How powerful are American chips?

Latest update time：2024-08-15

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SIA released the latest version of SIA FACT BOOK earlier. According to them, the data contained in the 2024 SIA FACT BOOK helps demonstrate the strength and prospects of the U.S. semiconductor industry and why it is critical to develop measures to promote growth and promote innovation.

The U.S. semiconductor industry is a key driver of America's economic strength, national security, global competitiveness and technological leadership, SIA said. Semiconductors enable the systems and products we use to work, communicate, travel, entertain ourselves, harness energy, treat diseases and make new scientific discoveries. Semiconductors were invented in the United States, and U.S. companies still lead the global market, accounting for nearly half of global chip sales.

To help foster innovation and ensure the United States continues to maintain its technological leadership, SIA states that policymakers should do the following:

1. Invest in U.S. semiconductor leadership:

Implement the policies and programs in the CHIPS Act efficiently, promptly, and transparently. Develop regulations for the advanced manufacturing investment credit in the CHIPS Act to cover the full scope of investments in the semiconductor ecosystem. Adopt policies that promote innovation and American competitiveness, such as establishing a semiconductor design investment tax credit and strengthening the R&D tax credit. Maintain America’s technological leadership by investing in research and science programs authorized by the CHIPS Act;

2. Strengthening America’s technical workforce:

Implement a national strategy—backed by appropriate investments and in consultation with education leaders and the private sector—to improve our education system, increase the number of Americans graduating in STEM fields, support those pursuing careers in microelectronics, and ensure training and education opportunities to fill open jobs.

Reform the U.S. high-skilled immigration system to enable access to the world’s best and brightest talent, including foreign students who have earned graduate degrees in STEM fields from U.S. universities. Ensure funding to strengthen the semiconductor workforce at all levels and ensure a strong talent pool at every education level and skill demand.

3. Promote free trade and protect intellectual property rights: Ratify and modernize free trade agreements, eliminate market barriers, protect intellectual property rights, and achieve fair competition. Expand the Information Technology Agreement, one of the most successful free trade agreements of the World Trade Organization.

4. Work closely with like-minded economies: Coordinate policies and regulations with like-minded allies to strengthen national security and promote growth, innovation, and supply chain resilience.

Industry Overview

Global semiconductor sales will grow from $139.0 billion in 2001 to $526.9 billion in 2023, a CAGR of 6.0%. According to the World Semiconductor Trade Statistics (WSTS) Fall 2023 Semiconductor Industry Forecast, global semiconductor industry sales are expected to increase to $588.4 billion in 2024 and $654.7 billion in 2025.

The U.S. semiconductor industry experienced a significant decline in global market share during the 1980s. In the early 1980s, U.S. manufacturers accounted for more than 50% of global semiconductor sales. Due to intense competition from Japanese companies, the effects of illegal “dumping,” and a severe industry recession from 1985 to 1986, the U.S. industry lost a total of 19 percentage points of global market share and ceded global industry market share leadership to the Japanese semiconductor industry.

The U.S. industry rebounded over the next 10 years, and by 1997 it had regained leadership with a 50% global market share, a position the industry still holds today. U.S. semiconductor companies have maintained their competitive advantage in microprocessors and other cutting-edge devices, and continue to lead in a range of other product areas. In addition, U.S. semiconductor companies maintain their leadership in research and development, design, and process technology. Today, U.S. companies have the largest market share, at 50.2%. The industry in other countries and regions holds between 7% and 15% of the global market share.

Sales of semiconductor companies headquartered in the United States grow from $71.1 billion in 2001 to $264.6 billion in 2023, a CAGR of 6.0%. Sales growth of companies headquartered in the United States exhibits the same cyclical fluctuations as the industry as a whole.

In 2023, semiconductor companies headquartered in the United States accounted for 50.2% of the total semiconductor market, the largest share of any country's semiconductor industry. In the semiconductor markets of all major countries and regions, companies headquartered in the United States also occupied the leading position in sales market share.

In 2023, U.S. semiconductor exports reached $52.7 billion, ranking sixth among U.S. exports, behind refined oil, crude oil, aviation, natural gas, and automobiles. Semiconductors account for the largest share of all U.S. electronic exports.

Global Market

The vast majority of semiconductor demand is driven by products that consumers ultimately purchase, such as laptops, smartphones, cars, etc. Consumer demand is increasingly driven by emerging markets, including Asia, Latin America, Eastern Europe, and Africa.

