2023 Seeds of investment: Semiconductors will have special demand for “economic security” after 2024 after inventory adjustment Akihiro Tsumura | Weekly Economist Online

Major countries will turn to domestic production of semiconductors. The scale of investment will exceed 20 trillion yen in the next 10 years. It is also a huge business opportunity for Japan, which is strong in manufacturing equipment and materials.

>> Click here for the special feature “2023 Investment Seeds”

The global semiconductor market in 2023 is likely to contract for the first time in four years due to the macroeconomic slowdown and inventory adjustments. The World Semiconductor Market Statistics (WSTS), which is organized by semiconductor manufacturers, is forecast to be -4.1%, and the research firm Gartner is forecasting -3.6%. As a result, the demand for semiconductor front-end processing equipment (WFE) in 2023 is expected to decline by at least 15-20% compared to the previous year, as investment in the memory field, which accounts for 40% of the semiconductor market, is expected to decline. It is said that there is even a view that it will decrease by more than 30%.

However, if we turn our eyes to 2024 and beyond, the semiconductor market will return to a growth trajectory, and there is a possibility that the WFE market will expand again due to unprecedented investment in increased production. The driving force behind this is the “policy to expand production share to stabilize domestic and regional procurement of semiconductors” promoted by each country in the name of economic security.

Eliminate uneven distribution in Asia

In order to eliminate the uneven distribution of advanced semiconductor production in Asia, the United States enacted the CHIPS Act to improve its production share, which had fallen to 12%, with a total investment of approximately 50 billion dollars (approximately 6.75 trillion yen). to return to domestic production. In addition, the EU (European Union) also enacted the European Semiconductor Law, prepared a total of 43 billion euros (about 6.2 trillion yen) in public and private subsidies, and increased the production share from the current 10% to 20% by 2030. planned to double to

In addition, India, which does not yet produce semiconductors, has set a goal of domestic production. In December 2009, a comprehensive policy program was announced to attract and develop the electronics industry (semiconductors and displays). With a total budget of 760 billion rupees (approximately 1.1 trillion yen), it is the largest industrial promotion package ever. He formed the ‘India Semiconductor Mission’ with experts to create a sustainable ecosystem and formulated a policy to support more than 20 companies with annual sales exceeding 15 billion rupees in five years.

click here for enlargement

Table 1 summarizes plans for new construction and expansion of semiconductor plants in Europe, the United States, and India in this trend.

Many, if not all, of these are based on the assumption that subsidies will be used, and there are quite a few projects aimed at securing production capacity with an eye on the next 10 years.

While planning to increase production, the United States tightened semiconductor regulations on China in October, prohibiting the export of equipment and technology essential for mass production of state-of-the-art logic (logical operation functions) and memory (memory devices). With regard to semiconductors, which lead to the enhancement of the competitiveness of all industries, in parallel with delaying China’s evolution even a little, it is also possible to see through the US intention to accelerate the development and mass production of cutting-edge technology through a series of policies.

Intel benefits from subsidies

Intel is expected to benefit the most from the subsidies. The company is developing a new $30 billion (approximately ¥4 trillion) plant in Arizona and a $20 billion (approximately ¥2.6 trillion) plant in Ohio. The company also plans to build up to eight plants in Ohio, which could potentially reach $100 billion over the next 10 years.

In Europe, we will invest 80 billion euros (about 11.5 trillion yen) over the next 10 years. In addition to the construction of a new factory in Germany, we will make additional investments in a factory in Ireland.

1986 characters remaining (3386 full text)

weekly economist

Weekly Economist Online is a service for paid members on a monthly basis.
If you become a paid member, you can read more.

・ Unlimited reading of paid articles for members only
・Search articles published in magazines since 1989
・You can read the back numbers of the past 8 issues on the digital page

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.