STATE OF THE U.S.
SEMICONDUCTOR
INDUSTRY2 | SEMICONDUCTOR INDUSTRY ASSOCIATIONTABLE OF CONTENTS

2INTRODUCTION

3CHIPS IMPLEMENTATION

9WORKFORCE AND MANUFACTURING INDUSTRIAL BASE

11

GOVERNMENTS RACE TO DEVELOP CHIP INCENTIVES

15

GEOPOLITICAL TENSIONS & THE SEMICONDUCTOR INDUSTRY

16

THE GLOBAL SEMICONDUCTOR INDUSTRY

18	SEMICONDUCTOR DEMAND DRIVERS
20

U.S. INDUSTRY MARKET SHARE

21

U.S. TECHNOLOGY COMPETITIVENESS

24

U.S. SEMICONDUCTOR INNOVATION POLICY LANDSCAPE

2023 STATE OF THE U.S. SEMICONDUCTOR INDUSTRY |1

INTRODUCTIONSEMICONDUCTORS FORM THE FOUNDATION OF THE DIGITALECONOMY, ENABLING INNOVATIONS THAT MAKE THE WORLD
SMARTER, GREENER, MORE EFFICIENT, AND BETTER CONNECTED.
WITH UP TO TENS OF BILLIONS OF TRANSISTORS ON A SINGLE CHIP,
PRODUCING THESE COMPLEX DEVICES IS A MARVEL OF MODERNTECHNOLOGY, MADE POSSIBLE BY THE SYNCHRONOUS SYNERGY OF
HIGHLY ADVANCED RESEARCH, DESIGN, AND MANUFACTURING.

In 2023, the semiconductor industry’s importanceto the world continues to grow, as chips become aneven greater presence in the essential technologies
of today—and give rise to the transformativetechnologies of tomorrow. In all, more than 1 trillion
semiconductors were sold globally last year, a total sohigh that if you stacked them one on top of another,
they would reach higher into the sky than the
maximum cruising altitude for commercial aircraft.
As chip demand rises, countries around the world
have been ramping up government investments
to lure semiconductor production and innovation
to their shores. In 2022, the U.S. government
stepped up to meet this challenge, enacting
the landmark CHIPS and Science Act to provide
needed semiconductor research investments andmanufacturing incentives. and reinforce America’s
economy, national security, and supply chains.
Since the CHIPS Act was introduced, companies fromaround the world have responded enthusiastically,
announcing dozens of new semiconductor ecosystemprojects in the U.S. totaling well over $200 billion in
private investments. These projects will create tensof thousands of direct jobs in the semiconductor
ecosystem and will support hundreds of thousandsof additional jobs throughout the U.S. economy.
Implementation of the CHIPS Act has begun inearnest in 2023, and SIA seeks to play a constructiverole to ensure the new law returns maximum benefits
for America’s economy, national security, and supply
chain resilience.

2 | SEMICONDUCTOR INDUSTRY ASSOCIATION

Although the future holds tremendous promise forthe semiconductor industry, it also presents a rangeof challenges. U.S.-China tensions continue to impact
the global supply chain, for example, spurring new
government controls on sales of chips to China, theworld’s largest semiconductor market. And othersignificant policy challenges remain, including theneed to enact policies to reinforce U.S. leadershipin semiconductor design, strengthen the U.S.
semiconductor workforce by reforming America’s
high-skilled immigration and STEM education
systems, and promote free trade and access to
global markets. In addition, while the global chipshortage has eased, macroeconomic headwinds
and market cyclicality have caused a short-term
downturn in sales, which is projected to linger
throughout the year.
Despite these challenges, the long-term outlook forthis foundational industry remains strong. That’s
because moving forward, the world will need more
and better semiconductors to power everything fromappliances and airliners to autonomous cars andartificial intelligence. For society to advance, so too
must chip technology.
In 2023, with effective government policies andcontinued hard work and ingenuity in our industry,
the semiconductor sector will continue to grow,innovate, and build a brighter future for the world.

CHIPS
IMPLEMENTATION
Enactment of the CHIPS and Science Act in August 2022 was an historic
step toward reinvigorating semiconductor production and innovation in the
U.S. This year, implementation of the new law has begun in earnest, andthe U.S. Department of Commerce has made great strides in this process.
The CHIPS Program Office (CPO) released its first Notice of Funding
Opportunity (NOFO) in March, providing semiconductor companies with theinformation needed to submit applications to receive CHIPS incentives toconstruct or expand commercial fabrication facilities, including for leadingedge semiconductors, current-generation and mature nodes, and back-end
manufacturing processes. The CPO released a second funding opportunity
for projects over $300 million involving the manufacturing of semiconductor
manufacturing equipment and materials in June. A funding opportunity forsupply chain projects below $300 million is expected in the fall. A final NOFO
for projects involving R&D facilities will be released in the fall.