Semiconductor technology is also developing rapidly as the industry develops more advanced products and process technologies for terminal industry applications. In recent years, the largest market segments of the global semiconductor industry are logic, memory, analog, and MPU. By 2023, these products will account for 75% of semiconductor industry sales.

In 2001, the Asia-Pacific market surpassed all other regional markets in sales as electronic equipment production moved to the region. Since then, its size has doubled, from $39.8 billion to $290 billion in 2023. By far the largest country market in the Asia-Pacific region is China, which accounts for 53% of the Asia-Pacific market and 29% of the global market. This data reflects only sales of semiconductors to electronic equipment manufacturers - the final electronic products containing semiconductors are then shipped around the world for consumption.

Capital and R&D investment

Total R&D and capital expenditures by U.S. semiconductor companies (including fabless companies) are expected to be $107.5 billion in 2023. This represents a CAGR of approximately 5.9% from 2001 to 2023. As a share of sales, investment levels are generally not affected by market cyclical fluctuations.

To remain competitive in the semiconductor industry, companies must continue to invest a significant portion of their revenues into R&D and new plants and equipment. The pace of technological change in the industry requires companies to develop more complex designs and process technologies and to introduce production machines capable of manufacturing components of ever-smaller size. The ability to design and produce the most advanced semiconductor components can only be maintained through a continued commitment to keep up with the industry-wide investment rate, which is approximately 30% of sales. The need to maintain technological leadership has led to some extreme fluctuations, such as in 2001 and 2002, when sales fell sharply while R&D and capital equipment spending did not fall at the same rate.

Total investment per employee (measured in R&D and new plant and equipment) increases by about 3.3% per year from 2001 to 2023. These expenditures exceeded $100,000 in 2001, but fell to about $91,000 in 2003 after the 2001 recession. In 2006, investment per employee increased to over $100,000. The 2008-2009 recession caused investment per employee to drop in 2009 and 2010, but it rebounded in 2012 and grew to $223,500 in 2023.

The compound annual growth rate of R&D spending in the U.S. semiconductor industry is about 6.7% from 2001 to 2023. R&D spending by U.S. semiconductor companies tends to be consistently high regardless of the annual sales cycle, reflecting the importance of R&D investment to semiconductor production. In 2023, the total investment of the U.S. semiconductor industry in R&D is $59.3 billion.

R&D spending as a percentage of sales has exceeded 15% annually for the past 20 years. This rate is unprecedented among the major manufacturing sectors of the U.S. economy. R&D spending is critical to the competitive position of semiconductor companies. The rapid pace of technological change requires continuous advancements in process technology and equipment capabilities. The increase in R&D spending in 2001 and 2002 was due to the industry's commitment to the future of technology despite the economic downturn. The decreases in 2003-2004 and 2020-2021 were not due to cuts in R&D budgets, but rather to stronger-than-expected industry growth and faster-than-expected revenue growth.

The U.S. semiconductor industry ranks among the top high-tech industrial sectors in terms of R&D spending as a percentage of sales. According to the 2023 EU Industrial R&D Investment Scoreboard, the U.S. semiconductor industry is second only to the U.S. pharmaceutical and biotechnology industries in terms of R&D spending as a percentage of sales.

The U.S. semiconductor industry's R&D spending as a percentage of sales is unmatched by the semiconductor industry in any other country or region.

In 2023, total U.S. semiconductor industry capital expenditures are $48.2 billion. Capital expenditures declined from 2001-2003 due to the construction of major new facilities during 1999-2001 and the increased use of foundries. A rebound occurred in 2004, and in 2005 the industry was in equilibrium in terms of capital expenditures as a percentage of sales. In 2011, capital expenditures rebounded to $23.7 billion after a sharp decline in 2009 due to the global recession. Capital expenditures declined slightly from $50.7 billion in 2022 to $48.2 billion in 2023. However, capital expenditures have increased at an annual rate of 5.1% since 2001.

In all but two of the past 20 years, annual capital expenditures as a percentage of sales have exceeded 10%. This ratio is very high among the major manufacturing sectors of the U.S. economy. For semiconductor manufacturers, capital expenditures are critical to their competitive position. The increasing pace of innovation in the industry requires large capital expenditures to continue to produce more advanced equipment.

The U.S. semiconductor industry creates 250,000 direct jobs in the United States and more than 1 million indirect jobs.

Labor productivity in the U.S. semiconductor industry has more than doubled since 2001. These productivity gains have been made possible by maintaining high levels of capital investment and R&D spending rates. In 2023, the U.S. semiconductor industry's sales revenue per worker ratio exceeded $632,000.

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