Where have all the chips gone? The US SIA annual report reveals

Latest update time：2021-10-08 11:28

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Recently, the Semiconductor Industry Association (SIA) of the United States released its annual industry report. The 27-page report sorted out and analyzed the performance of semiconductors during the COVID-19 pandemic, the position of the US semiconductor industry in the world, and the impact of the semiconductor industry on the US domestic economy.

According to the report, capital expenditures in the semiconductor industry are expected to approach $150 billion in 2021, after never exceeding $115 billion. Global semiconductor sales increased by 6.8% in 2020 to $440.4 billion, due to factors such as the epidemic and emerging technologies.

Although the U.S. share of global chip manufacturing has declined in recent years, U.S. semiconductor companies' R&D accounts for a larger proportion of sales than any other country, making them an important source of innovation for the industry.

01 .

Global chip shortage, wafer fab capacity utilization rate exceeds 80%

The chip shortage issue has attracted global attention in 2020 and 2021. The report pointed out that the semiconductor industry has been working hard to increase production capacity to ensure chip supply.

Due to the hot market demand, the capacity utilization rate of front-end wafer fabs generally exceeds 80%, and the capacity utilization rate of some wafer fabs is even as high as 90% and 100%. SIA predicts that the global wafer fab capacity utilization rate will further increase in 2021.

▲Changes in global wafer fab capacity utilization

Today, the global semiconductor industry is increasing its investment in manufacturing and R&D to meet future market growth. Since 2021, global chipmakers have been investing in new wafer fabs.

In addition, the semiconductor industry's capital expenditure (CAPEX) has set a historical record. SIA expects that the industry's capital expenditure in 2021 will be close to $150 billion and will exceed this figure in 2022. Before 2021, the industry's annual capital expenditure had never exceeded $115 billion.

The current chip shortage reminds people of the importance of chips to industries such as automobiles. In the long run, this importance will continue to increase, and global demand for chips will continue to rise.

02 .

Cars fall down, computers eat their fill, who takes up the most chips?

Due to the impact of the epidemic and the development of emerging technologies, the semiconductor market has grown rapidly. In 2019, global semiconductor sales were US$412.3 billion, and in 2020, global semiconductor sales increased by 6.8% to US$440.4 billion.

According to the World Semiconductor Trade Statistics (WSTS), global semiconductor sales will reach US$527 billion in 2021 and may reach US$573 billion in 2022.

▲Changes in the global semiconductor market

Affected by the epidemic, the demand for chips by various terminals has also changed significantly. According to SIA data, the terminal product with the highest increase in semiconductor sales in 2020 was computers, with sales increasing by 21.2% and a market value of US$142.2 billion.

The largest decline in 2020 was in the government sector, where semiconductor sales fell 11.8% to just $4.6 billion. The highly watched automotive industry saw large fluctuations, ultimately decreasing by 0.3%.

▲The value of semiconductors in various terminal markets in 2020

Overall, the highest demand for semiconductors in the world in 2020 was for computers, which accounted for 32.3% of the global semiconductor share; followed by communication terminals such as smartphones, which accounted for 31.2%. The three major terminals of consumer electronics, industry, and automobiles accounted for 12%, 12%, and 11.4% of the semiconductor share respectively.

If we look at it by region, US semiconductor companies account for nearly half of the global market share in terms of sales, while companies in South Korea, Japan, Europe, China and other countries and regions account for 20%, 10%, 10% and 12% of the market share respectively.

▲Semiconductor share in each terminal in 2020 (left) and global market share in each region (right)

03 .

Chip design supports industry status

There is no chip production line below 10nm in China

SIA also lists the pillars and shortcomings of the U.S. semiconductor industry.

Specifically, the U.S. semiconductor industry is in a leading position in EDA, IP cores, chip design, and semiconductor equipment, but is lagging behind in raw materials such as silicon wafers, packaging, and testing. In terms of chip manufacturing, the U.S. lacks the ability to manufacture logic chips below 10nm, but is in a leading position in analog chips and storage.

▲Semiconductor added value and share by supply chain link and region

It is worth noting that the United States' advantage in chip design has become the key to maintaining its position in the industry. Chip design is a technology-intensive process, with R&D accounting for 65% of the entire semiconductor industry and added value accounting for 53%.

Since the 1990s, the number of companies adopting the fabless model has continued to increase. In 2000, the total sales of fabless companies accounted for less than 10% of the entire semiconductor market, and in 2019, this figure was close to 30%. The sales of American fabless companies account for 60% of the global fabless companies, and they also have the largest number of design talents in the world, which is the key to the United States' leading position in the semiconductor field.