2023 STATE OF THE U.S. SEMICONDUCTOR INDUSTRY |3

CHIPS INVESTMENTS
The Commerce Department announced that as of May 2023, it had received over 400 statements of interest(SOIs) for CHIPS projects, reflecting the expansive interest in the CHIPS incentives program across the whole
supply chain. Since the introduction of the CHIPS Act in 2020, dozens of projects across 20 states have beenannounced, resulting in well over $200 billion of investment. These projects will create tens of thousandsof new, high-quality jobs in the U.S. semiconductor ecosystem alone, as well as hundreds of thousands ofsupported jobs throughout the broader U.S. economy. As the application process proceeds, the number ofannounced projects is expected to grow, supporting the semiconductor ecosystem nationwide.

U.S. SEMICONDUCTOR ECOSYSTEM

Semiconductors
Equipment
Materials
University R&D Partner

4 | SEMICONDUCTOR INDUSTRY ASSOCIATIONCHIPS IMPLEMENTATIONTHE CHIPS ACT IN ACTION
The Commerce Department has started issuing the key guidance documents that will shape the program.
Commerce issued a proposed rule for implementation of the CHIPS “guardrails,” which restrict certain
expansions of semiconductor manufacturing in countries of concern and engagement in certain joint
research and technology licensing efforts with entities of concern. The Commerce Department also
released an environmental questionnaire, where applicants will provide the CPO with information regarding
the environmental impacts of the proposed project, which will determine the level of necessary federal
environmental review. Applicants will also be expected to provide Commerce with financial models that
demonstrate the commercial viability of the project throughout the life of the facility.
To ensure the goals of the CHIPS Act are realized, applicants are crafting comprehensive workforce
development plans to ensure these new and expanded facilities have the talent needed to succeed. Stateand local partners, including universities and community colleges, are engaging with applicants to support
projects in their respective regions.
SIA supports continued efficient, effective, and transparent implementation of the CHIPS incentives
program, and looks forward to further collaboration with the Commerce Department to ensure the successof the CHIPS Act.

THE CHIPS ACT IN ACTION
Semiconductor supply chain manufacturing investments announced from May 2020 to June 2023

Semiconductors
Equipment
Materials

2023 STATE OF THE U.S. SEMICONDUCTOR INDUSTRY |5

CHIPS IMPLEMENTATIONINVESTMENT TAX CREDIT
The CHIPS Act established a 25% advanced
manufacturing investment tax credit, to be
implemented by the U.S. Department of Treasury
and set forth in section 48D of the Internal Revenue
Code. Coupled with the CHIPS grants, theseincentives will lower the cost gap between investingin the U.S. and investing abroad, while generating
greater benefits to the U.S. economy, national
security, supply chain, and technology leadership.

6 | SEMICONDUCTOR INDUSTRY ASSOCIATION

To implement the advanced manufacturing
investment tax credit, the Internal Revenue Service(IRS) and the Treasury Department issued aproposed rulemaking setting forth the parameters
for claiming the credit, including provisions torecapture the credit if companies make significant
investments or expansions of manufacturing
facilities in China. The regulations are expected tobe finalized later this year.

CHIPS IMPLEMENTATIONSTRENGTHENING THE U.S.
SEMICONDUCTOR WORKFORCEThe U.S. economy faces a significant shortageof skilled workers, which poses challenges to
U.S. economic growth, technology leadership,
and to national security. This shortage impacts
the semiconductor industry and all technology
reliant industries, including key technologies ofthe future – clean energy, medical technology,
artificial intelligence, cybersecurity, next-generation
communications, aerospace, automotive, andadvanced manufacturing. Addressing this skilledworkforce challenge must become a national
priority. Semiconductor Industry Association (SIA)
commissioned a report from Oxford Economics, aleading, independent economic advisory firm, toinvestigate the skilled workforce challenges facing
the U.S. semiconductor industry in the context of
economy-wide challenges.
The report projects the U.S. chip industry’s
workforce will grow by nearly 115,000 jobs by2030, from approximately 345,000 jobs today
to approximately 460,000 jobs by the end of thedecade, representing 33% growth. The report
estimates that roughly 67,000 risk going unfilled
at current degree completion rates, or 58% ofprojected new jobs. These 67,000 unfilled jobs also
represent approximately 80% of the project newjobs in technical fields (technicians, engineering,and computer science). Of this total workforce
shortage, we estimate gaps of 26,400 technicians,
27,300 engineers, and 13,400 computer scientists by
2030. Among engineers, 9,900 are at the bachelor’s
level (35%), 12,300 are at the master’s level (47%),
and 5,100 are at the PhD level (18%).
Addressing the shortage of trained and educatedworkers – both throughout the broader economy
and in the semiconductor industry in particular– should be a national priority. At stake is ourcontinued economic and technology leadership, ourglobal competitiveness, and our national security.
The report recommends:
1.

