SIA Report Highlights Importance of Chinese Market to Chip Industry

The Semiconductor Industry Association this week released a report on the state of the American chip industry, highlighting issues surrounding U.S. Chips Act implementation, the manufacturing industrial base, global chip demand, American technological competitiveness, geopolitical tensions impacting the industry and more.

The report noted that semiconductors over the past year have increasingly become the “subject of various restrictive policies that have impeded the ability of U.S. companies to compete on a level playing field in the China market.” SIA said a strong American chip industry is “grounded in a virtuous innovation cycle that relies on access to global markets that can support” domestic research and development efforts, noting that China is “the world’s largest semiconductor market.”

“Without access to these global markets,” the report said, “U.S. companies lose the scale necessary to finance both capital expansions and research and development here in the United States.”

But SIA also said the semiconductor industry recognizes the “need” for a “narrowly tailored and multilateral approach” to export controls to address national security issues “while at the same time ensuring commercial competitiveness of the U.S. semiconductor industry.”

The report also noted that semiconductors remain one of America’s top exports, totaling $61.1 billion last year, fifth most behind exports of refined oil, crude oil, natural gas and aircraft. The chip industry was also behind only the U.S. pharmaceuticals and biotechnology industry “in terms of the rate of R&D spending as a percent of sales.” U.S. chip companies “spend more on R&D as a percent of sales than any other country’s semiconductor industry,” the report said.

Although SIA pointed to several challenges facing the chip industry, including U.S.-China tensions and the “need to enact policies to reinforce U.S. leadership in semiconductor design,” the association said it’s optimistic about the future. “Despite these challenges, the long-term outlook for this foundational industry remains strong,” SIA said. “That’s because moving forward, the world will need more and better semiconductors to power everything from appliances and airliners to autonomous cars and artificial intelligence. For society to advance, so too must chip technology.”