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The global semiconductor industry is expected to grow 15 percent in 2025, to $723 billion by 2025, as per Malcolm Penn, Chairman and CEO Future Horizons, UK. He cautioned: don’t get drunk on these numbers. The recovery base is fragile.
If we take the bear route, the global semiconductor industry can reach $699.009 billion for 2025. The bull route can take the semiconductor industry to $749.027 billion. At 15%growth, the global semiconductor industry should end 2025 at $723.652 billion. However, don’t be fooled by the dollar growth, as 2025 will be challenging!
Life not so rosy!
We will now have Donald Trump, US President-elect as the 'great' wildcard. Trump is said to be keeping the chip industry executives awake at night, as he dominates the outlook uncertainty agenda. Anticipated policies are fuelling both corporate optimism and anxiety. There are also increasing US-China semiconductor trade tensions (Biden and Trump).
Trade tariffs threat is fuelling bond markets, and driving up interest rates. Tax cuts are adding further to interest rate jitters, threatening inflation and debt rollover cost. Punitive tariff threats on Canada, Mexico, and China risk a global trade war. Canada and Panama Canal annexation threat also emboldens rouge states, such as Russia, China, North Korea, Iran, etc.
Next, if you are not in GPUs, like Nvidia, and HBW memory, like SK hynix, then, life is far from sunshine and roses. And, don’t even think about mentioning discretes and opto. It is nice to have a bandwagon to worship, but life’s not that simple. There’s much more to the chip market than Nvidia’s $30k+ AI TGPUs.
China threat
We also have the impact of China on capex spend. We have the China push back ‘warning shot’ and non-China reaction. Non-China capex was cut back in Q2- 2023, or three quarters after the market collapse. China capex cut back only started from Q1-2024, or, three more quarters later. China capex spend was exacerbated by US tariffs, export controls and prohibitions. 2024 cutbacks were more likely driven by economic woes, than good intentions.
As per a statement by the European Union, friendly nations to the USA are now being hurt by the US administration’s effort to be tough on China. And, China is dominating in metals, such as antimony, germanium, natural graphite, and gallium. Now, that's a big threat!
Geopolitics is now at play for the global semiconductor industry. Semiconductors are a uniquely global industry. Typical semiconductor production process spans multiple countries. Eg. four+ countries, three+ trips around the world, and 100 days production time.
Six decades of intense outsourcing and specialization (from Charlie Spork’s transistors) has led to complex, unique, and ubiquitous global market, manufacturing, and value chain. No amount of reshoring can restore the self-sufficient status quo.
Mature-node processes (>10-22nm and legacy chips are foundational to the modern economies, powering home appliances, automobiles, networking equipment, defence systems, etc.
China’s 28nm-65nm market share surged from 18% in 2020 to 32% in 2023. Under Section 301, the US investigation is on to examine “China’s targeting of mature-node chips for dominance, and the impact on the US economy”.
China may get into mature-node dumping push that would destabilize the industry growth. There are many regions where these could happen, such as Africa and Latin America. And, no one has the authority to stop that!
And, India?
Now, a very interesting question: where does all of these leave India, especially, China's 28-65nm push? First answer: nowhere! What will the India Semiconductor Mission (ISM) do now? I really have no answer.
Why? India is just starting semiconductors production, and that too at 28nm. Yes, I know folks will jump up and say: we have captive internal market. Again, at what cost? What will you do, if you are getting a Chinese chip for, say, $5, vs. an Indian-made chip for, say, $10? Knowing China very well, they can even sell for $2, just to kill any competition. We are in a catch-22 situation really!
Also, China's semiconductor equipment sales leads all other regions by the proverbial mile. What are we doing about that? Well, nothing, so far? Again, will India do any such thing for equipment in the future? I'd say no, but that's open-ended, so let the policy makers decide what's best for India.
USA recently imposed latest chip curbs on China that targets 140 companies, including Naura Technology. Controls are also on 24 chip-making tools, three software tools, and chip-making equipment from Malaysia, Singapore, Israel, Taiwan, and South Korea.
Measures include restrictions on shipments of high-bandwidth memory (HBM) chips to China, which is essential for advanced applications such as AI training. Here's where South Korea's SK Hynix is shining brightly, by the way.
Next, the leading wafer fab equipment (WFE) market leaders are ASML, Lam Research, Applied Materials, Tokyo Electron Ltd, and KLA. APAC is estimated to contribute 78% to the growth of the global market. All of this, minus India. Some others include Aixtron, ASM, ASMPT, Baxter International, FormFactor, Hitachi, Horiba, Kokusai Electric, Nikon, Plasma Therm,
In an earlier article, I talked about robust fab ecosystem key to India realising full promise. Again, be aware that about 50 global fabs have already been closed. Running a fab is a very serious business. Only the ‘real men own fabs’, globally.
I mentioned earlirler, that one can ignore chips at their own peril. Let me remind everyone: Earlier, in 2013, when the first-ever semiconductor policy was announced, 22nm was in contention, besides 28nm and below nodes. Next, 28nm is perhaps the lowest entry point right now.
Why couldn't India start a fab back then? Why now, 11 years too late? At least, we could have started work on EDA, photonics and silicon photonics, semiconductor materials, advanced packaging, and so on! I am a novice, agreed. Can the learned come up and say something now?
With China's move, India may end up with fabs having little or no, RoI. But, we can leave this to the future. There are many, who have already written how India will be superpower by 2047. Well, first, let's cross 2025, and then, 2030!