Strengthening support for regional partnerships
and programs aimed at growing the pipeline
for skilled technicians for semiconductor
manufacturing and other advanced
manufacturing sectors.

2. Growing the domestic STEM pipeline forengineers and computer scientists vital to thesemiconductor industry and other sectors thatare critical to the future economy.
3. Retaining and attracting more international
engineering students within the U.S. economy.

2023 STATE OF THE U.S. SEMICONDUCTOR INDUSTRY |7

CHIPS IMPLEMENTATION

THE NATIONAL SEMICONDUCTORTECHNOLOGY CENTER
A core component of the R&D investments madeby the CHIPS and Science Act is the National
Semiconductor Technology Center (NSTC). The
NSTC was authorized in the 2021 National Defense
Authorization Act (NDAA) as a public-private
consortium established jointly by the Secretaries of
Defense and Commerce with the goal of conducting
advanced semiconductor manufacturing, design,and packaging research and prototyping. Additional
clarification was granted regarding the structure
and technical goals of the NSTC in April 2023 in awhite paper released by the National Institute ofStandards and Technology.
Although the full scope and structure of the NSTC
will be determined later in 2023, the Commerce

white paper sets forth the overall direction of
the NSTC. The NSTC consortium will be run by anew, independent, non-profit entity which will begoverned by a Board of Trustees who will selectand empower a CEO. The Board of Trustees will be
determined by an independent selection committee.
The NSTC will also convene a technical advisoryboard from industry, academia, and government todetermine the technology agenda. There will be auniquely identified headquarters which will serve asa prominent gathering place for the overall effort
and will serve functions of executive leadership,
government relations, and financial and legal
operations alongside a geographically distributed
network of research and engineering capabilities atconnected technical centers.

OPERATING STRUCTURE

Member Advisors
GeneralTechnical

NSTC Consortium
NSTC Nonprofit Operator Boardof Trustees & CEO
Headquarters
Administration
Research
Workforce Programs

Workforce

Venture Fund
Member Services
USG Relations
Convenings

CHIPS R&D Office
Funding, oversight,
supportTechnical Centers
Examples: Prototyping
facility, affiliated university
labs, specialized equipment
access, etc.

Affiliatedfacility

These technical centers will collectively provide
access to a baseline of prototyping and scaling
capabilities. Key areas of focus will include:
leading edge, trailing edge, and legacy CMOS
manufacturing; high quality processing ofnovel materials; power electronics materials
and manufacturing; RF, analog, and mixed
signal manufacturing; photonics materials and

8 | SEMICONDUCTOR INDUSTRY ASSOCIATION

Affiliatedfacility

Affiliatedfacility

Advancedpackaging facility(in coordination
with NAPMP)

Source: CHIPS Research andDevelopment Office, A Vision
and Strategy for the National
Semiconductor Technology Center.
April 25, 2023

manufacturing; micro-electromechanical systems;
bioelectronics; and design tool development. The
NSTC will also seek to offer a cloud-based design
enablement gateway to serve as a focal point forfabless R&D needs. Further decisions regarding thestructure, geographic distribution, and technicalfocus will be determined throughout 2023 and 2024
as NSTC leadership is identified and empowered.

WORKFORCE AND
MANUFACTURING
INDUSTRIAL BASE
Having a competitive domestic workforce and manufacturing capabilities are criticalto America’s lead in semiconductors. In addition, a strong domestic semiconductor
industry is essential to the U.S. economy. The semiconductor industry has aconsiderable economic footprint in the U.S. Roughly 345,000 people work in theindustry, designing, manufacturing, testing, and conducting R&D on semiconductors
throughout 49 states. Over 300 downstream economic sectors accounting for over 26
million U.S. workers are consumers of and are therefore enabled by semiconductors
for their sectors.

