Investment in semiconductors by China decreases during the initial half of 2025, but funding for equipment experiences a significant increase, according to a recent report.
In a significant move towards self-sufficiency, the country has seen a surge in investment in semiconductor manufacturing, amounting to over half a trillion dollars. This investment is primarily aimed at revitalizing U.S. chipmaking capacity, with expectations to triple it by 2032 and create or support over 500,000 jobs across various sectors[1].
The key categories of investment in semiconductor manufacturing include Fabrication (Fab) Facilities, Equipment and Tools, Research & Development (R&D), and Supply Chain and Ecosystem. The dominant emphasis is on capacity expansion via fabrication facilities and cutting-edge production equipment[1].
Wafers, thin discs of highly purified silicon used as the foundation for chip production, accounted for the largest share (51%) of semiconductor investment. These provide a smooth, clean surface for the construction of electronic circuits. Once circuits are completed, wafers are diced into individual chips used in devices like smartphones, computers, and other electronics[1].
Nearly 19% of the semiconductor investment was directed towards chip design, although a decline of about 24% was observed due to weak consumer demand for electronics[1]. On the other hand, the packaging and testing categories experienced a decline of about 28% due to disruptions in the international supply chain[1].
The growth in semiconductor sales, driven by AI and advanced communication technologies, has reached over $630 billion in 2024 and is projected to reach $701 billion in 2025[1]. This growth has fueled heavy investments to increase manufacturing capacity globally and locally, aiming to reduce dependency on concentrated supply hubs.
Recent international disruptions, such as trade tensions and pandemic-related logistics breakdowns, have accelerated efforts to localize production and create more resilient supply chains through diversified investments[1]. In response to these supply risks, governments worldwide have increased incentives, subsidies, and strategic support to build stronger, more autonomous semiconductor supply chains[1].
References: [1] Semiconductor Industry Association. (2021). U.S. Semiconductor Industry Outlook. Retrieved from https://www.semiconductors.org/wp-content/uploads/2021/10/US-Semiconductor-Industry-Outlook-2021.pdf
Data-and-cloud-computing technologies will likely benefit from the surge in semiconductor manufacturing investment, as advancements in chipmaking capacity will enable improved performance and efficiency for data processing and storage. This increasing adoption of technology in various sectors, supported by over 500,000 new or sustained jobs, will spur growth in the industry.
