Summary

The global semiconductor market, following fluctuations due to COVID-19 and geopolitical tensions, such as the US-China trade war, continued to grow. Despite challenges, the market witnessed a significant increase of 26.2% between 2020 and 2021, with a sector revenue of $580 billion in 2022. This growth was driven by digitization trends, the transition to 5G, and the electrification of vehicles.

In France, the semiconductor sector rebounded in Q4 2020 but remained below pre-pandemic levels. Notably, the demand from the automotive industry saw a rapid increase, with electric car sales in France growing and Strategy Analytics predicting the automotive chip market to soar to $105 billion by 2028. The market's competitive landscape is evidenced by extensive R&D, amounting to $71.4 billion in 2021, and innovations from French startups like Menta and DiamFab, pushing the industry forward.

Regulation plays a crucial role, with the EU implementing checks to safeguard against dual-use exports that can be used for military purposes, and launching the European Chips Act to bolster production and ensure technological sovereignty with a significant €43 billion investment plan.

Trends in Semiconductor Demand in the Spotlight

The semiconductor market in the region being analyzed is integral to several sectors, with demand primarily driven by innovations within the electronics industry. Fluctuations in the market mirror the broader global economic environment, underscoring the cyclical nature of the semiconductor industry. The automotive and industrial sectors represent a significant proportion of the area's semiconductor sales, with a substantial 69% of sales in these segments indicating a dependence on cyclicality. 

Despite this, the market is on a growth trajectory, propelled by factors such as the digitization of industries, the widespread adoption of 5G technology, and the progressive shift toward vehicle electrification. For instance, the value of semiconductor shipments worldwide in the first quarter of 2021 reached approximately $123.1 billion, marking a 3.6% increase from the previous year and recording the highest first-quarter growth since 2010. In the French market, while there was a recovery towards the end of 2020, the market has yet to return to its pre-pandemic levels. This region experienced a 7% increase in its semiconductor market value in the third quarter of 2020, rising to a 13% increase in the fourth quarter, signaling a contraction of around 8% compared to the same period in the previous year. This mirrors the global trend of shortages in the semiconductor industry compounded by the pandemic.

Demand for semiconductors spans various sectors, with the mobile telephony segment commanding a significant market value, estimated to be between $40 and $50 billion. Expected to grow by approximately 7-8% through 2026, this market segment is stimulated by technological advancements and the rollout of 5G networking. Likewise, the automotive industry, with its pivot towards electrification and digitalization, further amplifies the demand for semiconductors. In France alone, the share of electric car sales has surged to about 17%, underlining the push for more semiconductor integration in vehicles.

Notably, the semiconductor industry is affected by the geopolitical landscape, particularly with the constraints imposed on companies like Huawei, which has been banned from accessing US equipment for semiconductor manufacturing. This exemplifies how regulatory actions can have far-reaching implications on the semiconductor supply chain and market dynamics. 

The Titans of the Semiconductor Landscape: Navigating the Currents of Innovation and Competition

The semiconductor market, a bedrock of modern technology, is home to a pantheon of global behemoths and rising stars, each playing a pivotal role in shaping the industry's future. This dynamic arena is not just about the raw power to fabricate cutting-edge chips, but about the innovation, strategic positioning, and adaptability that define the market leaders. Let's explore some of these towering figures in the semiconductor domain.

  • Intel stands as a long-revered titan within the industry. Based in the United States, this powerhouse has been synonymous with microprocessors that have powered generations of personal computers. Despite facing competition from other players and dealing with market shifts, Intel's legacy and ongoing research and development efforts keep it at the forefront of semiconductor innovation.

  • Samsung Electronics and SK Hynix, hailing from tech-savvy South Korea, demonstrate that Asian players are not just contenders but leaders in the semiconductor space. Samsung's multidimensional role as a behemoth in memory chips, microprocessors, and a consumer electronics giant gives it a unique position within the market, whereas SK Hynix's specialism in memory semiconductors marks it as a crucial entity in the global supply chain.

  • TSMC from Taiwan represents the might of foundries—the specialized plants that fabricate chips for other companies. As a foundry leader, it epitomizes the strategic shift in the semiconductor market where manufacturing prowess can be decoupled from chip design, allowing a more modular and flexible approach to semiconductor production.

  • American companies Qualcomm, Broadcom, and Nvidia, each have carved their niches with precision. Qualcomm is a titan in wireless technology, propelling the telecommunications industry forward. Broadcom's diverse range of semiconductor products keep it at the nexus of the communication sector. Meanwhile, Nvidia has emerged as a leader in graphics processors, revolutionizing not just gaming but also accelerating the field of artificial intelligence.