The positive impact of the semiconductor industry on the American workforce.
The U.S. semiconductor industry is essential to
the U.S. economy, providing inputs to nearly every
industry in the U.S. stimulating jobs, and paying
income to workers. In total, the U.S. semiconductor
industry supported over 2.3 million U.S. jobs in 2022.
The industry directly employs more than 345,000
domestic workers in R&D, design, and manufacturing

activities, among others. In addition, for each U.S.
worker directly employed by the semiconductor
industry, an additional 5.7 jobs are supported in thewider U.S. economy, either in the supply chains of
the semiconductor industry or through the wage
spending of those employed by the firms themselvesof their supply chains.

FIG. 8: U.S. semiconductor industry employment by segment, 20232

Machinery mfg.
30,000Device mfg.
206,000
0

50,000100,000

EDA
9,000
Design100,000

150,000

200,000

250,000

300,000

345,000
total jobs
350,000

Employment
Source:
CES,QCEW,
QCEW,
OxfordEconomics
Source: CES,
OxfordEconomics

2023 STATE OF THE U.S. SEMICONDUCTOR INDUSTRY |9

The U.S. semiconductor industry accounts for over a quarter of a million
direct U.S. jobs and nearly 2 million additional indirect and induced U.S. jobs.

345,000
direct jobs in the U.S.
semiconductor industry

ONE
U.S. semiconductor
job supports

5.7
jobs in other parts in
the U.S. economy...
10 | SEMICONDUCTOR INDUSTRY ASSOCIATION...that’s nearly

2,000,000
ADDITIONAL
American jobs

GOVERNMENTS RACE TO
DEVELOP CHIP INCENTIVES
Supply chain resilience remains the top priority for the global semiconductor industry.
Global governments continue to take proactive steps to build domestic chip ecosystems
and increase market competitiveness. Governments in Asia, Europe, and the Americas
are continuing to advance their own versions of the CHIPS and Science Act, creating
ambitious packages of subsidies and tax incentives for semiconductor R&D andmanufacturing. Coordinating with government efforts, companies have responded withlarge-scale investments in research and workforce development.

The European Union: In April 2023, the European
Commission passed the “EU Chips Act,” a plan to
double the continent’s share in global chip production
by 2030 through mobilizing $47 billion in public andprivate investment . The plan was expanded fromits original target of advanced chip manufacturing
technology to include the entire value chain,including older chips and R&D facilities.
China: Semiconductors play a critical role in the
Chinese government’s agenda to develop its
domestic integrated circuit (IC) industry. As partof its efforts, the Chinese government placed newincome tax exemptions for advanced technology
process nodes, established import duty exemptions
for IC manufacturers, and resumed operations of the“Big Fund,” China’s $50 billion-plus state investment
fund for chips. China also established a new National
Science & Technology Commission led by the Party tocoordinate its efforts in the industry.
Japan: In December 2022, the Japanese government
announced $500 million in initial funding for Rapidus,
followed by an additional r $2.3 billion allocationin April 2023 Rapidus is a state-organized joint

chip venture with eight domestic partners thataims to achieve commercial production of 2nm
chips by 2027. In February 2023, the Japanese
government approved a $2.8 billion supplement tothe annual budget to subsidize private investmentsin chipmaking equipment, raw materials, power chips,
and microcontrollers.
South Korea: In March 2023, the Korean government
passed the “K-Chips Act,” providing 15% tax credits
for large corporations and 25% for small and medium
enterprises in key national strategic industries,
including semiconductors. In April 2023, the Ministryof Trade, Industry, and Enterprise announcedplans for the Industrial Transformation Super
Project, which will allocate 70% of its R&D budget –approximately $4.7 billion – to core industrial sectors
like semiconductors.
Taiwan: In January 2023, the Taiwanese government
passed amendments to the Statute for Industrial
Innovation, dubbed the “Taiwan Chips Act.” Thelegislation will offer 25% tax reductions for R&D and
5% for new equipment purchases.

2023 STATE OF THE U.S. SEMICONDUCTOR INDUSTRY |11

GOVERNMENTS RACE TO
DEVELOP CHIP INCENTIVES

India: In September 2022, the Indian government
revamped their $10 billion Production Linked
Incentive (PLI) scheme to provide up to 50% cofunding for project costs of building semiconductor
fabs and display fabs.
Southeast Asia: The governments of Malaysia, thePhilippines, Singapore, Vietnam, and Thailand haveintroduced incentive packages to attract foreign
semiconductor company investments.
Over the past year, SIA staff have made several
international trips to learn more about these
programs and discuss deepening investment ties.
In August 2022, SIA led a delegation of member
company executives to participate in a conferencein Mexico City to promote the growth of bilateralsupply chains. In January 2023, SIA traveled
to Southeast Asia, visiting Singapore, Vietnam,

