1.1 Presentation

A semiconductor is a material with the electrical characteristics of an insulator, but for which an electron can contribute to an electric current. It therefore has an electrical conductivity intermediate between that of metals and that of insulators. The semiconductor market is the market for products made from this type of material. Semiconductors are partly used in electronics to manufacture components such as diodes, transistors, integrated circuits which are then used in telephones, cars, computers...

The players in the semiconductor market are mainly international players and the three largest semiconductor vendors are Intel (US), Samsung (South Korea) and SK Hynix (South Korea) with respective revenue of $19.7 billion, $16.8 billion and $7.5 billion in Q1 2021. However, market players such as Intel saw a revenue decline of 4% from the last quarter of 2020. In its report, Intel explains this decline as a result of limited semiconductor supply in the market. This can also be explained by the current geopolitical context and the U.S. "war" against Huawei, which is destabilizing the semiconductor market, including the fact that the U.S. has banned Huawei from using U.S. machines to manufacture its semiconductors.

However, despite the backdrop, the global semiconductor market remains attractive as global shipments in the first quarter of 2021 were $123.1 billion, up 3.6% from the first quarter of 2020, making it the highest increase for a first quarter since 2010. The growth of the semiconductor market is expected to continue in the coming years, as due to the global pandemic, industries are experiencing a shortage of semiconductors.

While the French semiconductor market saw some semblance of recovery in Q4 2020, we are still far from its pre-pandemic highs. Indeed, in Q2 2020, the market fell and then recovered by 7% in value in Q3 2020, reaching in Q4 a 13% growth in value, which however remains a contraction of 8% compared to Q4 2019. In fine, the semiconductor market in France seems to follow the course of the global market.

1.2 Global market

The semiconductor market has seen ups and downs in recent years, including the Covid-** crisis and the trade war between China and the United States. However, the market growth is a strong trend, which is expected to be accelerated by the digitization of companies, the transition to *G or even the ...

1.3 Size of the French semiconductor market

Although the majority of current production capacity is located in the Asia-Pacific region, notably in China and South Korea, France remains a major player in the semiconductor market.

Data on revenues generated by the French semiconductor sector are collected by INSEE under NAF code **.**: "Manufacture of electronic components", which includes the ...

1.4 Trends and cyclicity

The semiconductor industry is a cyclical industry that follows the course of the global economy. Indeed, this industry is strongly influenced by the demand for personal computers smartphones and more generally, by the electronics industry.

France is an exception in that **% of its sales are in the industrial and automotive sectors, ...

1.5 International trade

To quantify global semiconductor trade, the Semiconductors Industry Association(***) relies on UN Comtrade data collected under HS codes:

****: Diodes, transistors and semiconductor-like devices; ****: Electronic integrated circuits.

This allows us to establish France's trade balance, as well as its main suppliers and buyers for this product.

Trade balance

Aggregating the data ...

2.1 Final destination of semiconductors

Semiconductors are intermediate manufactured products, which are needed in the realization of a wide variety of finished products. The SIA's annual report gives an idea of the markets and their proportions. The demand from car manufacturers has grown by **.*% per year, overtaking consumer products and other industrial sectors. Governments are using ...

2.2 Demand driven mainly by cell phones

Mobile telephony is a major market for the semiconductor industry. Estimated to be worth nearly $** billion in ****, this segment could grow by *.**% through ****. Asia-Pacific is the driving region in this segment.

This growth is fueled by the introduction of *G, but also by the development of technologies such as cloud computing ...

2.3 Demand driven by the automotive industry

Vehicle electrification is a growth driver for the semiconductor industry. globally, China has the largest electrified fleet in the world, accounting for **% of the global fleet. In Europe, **% of the fleet is electric.

evolution of the share of electric car sales in the automotive market France, ****-****, % Source: ****

Strategy Analytics predicts ...

3.1 Industry characteristics

The main differentiating factor in the semiconductor industry is the quantity of transistors that can be placed on a chip. The market is characterized by tough competition, which pushes manufacturers to constantly improve the quality of their products. Thus, the industry has generated the theorization of " Moore's Law ", which states that ...

3.2 Production

The production of electronic components is particularly meticulous. Indeed, because of their size and functions, no error is allowed

Producing electronic components therefore requires a significant basic investment in order to benefit from the best infrastructure. The quality of an electronic component will determine the success of its manufacturers.

The complexity ...

3.3 Distribution

Because semiconductors are so fragile, good distribution is crucial, and manufacturers have a choice between going through distributors or selling directly.

According to Acsiel, sales through distributors will be more popular in ****, while the market is still suffering from shortages. This choice of the distribution answers the will of diversification of ...

4.1 Products

Semiconductors are mainly divided into two main product categories: discrete semiconductors and integrated circuits. Sensors and optoelectronic devices can also be distinguished.

Breakdown of global sales by product type World, ****, % Source: ****

The role of discrete semiconductors is to perform a single function. They differ from integrated circuits, which integrate several functions, ...

4.2 Prices

The prices shown in Table * are price ranges for the four main semiconductor categories: Discrete, Analog ICs, Logic ICs and Memory ICs. These prices are obtained through Mouser Electronics, a U.S. online distributor of electronic components.

The table compares the semiconductor prices of the two European market leaders: the French ...

4.3 A highly competitive market in perpetual change: examples of two French start-ups

The shortage of semiconductors caused by the Covid-** pandemic has accelerated the upheaval in the industry. One of the major current innovations is that of reprogrammable semiconductors, which make it possible to assemble all the components of the finished product on a single chip. Another research avenue is the exploitation of ...

5.1 A regulatory framework implemented by the EU

In the context of the trade war between China and the United States, products manufactured in the EU are receiving increased attention from Chinese actors. [***] However, the sale of chips and semiconductors, as dual-use exports that can be applied for military purposes, is protected. The sale therefore requires authorization and is ...