Modern society depends on semiconductors and the role they play in telecommunications, energy, automotive and military equipment, and other types of technology. These conductive materials are necessary to build the integrated circuits, transistors, diodes, and capacitors that make advanced electronics work.
Despite the fundamental importance of semiconductors to 21st century technology, relatively few countries are producing them at scale. This overconcentration has caused significant global supply issues during the pandemic, underscoring the need to further develop the industry internationally.
Though some semiconductors are manufactured in Europe and the US, the leading producers are in Asia – notably China, Taiwan, South Korea, and Japan. The importance of Asia-based manufacturing is set to grow even further in the future, putting pressure on a limited talent pool.
An unsustainable bottleneck
The semiconductor industry is currently suffering heavy blows to its supply chain, as a result of political tensions as well as the global pandemic. As the world’s biggest semiconductor provider, Taiwan was seriously impacted by both of these issues. Unfortunately for the rest of the world, every delay only increases the headaches for companies that rely on a steady supply of semiconductors.
The result has been a perfect storm for semiconductor manufacturers (and their customers), complete with government squabbling, paused production, and delayed shipments. To make things worse, each time higher demand meets limited supply, semiconductor prices increase.
Among the casualties of the resulting scarcity has been the international automotive industry, with the likes of Toyota, GM, and Ford forced to cut back on production. Yet the solution – a more durable and diversified superconductor manufacturing sector – may be just around the corner.
Setting up a new generation of growth
Data from the Financial Times indicates that China now controls 15% of global superconductor production – a figure which will increase to 24% over the remainder of the decade. China’s manufacturers benefit from a combination of government incentives and low local production costs. In the past 6 years, more than 80 semiconductor-related foreign direct investment projects have been launched in China, dwarfing related investment numbers in other countries.
According to Boston Consulting Group, a semiconductor facility in China costs 30% less than a similar facility in the US. As recently as 1990, the US owned 37% of the semiconductor global capacity, and Europe had over 40%. Today, the US accounts for just 12% of global semiconductor production, with all of Europe combining for less than 9%.
China is not the only Asian country with its sights set on growth. Singapore is also attracting significant foreign investment, with German chipmaker Infineon Technologies planning to invest $27 million on AI integration over the next three years.
Infineon’s involvement is opening up important roles for talent within the semiconductor industry in Singapore. The company will work together with local start-ups and with SGInnovate, as well as with research and educational institutions. Among its goals is to provide AI courses and certifications to boost overall technological expertise.
Companies like Infineon recognise that a skilled talent pool is a prerequisite for the growth of any modern industry. In the same way that supply chain shortages stalled business operations among high-tech companies, talent shortages can stall companies across the superconductor industry and beyond. The key, as ever, is to have talent solutions in place before any supply shortage occurs.
Planning for success
The global semiconductor industry was worth US$439 billion in 2020. Asia is continuing to increase its worldwide market share, with countries like China and Singapore serving as major production hubs. South Korea and Taiwan are also in the limelight, with giants such as Samsung and TSMC set to play key roles moving forward.
Growth in this environment will ultimately depend on the human resource factor. Connexus Search provides jobs to support this value chain in Asia, including specialised services in Advanced Technology & Electronics from our Singapore office. To make the most of new opportunities in the world of semiconductors, get in touch with us today.