12 | SEMICONDUCTOR INDUSTRY ASSOCIATION

Thailand, the Philippines, and Malysia. SIA has
visited India several times over the past year toencourage India’s expanding role in the global
semiconductor value chain and support the U.S.India initiative on Critical and Emerging Technology(iCET). SIA team members have also madeproductive trips to Europe and Taiwan.
The scale of global incentives packages represents
the strategic significance of semiconductors innational and economic security narratives. Healthy
competition can innovate the industry and diversify
the supply chain to become more resilient toexterior shocks and reduce market vulnerabilities.
Governments around the world, however, should
be exchanging information on their programs
to strengthen their chip industries to promote
efficiencies and avoid redundancies.

GOVERNMENTS RACE TO
DEVELOP CHIP INCENTIVESNORTH AMERICANSEMICONDUCTOR CORRIDORThe North American Semiconductor Corridor(NASC) is part of a major effort to rebalance andrebuild semiconductor supply chains in the western
hemisphere. Core to this is the $52 billion CHIPS Act,
which has already spurred more than $200 billion
in new investment commitments. The United States,
however, cannot do this on our own, and we need towork closely with partners and allies to strengthen
global semiconductor supply-chain resiliency. The
NASC was launched at the last North America
Leaders’ Summit on January 10, 2023. One of the
key drivers behind the launch of North American
Semiconductor Corridor was the COVID-19 induced
global semiconductor shortage, while now easing,hit a number of industries hard. By building up thesemiconductor industry within North America, theregion can improve the resilience of its technology
supply chains by having a greater share of the valuechain located within the region.
Each country brings advantages and strengths to thepartnership. The hope of the NASC is to coordinate
efforts across the region, especially in the area of
workforce training and development, establishinglinkages for research centers, coordinating
government incentives for the semiconductor
industry, and promoting environmental protectionsin the area of critical minerals necessary for the
manufacture of semiconductors.

2023 STATE OF THE U.S. SEMICONDUCTOR INDUSTRY |13

GOVERNMENTS RACE TO
DEVELOP CHIP INCENTIVESGLOBAL SEMICONDUCTOR MARKETS AND
INTERNATIONAL PARTNERSHIPSThe Importance of Global Markets andInternational Cooperation
The semiconductor industry is one of the mostglobally integrated industries, spanning dozens ofnations with thousands of suppliers. SIA and its
members are committed to rebuilding American
supply chains, further promoting more access to
global markets, and facilitating increased global tradethrough deeper international collaboration with all
key partners and nations. SIA is currently leading
efforts to promote global industry cooperationand expand global markets through the World
Semiconductor Council (WSC) and the World Trade
Organization (WTO).
World Semiconductor Council (WSC)
Established in 1996, the World Semiconductor
Council (WSC) is a forum that comprises thesemiconductor industries of China, Chinese Taipei,
the EU, Japan, Korea, and the U.S., to discussshared industry and government initiatives andpolicies to ensure our industry remains healthy.
Few industries have such a body, and from day
one, the WSC has been a shining example of ourindustry’s commitment to international cooperationand policies that foster fairness and openness
in the semiconductor industry. For example, the
WSC has successfully promoted a tariff-free global
environment for the trade of semiconductor
products, including adding Multi-Component and

14 | SEMICONDUCTOR INDUSTRY ASSOCIATION

Multi-Chip and Multi-Component Packages (MCOsand MCPs) to the WTO’s Information Technology
Agreement. Most recently, the cooperation among
WSC members was critical to keeping semiconductor
operations up and running during COVID forced
closures. This type of strong relationships and trust
built through the WSC is essential in ensuring ourglobal industry continue to prosper.
Information Technology Agreement
SIA, together with more than 40 other global
associations from around the world, continues
to call for the WTO to expand the Information
Technology Agreement (ITA) again. The ITA was
originally launched by the WTO in 1997 to eliminate
tariffs on a broad swath of tech products from cell
phones to computers. While ITA-2 (the previous
round of product expansion) captured an impressive$1.3 trillion in tech trade in 2015, not a single
additional product has been added to the agreementin the ensuing eight years, even though the techsector is bursting with innovation and demand for
digital technologies is growing exponentially. The
global industry must work together to press foranother product expansion to the WTO’s ITA. Thisis more important than ever, as tariff elimination
will make affordable and innovative products moreaccessible in the global market, including those thatare essential to deal with climate change, facilitate
remote work and learning, and save and extend lives.

