and Senate are still haggling over the final shape of a bill.
Here are five facts that explain why it’s so important for the U.S. to maintain its lead in the global semiconductor industry.
1. In 1990, the U.S. made 37% of the world’s semiconductors. Last year, the U.S. made 12%.
In addition, in 2019, 100% of the world’s most advanced logic semiconductors — which are used to control the operation of electronic devices by processing digital data — were produced outside the U.S.
But despite the overall decline, U.S. semiconductor exports totaled $49 billion in 2020 — the nation’s fourth-largest export market behind only airplanes, refined oil, and crude oil.
2. Global semiconductor sales are estimated to hit $573 billion this year, up from $527 billion last year and $440 billion in 2020.
The market is expected to top $800 billion by 2028 and $1 trillion by the end of the decade. By 2025, there will be at least 75 billion connected devices that run on semiconductor chips, more than three times the 22.6 billion in 2019. These devices include consumer electronics, telecommunications devices, and connected devices such as sensors and thermostats.
3. For each of the 277,000 Americans directly employed by the semiconductor industry, an additional 5.7 jobs are supported in the broader economy.
That amounts to nearly 1.6 million jobs. Furthermore, more than 300 domestic economic sectors employing more than 26 million Americans rely on semiconductors.
The Semiconductor Industry Association of America says an investment on the scale of USICA would create at least 10 new manufacturing hubs and trigger about $279 billion in additional private sector investment.
4. Eighty percent of semiconductors are now produced in Asia.
The Chinese government is investing $161 billion over 10 years to build the nation’s semiconductor industry. In 2020, China produced just 16% of its semiconductor demand domestically, but Beijing aims to domestically meet 70% of China’s semiconductor demand by 2025 and 80% by 2030.
Taiwan alone produces 92% of the world’s most advanced semiconductors, and Taiwan’s TSMC makes nearly 90% of the chips used by Amazon, Apple, Google, and other major U.S. tech firms.
5. The European Union produces about nine percent of the world’s semiconductors.
That’s down from 35% in 1990. The European Commission is taking steps to revive Europe’s semiconductor industry, creating the €2 billion EU Chips Fund to back semiconductor start-ups and bolster the European sector and advancing the European Chips Act, which will invest an additional €15 billion in technology-related programs.