Global semiconductor market growth

Semiconductors have been described as being for the digital transition what steam engines were for the industrial revolution: a general purpose technology that defines a whole era of economic growth and progress. Chips are universally present and essential components of digital and digitised products, devices and infrastructures, from smartphones and vehicles to healthcare, energy, communications and industrial facilities. With the digital transformation and the emergence of highly automated cars, the internet of things, AI, cloud-, edge-, and quantum computing, supercomputers, industrial production automation, and applications in space and defence, chips will only grow more crucial as economic and strategic assets. With the relentless expansion of computing capacities, AI and connectivity, including the need to manage ever growing data volumes and the widening digitalisation of electrical devices, industrial machines, and vehicles, the market for semiconductors is expected to double from US$550 million currently to over US$1 trillion by 2030. It is therefore fundamental for the EU’s future open strategic autonomy, digital sovereignty, and competitiveness vis-à-vis other players for it to reinforce its technological capabilities, industrial capacity and security of supply in the field of semiconductors.
After all, other players are implementing their own plans to reinforce their domestic semiconductor capacities, thus further indicating the need for European action to keep up. The EU chips act will have to compete or find synergies with existing investment strategies in the US and east Asia. The US and Japan have announced investment plans worth US$52 billion and US$6.8 billion respectively to attract advanced chip manufacturers, including Taiwan’s TSMC, to build production facilities. China is reportedly providing US$97 billion in national and regional funds for the 2014-2024 period, and South Korea has introduced 6-10 % breaks and other measures, in efforts to attract another US$225 billion and US$450 billion in Chinese and Korean investments over a 10-year period. Taiwan’s chip giants are expanding their foreign assets and are building production facilities in the US and Japan. Europe could be next. Preliminary talks with German officials have taken place following the intention expressed by TSMC and Taiwan’s foreign minister to establish a foundry there and engage in semiconductor cooperation in Europe. Taiwan welcomed the EU chips act as an opportunity to facilitate such efforts. Europe remains keen to draw in Taiwanese chip investments and cooperate on semiconductor supply chain security. In this context, an online trade and investment dialogue took place on 2 June 2022 between the European Commission’s Director-General for trade, Sabine Weyand, and the Taiwanese minister for economic affairs, Wang Mei-hua.