GEOPOLITICAL TENSIONS& THE SEMICONDUCTOR
INDUSTRY
U.S. and China are key players in the semiconductor global supply chain that drive
industry innovation and market expansion. China is the single largest market for
semiconductors accounting for 36% of sales for U.S. companies. Rising tensions
in U.S.-China relations pose both short-term and long-term risks to supply
chain resilience, market access, and ultimately the competitiveness of the U.S.
semiconductor industrial base.

Both countries have announced unprecedented
investments and policies to grow their domestic
semiconductor ecosystems and ensure economic
and national security. Semiconductors have played acentral role in bilateral tensions, and given the recent
economic and geopolitical challenges, have become
the subject of various restrictive policies that have
impeded the ability of U.S. companies to compete ona level playing field in the China market.
At the end of the day, a strong semiconductor
industry is grounded in a virtuous innovation cyclethat relies on access to global markets that can
support the scale of R&D investments. Without
access to these global markets, U.S. companies
lose the scale necessary to finance both capital
expansions and research and development here in
the United States. At the same time, the industry
understands the need for a narrowly tailored andmultilateral approach to trade restrictions that canaddress the discrete national security concerns andsupply chain vulnerabilities, while at the same timeensuring commercial competitiveness of the U.S.
semiconductor industry.

2023 STATE OF THE U.S. SEMICONDUCTOR INDUSTRY |15

THE GLOBALSEMICONDUCTOR INDUSTRYOver the past three decades, the semiconductor industry has experienced rapid
growth and delivered enormous economic impact. Chip performance and cost
improvements made possible the evolution from mainframes to PCs in the 1990s,
the Web and online services in the 2000s, and the smartphone revolution in the2010s. These chip-enabled innovations have created incredible economic benefits. For
example, from 1995 to 2015 an estimated $3 trillion in global GDP has been directly
attributed to semiconductor innovation, along with an additional $11 trillion in indirect
impact. Semiconductors have become essential to our modern world, which is why
long-term market demand for semiconductors remains strong.

The 2022 market grew through the first half of the year but due to weaker
than expected demand, sales dropped in the second half.
Following strong sales of $555.9 billion in 2021, global
semiconductor sales in 2022 increased by 3.2% to$574.1 billion. Semiconductor sales were strong in thefirst half of 2022 following a period of tremendous
growth through most of the pandemic. But
macroeconomic factors such as inflation, decreased
consumer spending and weakened demand forsemiconductors led to a decrease in sales in thesecond half of the year. Estimates from The World
Semiconductor Trade Statistics (WSTS) projectworldwide semiconductor industry sales to decrease
to $515 billion in 2023, a drop of 10%. The current
short-term downturn, however, does not change
the reality that long-term growth prospects for thisfoundational technology remain very promising.

GLOBAL SEMICONDUCTOR SALES ($B)

700
600
500
400
300
+3.2% ‘21/’22
200
100
0
'01

'02

'03

'04

'05

'06

'07

'08

16 | SEMICONDUCTOR INDUSTRY ASSOCIATION

'09

'10

'11

'12

'13

'14

'15

'16

'17

'18

'19

'20

'21

'22

2023 STATE OF THE U.S. SEMICONDUCTOR INDUSTRY |17

SEMICONDUCTORDEMAND DRIVERS
Over the next decade, further innovation in semiconductor technology will enable ahost of transformative technologies including artificial intelligence (AI), autonomous
electric vehicles, and the internet of things (IoT). Indeed, long-term growth drivers
for semiconductor demand are firmly in place. But the relationship between
semiconductors and the markets they serve is truly symbiotic, as innovations insemiconductors themselves help to spur further market demand and open up newmarkets entirely. For example, successive generations of cellular technology weremade possible by advances in semiconductors themselves, leading to 5G. The demand
drivers in 2022, however, experienced some unexpected shifts that in many ways areindicative of future growth trends for semiconductors in cars, innovation in AI, and
5/6G technologies.

Shifts in end-use market share reflect growing innovation and demand forsemiconductors in the Automotive, Industrial and Consumer markets.
In 2022, end-use sales of semiconductors
experienced shifts in market share for theindustrial, consumer, and automotive industries.
These industries historically made up a combined
third of sales, however, the growth in market sharesignify changes in demand trends that will power
the chip industry through the decade. Innovationin the automotive, industrial, and consumer
electronics industries ensure that growth continues
in the industry and could reach $1 trillion in sales
by 2030. To meet increasing demand for chips,
semiconductor companies have committed billions
in new investments through the decade.

