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
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