The semiconductor industry operates through a highly fragmented and specialised global production system. Although commonly described in 4 stages:
- Design (EDA)
- Wafer production with Raw materials
- Chip manufacturing with Foundries
- Assembly, test and packaging (ATP/OSAT)
Upstream production depends on ultra-pure materials, electronic design automation (EDA) tools, and highly specialised equipment such as lithography, deposition, and etching systems. Core manufacturing consists of tightly sequenced, iterative processing steps carried out across multiple specialised firms.
There are 23 companies that actually control global chip supply (see Logo size of the infografic). SEC analysed these companies that operate within highly concentrated markets across the most critical manufacturing steps:
1. Design: Core chip IP is almost entirely concentrated in the U.S. and the UK (together ~95%). EDA software is even more consolidated, with US. firms controlling ~96% of the market (Cadence, Synopsys…).
2. Raw materials: Sibelco, TQC, Shin-Etsu, Sumco, Siltronic, SK Siltron, Sumitomo Electric (Japan) or Mersen (France).
High-purity quartz (HPQ) is the first structural bottleneck in the semiconductor value chain. It is essential for producing the quartz crucibles used to grow monocrystalline silicon ingots, and purity requirements at advanced nodes leave virtually no room for substitution. Semiconductor-grade HPQ is almost entirely extracted in the Spruce Pine Mining District in North Carolina. Two companies Sibelco (via Covia) and The Quartz Corp (TQC) control nearly 95% of global supply. Silicon wafer production is heavily concentrated in Japan and South Korea. Two companies, Shin-Etsu and SUMCO, together control more than half of the global market, with most remaining capacity held by Siltronic and SK Siltron. A thin layer of specialist processors, including Ferrotec, Momentive and Heraeus, sits between HPQ suppliers and wafer producers, converting raw quartz into Czochralski (CZ) crucibles and related components.
For Chip manufacturing, Fabs need Wafer Fab Equipment (WFE) for the Front-end and Back-end: ASML (Lithography), Applied Materials (Deposition), Lam Research (Etch)
- Lithography: ASML is the only company capable of producing EUV lithography systems and the dominant supplier of high-end DUV tools. No alternative supplier exists for advanced nodes.
- Deposition: Applied Materials leads key deposition technologies such as ALD, CVD and PVD. Once a deposition tool and process recipe are qualified, switching vendors is effectively impossible without revalidating entire device layers.
- Etch: Lam Research dominates plasma etch and atomic-layer etch at the leading edge. Many of its chamber components – high-purity ceramics, RF matching units, vacuum systems – have no second source.
3. Foundries: TSMC (Advanced Nodes), Samsung (Advanced Nodes), SMIC (Mature Nodes, not a monopoly but a dominant player), UMC, Global Foundries
At the leading edge, TSMC dominates global capacity, holding 64% of the market and an even higher share below 7 nm. Cutting edge semiconductor capacity remains therefore concentrated in two locations: Taiwan, where TSMC dominates, and South Korea, led by Samsung. The mature-node market (28 nm and above), which underpins most automotive, industrial and power-electronics applications, is far more fragmented. Smaller players such as UMC (~4%), GlobalFoundries (~4%) and SMIC (~6%) supply a significant share of global legacy-node capacity, but each carries distinct structural risks.
4. OSAT: ASE, Amkor, JCET, Tongfu. A small number of players anchor global OSAT capacity:
- ASE Technology: ~44% global share
- Amkor: ~15%
- JCET: ~10%
Most of the world’s chips pass through OSAT clusters in:
- Penang (Malaysia)
- Bangkok (Thailand)
- The Pearl River Delta (China)
- Hsinchu / Kaohsiung (Taiwan)
- Suzhou (China)
- Guadalajara (Mexico)
Therefore a high geographic concentration in Asia:
- Spanning leading-edge foundries in Taiwan
- Memory clusters in South Korea
- Materials suppliers in Japan\
- Large ATP hubs across Southeast Asia (Singapore, Malaysia)
IDMs (Power Discretes, Essentials, Analog Power MCU, DRAM, NAND)
- Memory (DRAM+NAND): Samsung Electorincs, SK Hynix, Micron Technology, Kioxia, Western Digital , Nanya Technoolgy, Winbond, CYMT, YMTC, PSMC
- Analog/Power/Discrete/MCU: Texas Intruments, Analog Devices, Infineon, STMicroelectornics, NXP Semiconductors, Renesas Electroncis, ON Semiconductor, Microchip Technology
- Power/Discretes&Essential Semiconductors: Nexperia, Rohm Semiconductor, Vishay Intertechnolgy, Toshiba Electronic Device & Storage
Although US companies make 95% of the chip sector’s design software, it only produces 12% of its chips. Europe created a state-of-the-art European chip ecosystem and is developing new markets for ground-breaking European tech.
