\u2018There\u2019s incredible capability here, but we sometimes miss opportunities to keep that value within the country,\u2019 YieldHub founder says.<\/p>\n
Millions of microscopic semiconductors make up the bedrock of the modern world. From computers, cars, phones and coffee machines, to guns and warships, these chips \u2013 found in practically all modern electronic devices \u2013 shape the world and determine where political and economic power lies.<\/p>\n
In 2024, the semiconductor industry was valued at more than $580bn and estimates suggest that these chips are the world\u2019s fourth most globally traded product, only after crude oil, refined oil and cars (an average car has more than a thousand of these chips fit inside them).<\/p>\n
Global semiconductor sales this past June reached $59.9bn, growing 19.6pc compared to the same period last year.<\/p>\n
The Americas and China accounted for a majority of these sales, with sales of $18.3bn and $17.1bn respectively, while Europe trailed behind at $4.4bn. Though Europe remains an important part of the ecosystem.<\/p>\n
The chip supply chain is intricately connected through vines that travel through dozens of countries before ending up as a final product.<\/p>\n
Countries worldwide specialise in manufacturing for different portions of the chip supply chain. For example, the US and Japan produce the largest share of semiconductor manufacturing equipment (SME), while the EU stands as the sole producer of certain key equipment in the form of Dutch company ASML\u2019s advanced photolithography scanner devices.<\/p>\n
Taiwan, on the other hand, produces around 90pc of the world\u2019s most advanced semiconductors and China holds a strong position in the supply of raw materials.<\/p>\n
It would be impossible to entirely localise chip production. Although, growing political tensions and lessons from a global chip shortage<\/a> \u2013 one that was only made worse by a pandemic \u2013 meant that countries wanted to come up with ways to attempt to increase the production of this strategically vital product on their turf.<\/p>\n And so, the US came up with its Chips (short for Creating Helpful Incentives to Produce Semiconductors) and Science Act back in 2022, allocating $53bn in government subsidies and grants to drive chip R&D and manufacturing growth in the country.<\/p>\n More than $32bn of that funding has already been invested, with Intel receiving up to $8.5bn \u2013 the highest amount of direct funding offered under this scheme. Plus, since the Chips Act came into law, companies have announced more than $540bn in US semiconductor investments, which is projected to triple total US chip manufacturing capacity over the next decade.<\/p>\n Although, these \u201chelpful incentives\u201d also mean that funding recipients are barred \u2013 for a decade \u2013 from expanding chip manufacturing to China or any countries that the US thinks pose a threat.<\/p>\n And while president Donald Trump may not be a fan of the Biden-era Chips Act, he aims to achieve similar results through his heavy use of tariffs, including on semiconductors \u2013 the latest of which includes a 100pc levy on companies that do not have chip deals with the US<\/a>. Though details on that front still remain unclear.<\/p>\n Competing with the US<\/p>\n Over on this side of the pond, the EU introduced its own Chips Act in 2023, which it hopes will increase the region\u2019s share of global semiconductor production from 10pc to at least 20pc<\/a> by the end of the decade. For this cause, the bloc has allocated more than $43bn in joint public and private sector investment.<\/p>\n A number of companies have received funding under this scheme, including STMicroelectronics, which will develop a wafer plant and an integrated silicon carbide manufacturing facility in Sicily and a new microchips manufacturing facility in France along with Global Foundries.<\/p>\n Funding has also been given to European Semiconductor Manufacturing Company (ESMC), a joint venture between TSMC, Bosch, Infineon and NXP, to set up a microchip manufacturing plant in Germany.<\/p>\n The region\u2019s investment into semiconductors, is however, much less compared to other regions and, according to John O\u2019Donnell, the founder and CEO of Irish multinational YieldHub, is \u201cprobably\u201d not enough. YieldHub provides data analysis and yield management solutions to the semiconductor industry.<\/p>\n Earlier this year, a report by the European Court of Auditors (ECA) found that the EU would be unlikely to hit the 20pc target<\/a>. According to the ECA member in charge of the audit, Annemie Turtelboom, the target was \u201cessentially aspirational\u201d and meeting it would require quadrupling the region\u2019s production capacity \u2013 which it is nowhere near achieving.<\/p>\n Chip investments should be benchmarked per head and per gross domestic product (GDP), O\u2019Donnell says, \u201cand at least match the best, such as Japan\u201d. Last year, Japan unveiled a $65bn plan<\/a> to boost the country\u2019s chip and AI industries through subsidies and incentives.<\/p>\n Plus, with just four odd years left until the end of the decade, Europe should accelerate investments and incentives for the entire supply chain, starting with wafer fabrication \u2013 one of the earliest stages of chip production, he says.<\/p>\n Although the region could not have expected the 15pc tariff on chip exports to the US. The effects of the tariffs are yet to be seen, with the levies just beginning to take effect. While other possibly negative developments include Intel\u2019s closure of its European chip projects<\/a> after a recent flat quarter.<\/p>\n However, aside from higher investments, training engineers and technicians in key semiconductor tech is also important, according to O\u2019Donnell. Perhaps that\u2019s where Ireland can come in.<\/p>\n Keeping value in Ireland<\/p>\n Ireland published its own semiconductor strategy<\/a> this year, aiming to place itself as a strong player in this sector. As part of the strategy, the Government hopes to secure industrial investments, including for a regional edge fabrication facility, two trailing-edge foundries and an advanced packaging facility in the country.<\/p>\n Reports suggest that Ireland is planning to lure semiconductor giants such as Samsung and TSMC with an offer that includes billions in subsidies.<\/p>\n The strategy also includes plans to develop large-scale manufacturing sites with the necessary infrastructure, enhance R&D capacity and support businesses working in the semiconductor industry with commercialisation support and access to finance.<\/p>\n Moreover, the proposed efforts also aim to develop Irish leadership in semiconductors tied together with a skills study aimed at developing talent pipelines.<\/p>\n