Why Governments Became So Concerned About Semiconductor Self-Sufficiency

G. Dan Hutcheson

The Chip Insider®

Strategy and Tactics: Why governments became so concerned about Semiconductor Self-Sufficiency

Why governments became so concerned about Semiconductor Self-Sufficiency: When the world's economy was globalized, the resulting fragmentation of the semiconductor supply chain as it chased hyper-coherent efficiency was of no concern... In the 1980s, Japan had displaced the U.S. and was the largest producer of semiconductors. In the 1990s, the U.S. would re-emerge like a phoenix from the ashes - the ashes made from the abandoned wafer fabs as EDA cleanly separated design from manufacturing. This led to the rise of Taiwan and the fabless/foundry business model. Everything was going nicely until 'Made in China 2025' was published, marking its government's concern about Semiconductor Self-Sufficiency... then COVID disrupted global supply chains in 2020 and the great semiconductor shortage came in 2021 which it the concern of most governments.

Now many ask the simple question of why does an industry that's largely cash-flow positive even in downturns need government support? ... the top merchant semiconductor companies, with the exception of Samsung and SK Hynix are all American. You might look at the 43% share held by these U.S. based companies hold of the global market and see why China and Europe are so worried, but not the U.S. This is only the merchant companies that sell their semiconductors on the open market to makers of electronics products... Add the hypervertical whale named Apple ... and it takes the U.S. share to 52% ... you have to ask: Why is the U.S. so worried? ... But what about TSMC? Shouldn't they up there in the list too? ... not to mention the other the foundries. Now that's a very complex question because TSMC is not really a semiconductor company. It is a supplier to semiconductor companies. It sees every company on the list above as a customer ... and not a competitor... TSMC's real size - in the end market revenues its customers bring in - is $142B. That takes them to the top of the list with a 24% relevant share of the semiconductor market. What the U.S. government is - and should be - so concerned about is that more than half of its semiconductor leadership is at risk should something happen to those foundries...

What's Happening and What's the Meaning: SEMI Wins $1 Million Grant to Create Community College Apprenticeship Program for Microelectronics Industry Workforce Development: SEMI continues to walk the talk of workforce development... Launch of the American Semiconductor Innovation Coalition (ASIC): This is the Albany Nanotech Complex based group that is looking to convert funds from the yet-to-be enacted CHIPS act into a National Semiconductor Technology Center (NSTC) and a National Advanced Packaging Manufacturing Program (NAPMP).