Although the U.S. government's investment in semiconductors has not been as high as other governments, the R&D spending of U.S. semiconductor companies has been growing, with a compound annual growth rate of 7.2% from 2000 to 2020. In 2020, the total investment in R&D by the U.S. semiconductor industry reached $44 billion.

▲R&D investment of US semiconductor companies

In terms of the proportion of R&D expenditure to industry sales, the U.S. semiconductor industry's R&D expenditure is second only to the pharmaceutical and biotechnology industries, and its R&D proportion is higher than that of the semiconductor industry in any other country.

SIA said these high levels of investment in R&D have driven innovation in the U.S. semiconductor industry, helped it maintain its leadership in the global market, and created jobs across the United States.

▲Ranking of U.S. industry R&D spending (left) and semiconductor R&D spending (right)

In terms of chip manufacturing, logic chip manufacturing based on advanced processes is the shortcoming of the U.S. semiconductor industry. In the field of memory chips, the United States has strong competitiveness in DRAM and 3D NAND flash memory, and companies such as Micron are fully embracing the arrival of EUV lithography technology.

In addition, the United States is also a leader in advanced packaging, compound semiconductors, and wide-bandgap semiconductor manufacturing technologies such as silicon carbide.

04 .

Generates $160 billion in revenue

Local manufacturers are losing capacity

SIA pointed out that the US semiconductor industry is vital to its domestic economy. According to its statistics, there are more than 277,000 people engaged in semiconductor design, manufacturing, testing and R&D in the United States, which can affect more than 26 million American workers.

The report shows that each semiconductor job creates 5.7 additional jobs. In 2020, the U.S. semiconductor industry created 1.85 million jobs.

In addition to creating jobs, the semiconductor industry has a significant impact on GDP. In 2020, the total impact of the US semiconductor industry on GDP reached $246.4 billion, and it also generated $160.8 billion in revenue, covering different fields such as construction, finance, leisure, and hotels. In terms of exports, the total export value of US semiconductors in 2020 reached $49 billion, ranking only after aircraft, refined oil, and crude oil.

▲GDP driven by the US semiconductor industry

It is worth noting that compared with 2013, US semiconductor manufacturers have gradually begun to locate more front-end wafer fab production capacity in Singapore, Taiwan, Europe, Japan and other regions. In 2013, about 57% of US semiconductor manufacturers' wafer production capacity was located in the United States; in 2020, this figure dropped to 43%.

▲Regional share of wafer fab capacity of U.S. semiconductor manufacturers

Over the past decade, the average growth rate of overseas chip manufacturing output has been five times that of the U.S. In fact, three-quarters of the world’s chip manufacturing capacity is concentrated in East Asia, and mainland China is likely to account for the world’s largest chip manufacturing share by 2030.

This is also one of the important reasons why the Semiconductor Industry Association of the United States called on the United States to introduce an incentive bill.

At the same time, the US government's investment in chip research as a percentage of GDP is basically the same, which is insufficient compared with other countries, weakening the chip manufacturing and research capabilities. In order to improve this situation and create high-paying jobs, the US bipartisan passed the CHIPS Chip Act, but the bill still needs to be allocated by the US Congress.

▲Global logic chip production capacity in 2019

In addition, the U.S. Congress is also considering formulating a chip manufacturing bill called the FABS Act, which will include a semiconductor investment tax credit policy to help strengthen its semiconductor ecosystem. SIA believes that through these bills, U.S. chip manufacturing will usher in a revival and ensure its leading position in key semiconductor-based technologies such as artificial intelligence, quantum computing, and 5G/6G.

Finally, SIA put forward four suggestions:

1. Increase investment in the U.S. semiconductor industry, including the development of investment tax credit policies, to stimulate innovation;

2. Strengthen the U.S. technical talent pool, improve the education system, and attract foreign technical talent immigrants;

3. Promote free trade and intellectual property protection and expand the Information Technology Agreement;

4. Strengthen cooperation with allies, recognize the global nature of the semiconductor supply chain, and shape a regulatory and legal environment that is more conducive to growth, innovation, and supply chain resilience.

05 .

An inventory of the five major areas of semiconductor anti-epidemic efforts

For the world, the most important thing in 2021 is to fight the COVID-19 epidemic, and the semiconductor industry is no exception. SIA said that during the epidemic, the semiconductor industry played its role in five major areas and made its own contribution to the fight against the epidemic.