  • French-Italian stalwart STMicroelectronics is a testament to European expertise in specialized integrated circuits and microcontrollers, while NXP from the Netherlands focuses on automotive electronics, microcontrollers, and logic circuits, reflecting the critical role semiconductors play in modernizing and digitizing the automotive sector.

  • Japanese giant Murata specializes in passive electronic components, quietly underscoring the ubiquity and necessity of such components in nearly every electronic device.
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  • Last update : 21/12/2022
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Summary and extracts

1 Market overview

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 Analysis of the demand

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 Market structure

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 Analysis of the offer

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 Regulation

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 ...

List of charts

  • World semiconductor market
  • Evolution of the turnover (excl. VAT) of the electronic components manufacturing
  • Evolution of the share of semiconductor production by region
  • Semiconductor manufacturers' R&D spending trends
  • Breakdown of worldwide sales by product type
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Latest news

Semiconductors: Grenoble-based UpMem strengthens its position - 13/10/2023
  • UpMem founded: 2015, based in Grenoble, France
  • Sector: Big Data
  • Recent fundraising: €6.6 million
  • Current workforce: 23 people. Planned increase to 40 next year
  • Data server market: $80 billion worldwide
  • acceleration processor sector: $15 billion
  • The company's current circuits are 10 to 15 times faster and can replace ten servers
  • Second-generation products expected to consume 40% less energy
  • Current sales: around one million euros
  • Target: 30 million euros within three years.
IT: Icape strengthens its position in the United States - 07/10/2023
  • Icape recently acquired the operating assets of three American companies: PCB Solutions, Ustek Incorporated and Nujay Technologies.
  • These companies have combined annual sales of over $5 million.
  • Icape has a global platform of 36 subsidiaries, with sales of 220 million euros in 2022.
  • It employs over 500 people.
  • The market in which Icape operates has seen a decline in activity of around 20%.
  • Icape has acquisition plans in Europe and aims to buy 120 million euros in sales over the next four years.
Chip investments in Europe reach 100 billion euros - 11/08/2023
  • The European Union aims to double semiconductor production by 2030 to 20% of the global share.
  • Over 100 billion euros of investment is planned in semiconductor production in Europe.
  • The "Chips Act" was passed with an initial allocation of 43 billion in subsidies.
  • TSMC plans to invest up to 10 billion euros in its first European plant in Germany.
  • Intel plans to invest 30 billion euros in Germany, 4.6 billion in Poland and 12 billion in Ireland.
  • In France, STMicrelectronics and GlobalFoundaries are investing 7.5 billion euros in a project at Crolles.
  • Infineon plans to invest 5 billion euros in a plant in Dresden.
  • Broadcom plans to build a site in Spain at a cost of one billion euros.
  • The PIIEC, which brings together 20 European countries and 56 companies, accounts for 22 billion euros of investment.
Chips: Chinese giant Hua Hong signs Asia's biggest IPO of the year - 08/08/2023
  • Hua Hong, China's second-largest foundry, has raised nearly $3 billion for its Shanghai IPO in 2023.
  • Hua Hong plans to use this investment to open a new manufacturing plant in Wuxi, China, and to upgrade an existing production line.
  • China accounts for a third of the world's semiconductor chip sales.
  • Hua Hong posted record sales of $2.48 billion in 2022, up 52% on the previous year.
  • Its net profit for the first quarter of the unspecified year was $152.2 million, compared with $102.9 million a year earlier.
Samsung Digital City in Suwon - 27/07/2023
  • Samsung has a market share of over 60% of smartphone sales in South Korea.
  • Samsung is the world's number-one smartphone and TV sales group.
  • More than 37,000 employees work at Samsung's Suwon campus.
  • The Suwon facility covers more than 170 hectares
Virtual reality headsets, new Macs - 05/06/2023
  • Apple plans to unveil its first virtual and augmented reality headset.
  • The headset is expected to cost $3,000
  • Apple expects to sell around 900,000 units in the first year
  • Several Mac and iPhone applications will be integrated into the headset, such as Camera, Contacts, FaceTime, Email and Messages, Maps, Notes, Music, Photos, Safari and Weather.

Companies quoted in this study

This study contains a complete overview of the companies in the market, with the latest figures and news for each company. :

Elkem
Soitec
Murata Manufacturing
STMicroelectronics
NXP Semiconductors
Qualcomm
Intel
Avnet
Arrow Electronics France
Samsung Group
ASML
Apple

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