2022 DEMAND BY END-USE

End-UseCategory

AnnualGrowthTotal
Value ($B)

Communication

ComputerIndustrial

Consumer

Automotive

Government

1.0

-13.9

24.2

17.7

13.4

56.5

172.3

150.7

83.1

80.5

78.3

9.1

18 | SEMICONDUCTOR INDUSTRY ASSOCIATIONSEMICONDUCTOR DEMAND DRIVERS

2022 TOTAL GLOBAL SEMICONDUCTOR DEMAND SHARE BY END USE

PC/Computer

30%
Communications

26%
Automotive

14%
Consumer

14%
Industrial

14%
Government

2%2023 STATE OF THE U.S. SEMICONDUCTOR INDUSTRY |19

U.S. INDUSTRY
MARKET SHARE
Semiconductors were invented in the United States, and the U.S. industry remains
the global market share leader today. Throughout the industry’s history, America’s
leadership position has been challenged by overseas competitors, but the U.S. hasremained top thanks largely to its commitment to world-class innovation. With
global competition for leadership in this strategic technology on the rise, it’s neverbeen more important to ensure U.S. chip companies can run faster than overseas
competitors.

The U.S. semiconductor industry has nearly half the global market share andhas displayed steady annual growth.
semiconductor industry to benefit from a virtuous
cycle of innovation. That is sales leadership enables
the U.S. industry to invest enormously into R&D
which helps ensure continued U.S. sales leadership.
As long as the U.S. semiconductor industry maintains
global market share leadership, it will continue tobenefit from this virtuous cycle of innovation.

2022 GLOBAL MARKET SHAREA VIRTUOUS CYCLE OF INNOVATION

48%

7%

Japan

Europe Taiwan

China

20 | SEMICONDUCTOR INDUSTRY ASSOCIATION

Hi
g

8%

p

Korea

9%

U.S.
technology
leadershipen ue a n
rev
d

U.S.

9%

Hig
h
er

19%

R&D Invest
r
m
he

t
en

fits
ro

Since the late 1990s, the U.S. semiconductor industry
has been the global sales market share leader withnearly 50 percent annual global market share.
In addition, U.S. semiconductor firms maintain aleading or highly competitive position in R&D, design,and manufacturing process technology. Global
sales market share leadership also allows the U.S.

U.S. TECHNOLOGYCOMPETITIVENESS
U.S. semiconductor industry R&D expenditures are consistently high, reflecting theinherent link between U.S. market-share leadership and continued innovation.

U.S. semiconductor industry R&D expenditures from2000 to 2020. In 2022, total U.S. semiconductor
industry investment in R&D totaled $58.8 billion, acompound annual growth rate of approximately 6.7

percent. R&D expenditures by U.S. semiconductor
firms tend to be consistently high, regardless ofcycles in annual sales, which reflects the importanceof investing in R&D to semiconductor production.

CHIP INDUSTRY R&D EXPENDITURE ($B)
70
60
50
40
30
20
10
0
'01

'02

'03

'04

'05

'06

'07

'08

21 | SEMICONDUCTOR INDUSTRY ASSOCIATION

'09

'10

'11

'12

'13

'14

'15

'16

'17

'18

'19

'20

'21

'22

2023 STATE OF THE U.S. SEMICONDUCTOR INDUSTRY |21

U.S. TECHNOLOGY COMPETITIVENESSThe U.S. semiconductor industry maintains one of the highest levels of R&D
as a percent of sales of any U.S. industry.
The U.S. semiconductor industry was second only to
the U.S. pharmaceuticals and biotechnology industry
in terms of the rate of R&D spending as a percent ofsales. While global competitors are increasing their
R&D investments to compete with the U.S. industry,
American firms spend more on R&D as a percent

of sales than any other country’s semiconductor
industry. These high levels of reinvestment into R&D
drive innovation in the U.S. semiconductor industry
and, in turn, help maintain global sales market
leadership and jobs throughout the United States.

R&D EXPENDITURES AS A PERCENTAGE OF SALES

Pharmaceuticals& Biotechnology
Pharmaceuticals& Biotechnology
Semiconductors
Semiconductors

21.4%
21.4%
18.7%
18.7%

Software& Computer
Services
Software& Computer
Services

15.7%
15.7%

South
South
Korea
Korea
Japan
Japan

8.4%
8.4%

HardwareTechnology
HardwareTechnology& Equipment& Equipment

7.7%
7.7%

GeneralGeneralRetailers
Retailers

6.8%
6.8%

Alternative
Alternative
Energy 6.2%
Energy6.2%
Financial
Financial
Services
Services

5.7%
5.7%

22 | SEMICONDUCTOR INDUSTRY ASSOCIATION

11.0%
11.0%

TaiwanTaiwanMobileMobileTelecommunications
Telecommunications9.1%
9.1%
Media
Media

15.0%
15.0%

EuropeEuropeEstateInvestment
RealReal
EstateInvestment& Services& Services

9.2%
9.2%

18.7%
18.7%

U.S.U.S.

