Opportunities in the Semiconductor Market

From electrical mobility to renewable energy generation up to IT infrastructure: the technologies of the future all have one enormous challenge in common: slim down the cost structure, decrease the space occupied as well as the weight of the components without compromising, in terms of quality and efficiency, the outcome of the final product. In recent years, a specific range of materials seems to have started a meaningful process of development from this point of view: semiconductors

What are semiconductors?

Semiconductors are materials which possess an electrical conductivity value between conductors and insulators. Its resistivity declines as the temperature increases, which is the opposite of metals. Common examples of semiconductors include silicon, germanium and elements near the “metalloid staircase” on the periodic table.

The importance of semiconductors

Semiconductors play an important role in the manufacturing of electronic devices such as TVs, computers, high-quality medical equipment as well as the construction of microprocessors and microcontrollers in the industrial sector.

Advancements in Artificial Intelligence (AI), IoT, automotive, consumer electronics and wirelessly connected devices have created an unprecedented demand for semiconductors globally. Especially so in the automotive industry, with the global goal of reducing carbon dioxide emissions and progress towards a green economy, the electric vehicle industry is going to acquire a strategic importance in the immediate future and semiconductors with it.

Therefore, it is beyond doubt that semiconductors have revolutionised the technology industry.

Global semiconductor industry

According to Fortune Business Insights (FTB), the semiconductor market has grown exponentially over the past few years, to over $425.96 billion as of 2020. This figure is projected to double in value by the end of 2028, reaching $803.15 billion, at a CAGR of 8.6% during the forecast period. This growth can be attributed to the large demand for semiconductors from emerging economies, for the manufacture of regular and advanced electronic devices due to the rapidly growing population along with increasing urbanization.

Chinese semiconductor industry

China is the world’s largest manufacturing company and produces 36% of the world’s total electronic devices. However, China’s semiconductor industry is relatively small, accounting for only 7.6% of the global semiconductor sales. Chinese companies mostly produce low to mid-end chips, resulting in the absence and demand for high-end chip manufacturers in China. Many manufacturers import semiconductor chips and assemble them into various products to be resold in the Chinese market.

Despite China’s small presence in the global semiconductor market, the Chinese semiconductor industry is growing rapidly, especially in mid-tier products such as CPUs, network processors and sensors. It is reported that China accounts for 16% of the global fabless semiconductor market in 2020.

Industry Opportunities

With China’s goal to achieve 70% self-sufficiency in semiconductors by 2025, the government support fund has established a $21 billion state-backed financing. Furthermore, the government has invested $39 billion in the industry, at which 69.7% is invested in front-end manufacturing.

There exists high demand for high-end semiconductor chips as seeing that China aims to increase their share in the worldwide semiconductor industry, the Chinese market presents a good opportunity for foreign investment.

Conclusion

To sum, the applications of semiconductors are innumerable. They represent what can only be described as the “future”, not only of our lives but the future of economic predominance. If your company is specialized in the fabrication of one or more specific semiconductors and would be interested in penetrating the Chinese semiconductor market, you may contact us for a free evaluation of your company’s technological fit and potential at info@summeratlantic.com. Summer Atlantic Capital is committed to providing tailored solutions which tackle challenges faced by foreign companies looking to enter the Chinese market.

Thank you for reading! We look forward to working with you!