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This statistic highlights Semiconductor Equipment Sales by Region, distributed across Taiwan, North America, Europe, Japan and China.
A semiconductor is a material which conducts electricity under specific conditions. Its conducting strength lies somewhere between a conductor and an insulator. Semiconductors, also known as semis or chips have a variety of uses, such as in computers, gaming appliances, smartphones and medical devices. Their usefulness has made semiconductors a major contributor to global technological development.
The accepted rule is that the smaller a semi is, the more powerful it becomes a transmitter of electric currents. With a reduction in size, there is a slash in price which in turn leads to a decrease in the cost of products that run on semiconductors. This makes the semiconductor industry highly cyclical having the nature of a ‘boom and bust’ cycle. As a result, there is intense competition in the semiconductor industry as the companies that are manufacturing semiconductor equipment have to come up with something better and cheaper every couple of months, else they run the risk of becoming redundant.
2018 was a period of boom for semiconductor companies with global sales of US$ 64.5 billion. Of that, the largest market has been claimed by Korea for the second consecutive year with annual sales of US$ 17.71 billion. Fueling growth, South Korean multinational conglomerate Samsung Electronics and SK Hynix – among the world leaders in semiconductor manufacturing, have plans to invest a combined US$ 32.8 billion in the country’s chips industry by 2024.
Not to be outdone, China came in a close second with a surge of 59.3% in annual billings from 2017. Taiwan which was top of the heap was dethroned by Korea in 2017 and was pushed down to third place in 2018 by China. One of the reasons for Taiwan’s downtrend could be China’s active poaching of Taiwanese engineers in its fast developing semiconductor industry. While South Korean and Japanese engineers have not escaped China’s watchful eye, the mainland has been most successful in recruiting Taiwanese talent because of the shared language and culture. Reportedly, the engineers were lured by high pay and senior roles among other incentives. In 2017, China imported $260 billion worth of semiconductors as the market demand for domestically produced chips barely touched 20%. Hoping to reduce its tech dependency on outside sources, specifically in the wake of a hike in the U.S. imposed tariffs, Beijing has established a goal for locally producing at least 40% of semiconductors by 2025.
The U.S.-China Trade War has a counterpart in the form of a burgeoning trade dispute between Japan and South Korea. In July of 2019, Japan announced that it will restrict exports of certain chemicals to South Korea which are essential for producing semiconductors. Under the new regulations, South Korea would have to undergo a 90-day process to obtain a license to import each chemical. This tight control exerted by Japan could adversely affect the Korean economy, considering semiconductor sales accounted for 92% of the 2018 growth in exports of the Korean peninsula.  Japan, and erstwhile leader of chips in the 1990s was overtaken by Taiwan in 2009 most probably due to certain strategies of Japanese companies such as high prices, over customization and restricting competition – with the last tactic being employed once again with South Korea.
2014 and 2015 saw a decline in equipment sales for Taiwan while Japan had an uptick of US$0.8 billion and U$1.31 billion in each of the two years. 2016 was the best year for Taiwan over the last 4 years with semiconductor sales of US$12.23 billion. Europe has been ranked among the bottom in over 30 years. The European Commission has redoubled its efforts in trying to revive its semiconductor industry by funding a research programme called Horizon Europe. The € 5 billion Electronic Components and Systems for European Leadership (ECSEL) are focused on bringing about public-private partnerships to promote R&D against American and Asian competitors.
At the outset of 2019, billings of North American semiconductor manufacturers is decelerating after reaching revenue highs in the early part of 2018. May of 2018 witnessed the highest revenue of US $ 2,702.3 million for North America since 2012 but expectations are quite low for 2019.
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