China
China

9.1%
9.1%
8.3%
8.3%
7.6%
7.6%

U.S. SEMICONDUCTOR INDUSTRYDOMESTIC ECONOMIC CONTRIBUTION

Semiconductors are one of America’s top exports.
U.S. exports of semiconductors totaled $61.1 billion in 2022, fifth highest among U.S. exports behind refinedoil, crude oil, natural gases, and aircraft. Sales outside the U.S. comprise over 80 percent of sales of the U.S.
semiconductor industry.
U.S. EXPORTS IN 2022

Refined Oil

Crude OilNatural Gas$146.2B $116.8B $96.5B

23 | SEMICONDUCTOR INDUSTRY ASSOCIATION

Aircraft

Semiconductors$93.8B$61.1BU.S. SEMICONDUCTORINNOVATION POLICYLANDSCAPETo ensure continued U.S. leadership in the global semiconductor industry, the U.S.
must adopt an ambitious competitiveness and innovation agenda.

1. Invest in U.S. Semiconductor
Leadership: Implement the policies and programs in
the CHIPS and Science Act efficiently,
promptly, and transparently.
Devise regulations for the advanced
manufacturing investment credit in the
CHIPS Act to encompass the full scopeof investments in the semiconductor
ecosystem.



Adopt policies to promote innovationand U.S. competitiveness, such asenacting an investment tax credit for
semiconductor design and strengthening
the R&D tax credit.

2. Strengthen America’s Technology
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 numberof Americans graduating in STEM fields,
support those pursuing careers inmicroelectronics, and ensure training
and education opportunities to fill open
positions.


Reform America’s high-skilled
immigration system to enable accessto the best and brightest in the world,
including foreign students with graduate
degrees in STEM fields from U.S.
universities.



Secure funding to strengthen thesemiconductor workforce at all levels
and ensure a robust pipeline at all
education levels and skills needs.

3. Promote Free Trade and Protect IP:
 Approve and modernize free trade
agreements that remove market
barriers, protect IP, and enable faircompetition.


Expand the Information Technology
Agreement, one of the World Trade
Organization’s most successful free
trade agreements.



Make permanent the WTO Moratorium
on Customs Duties and Electronic
Transmissions.

4. Cooperate Closely with Like-Minded
Economies: Align policies and regulations with likeminded allies to strengthen national
security, promote growth, innovation,and supply chain resilience.

2023
2021STATESTATEOF
OFTHE
THEU.S.
U.S.SEMICONDUCTORSEMICONDUCTORINDUSTRY
INDUSTRY|| 24

METHODOLOGYThis report is based on data developed
independently by the Semiconductor
Industry Association and in conjunction
with the Boston Consulting Group andOxford Economics. Figures pertaining to
the industry’s employment are based ondata from the U.S. Census Bureau andthe U.S. Department of Labor. Figures
regarding the industry’s international
trade activity are based on an analysis of
official U.S. government trade data fromthe U.S. international Trade Commission.
Figures regarding industry manufacturing,

capacity, and capital spending were basedon data from TechInsights, New York
University, McKinsey, The Economist,
Tokyo Electron, J.P. Morgan, and IC
Insights. Market data was based on World
Semiconductor Trade Statistics data.
Industry R&D data was based on company
financial reports, as well as data fromNew York University. Lastly, data for theindustry job multiplier, GDP contribution,and labor income are based on an InputOutput model developed by IMPLAN.

ABOUT SIAThe Semiconductor Industry Association(SIA) is the voice of the semiconductor
industry, one of America’s top exportindustries and a key driver of America’s
economic strength, national security, andglobal competitiveness. Semiconductors– the tiny chips that enable modern
technologies – power incredible products
and services that have transformed ourlives and our economy. The semiconductor
industry directly employs over a quarter ofa million workers in the United States, andU.S. semiconductor sales totaled $75 billion
in 2022.

SIA members account for 99 percent of
all U.S. semiconductor industry sales.
Through this coalition, SIA seeks tostrengthen leadership of semiconductor
manufacturing, design, and research byworking with Congress, the Administration,and key industry stakeholders aroundthe world to encourage policies that fuelinnovation, propel business, and driveinternational competition. Learn more atwww.semiconductors.org.

2023 STATE OF THE U.S. SEMICONDUCTOR INDUSTRY |25