1. Chips are entering more medical devices, with prices dropping from $100,000 to thousands of dollars

Semiconductors are an important component of many current medical devices, providing functions such as operational control, data processing and storage, wireless connectivity, and power management. As semiconductors can provide functions that were previously not available on semiconductor devices, the performance of medical devices has been improved and the cost has been reduced, which helps to respond to the epidemic and improve the overall medical environment.

SIA cited two specific examples to verify this statement. The first is a portable ultrasound device that can detect viral symptoms such as lung lesions in patients and quickly identify the characteristics of acute pneumonia associated with the new coronavirus without waiting for nucleic acid testing.

This type of equipment previously used piezoelectric crystals as ultrasonic probes, which generally made the price of ultrasonic testing equipment exceed $100,000. By replacing piezoelectric crystals with semiconductor chips, the equipment cost only a few thousand dollars and can more conveniently detect and evaluate the internal conditions of patients.

The second is the ventilator. During the epidemic, ventilators are used to help patients with severe lung damage to breathe. The ventilator system uses semiconductor sensors and processors to monitor vital signs. The sensors are used to determine the speed, volume and amount of oxygen taken by each breath of the patient and accurately adjust the oxygen level according to the patient's needs. The processor controls the motor speed to assist the patient in breathing.

2. Advanced sensors and analog chips enable temperature measurement in densely populated areas

For many reopened workplaces and public facilities, it is important to conduct temperature checks on a large number of people. Current thermal imagers or non-contact forehead infrared thermometers are two commonly used methods. These devices also rely on semiconductors such as sensors and analog chips to convert data such as temperature into digital readings.

3. AI and supercomputing accelerate vaccine development

The pandemic has rapidly generated a large amount of data that could be used to develop an open COVID-19 vaccine, but the sheer volume of data makes it difficult for researchers to quickly find the data they need. Cutting-edge semiconductor technology is making it easier for vaccine researchers to gather data.

Engineers at a semiconductor company in the United States have developed a platform called Deep Search that uses natural language processing to tag research papers so that researchers can find the papers they need more quickly through search engines.

At the beginning of the epidemic, industry, academia, international government agencies, etc. formed the COVID-19 High Performance Computing Consortium. The members of the consortium have supercomputing platforms and AI deployment capabilities. In the early stages of the epidemic, they helped universities, companies and hospitals to shorten the time for vaccine modeling and simulation of potential treatments from weeks to minutes, greatly saving vaccine development time.

▲COVID-19 High Performance Computing Alliance official website

4. Remote office and online course infrastructure

During the pandemic, semiconductors are the infrastructure for companies' remote work and school online class communications. As the pandemic develops, the trend of remote work and education continues, and the network usage rate of top companies has increased by 30%-50%. Even logistics and delivery rely heavily on chip-based communication services.

During lockdowns, the delivery of store items, groceries, and restaurant food was common. Grocery delivery companies used smartphone apps to connect shoppers and customers, and these semiconductor-based services made both pickup and delivery easy and safe.

5. New sensors help vulnerable groups fight the epidemic

Semiconductor technology has strengthened the protection of vulnerable groups such as the elderly, diabetics and the hearing-impaired. After the outbreak, real-time monitoring systems can help doctors provide remote medical assistance and guidance to these groups. Thanks to the emergence of new semiconductor sensors, wearable devices can provide monitoring services for health indicators such as blood sugar.

In addition, semiconductors have improved the situation of people with hearing impairments. When the epidemic hit, many people infected with the new coronavirus suffered from hearing loss, so several hearing care companies launched medical platforms that allow patients to receive remote care. In some areas, the number of users of telemedicine platforms has increased by more than 700%.

06 .

Conclusion: Chip shortage prompts the US government to increase investment in chip manufacturing

Although the U.S. semiconductor industry's share of chip manufacturing has declined, international giants such as Qualcomm, Apple, Intel, and IBM not only hold a large market share, but also lead in patents and R&D investment.

At a time when the world is facing a chip shortage, Chinese semiconductor players have certainly gained the opportunity to expand their market share and achieve domestic substitution, but it has also made the US government and industry realize the importance of the manufacturing link and began to promote investment and legislation in the field of chip manufacturing. In the future, the game and cooperation between China and the United States in the semiconductor field will become an important factor affecting the development direction of the industry.

Source: SIA

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