Asian powerhouses are not just found in semiconductor manufacturing, but also in testing and packaging. Many Asian companies are also key suppliers of semiconductor equipment and materials.
As the world’s largest manufacturing hub, China is the biggest semiconductor consumer in the world, yet it only accounts for 7.6% of global chip sales. Meanwhile 95% of China’s installed chip capacity is for chips with nodes of 28nm or above, lagging behind industry leaders that are planning to roll out 3nm processes in the near future.
Following Semicon China, the Chinese semiconductor industry has now undergone significant developments over the past two decades. Today, China accounts for 41.4% of global semiconductor sales, making it the world’s largest semiconductor market.
China’s semiconductor market is expected to exceed $506 billion by 2032, growing at a CAGR of 11.18%. This growth is driven by AI and 5G expansion, rising domestic demand, and increased R&D investments.
SMIC has advanced to 7 nm-class production using DUV multipatterning but remains constrained by restricted access to EUV tools. China has responded with industrial support and strategic controls on critical materials (gallium, germanium, rare earths). This creates a more regionally segmented world where “China for-China” capacity must be balanced against export-control compliance everywhere else.
We highlight the Top 5 Chinese semiconductor companies and their focus:
- Semiconductor Manufacturing International Corporation (SMIC) Foundry: Logic and memory chips
- Jiangsu Changjiang Electronics Technology (JCET) OSAT: Wafer Level & Fan Out packaging
- Yangtze Memory Technologies (YMTC) IDM: NAND flash memory
- Naura Technology Group (Naura) WFE: Chip manufacturing equipment for smartphones and AI
- ChangXin Memory Technologies (CXMT) IDM: DRAM chips
Asia’s dominance of the global semiconductor supply chain is likely to remain unrivalled in the near term. Efforts by the US, Europe and Japan to create a viable alternative, as well as China’s determination to increase domestic chip production, would impact economies, manufacturers, existing supply chain players as well as investors in the longer term.
🌏Around the world only a few companies control the global chip supply with regional expertise in ⚪US, 🔵Europe, 🟣Taiwan, 🟠South-Korea, 🟢Japan, 🔴China and 🟡Singapore but overall a high geographic concentration in Asia.
Fabless like NVIDIA Broadcom AMD rely on these champions operating across the critical semiconductor manufacturing steps:
– Design: Core chip IP Arm and EDA software mainly from US Cadence and Synopsys Inc.
– Wafer supply & raw materials: Japanese Shin-Etsu, SUMCO, Sumitomo Electric and European Sibelco Group, Siltronic AG, Soitec, Mersen.
– Wafer fab equipment: European ASML (Lithography), US Applied Materials (Deposition).and Lam Research (Etch).
– Manufacturing foundries: Leader Taiwan TSMC and Korean Samsung Semiconductor (Advanced Nodes) and Chinese SMIC (Mature Nodes).
– OSAT: Taiwan ASE Global, US Amkor Technology, Inc. and Chinese JCET Group, Tongfu few players anchor the global OSAT capacity.
🏆Here a partial list of components champions: VAT GROUP leader in vacuum valves, Edwards Vacuum dominant in dry vacuum pumps, INFICON Pfeiffer Vacuum+Fab Solutions Spacetek Technology AG vacuum sensors, MKS Inc. Advanced Energy sub-systems around the chamber, VDL ETG Eindhoven Precision stages and actuators.
#Sustainablity #SDGs #SDG11 #SmartCities #QuantumCities #SmartEcoCity
#SmarterGreenerTogether
Sources:
- https://www.eastspring.com/insights/thought-leadership/implications-from-a-reshaping-of-the-semiconductor-supply-chain
- https://www.rankred.com/chinese-semiconductor-companies/
