Semiconductor subsidies have skyrocketed

In the recent semiconductor-shortage-dominated months, the US, European Union, and South Korean governments have pledged to boost their chipmaking subsidies from basically (or, in the US’ case, literally) zero to hundreds of billions of dollars.

• For context...here’s each country’s share of global semiconductor manufacturing: US (12%), EU (2.8%), South Korea (27%).

“We’ve sort of reached a tipping point where countries are investing because they know demand for semiconductors is on the rise,” Dan Rosso, director of communications at the Semiconductor Industry Association (SIA) told us. “They want a bigger share of the increased chip production.”

Big spenders

So far in 2021, the US, EU, and South Korean governments combined have pledged 5,124% more in semiconductor subsidies than they dished out over the last two decades.

• From 2000–2020, total semiconductor subsidies across South Korea, the US, and Europe totaled ~$12.5 billion, per SIA analysis, with the US spending zero, zip, zilch, nada.
• Now, that figure is ~$653 billion. South Korea is the leader with a plan to spend $451 billion, the EU is next at a pledged $150 billion, and the US Senate approved a plan to spend $52 billion.

Zoom out: China, which has 12% of global semiconductor manufacturing, pumped about $50 billion into its chipmaking industry between 2000–2020. And in 2014, it established a goal of spending $150 billion to produce 70+% of the chips it uses by 2030. As of H1 2021, it made no more than 36% of the chips it used.