Global semiconductors: industry profile

Semiconductors are fundamental to the modern digital economy, enabling chips that power everything from smartphones and AI systems to cars and industrial equipment. While semiconductor devices include a wide range of product categories, integrated circuits (ICs) or chips form the backbone of the semiconductor industry.

Rapid growth is being driven by AI adoption, Internet of Things (IoT) technologies and electric vehicle (EV) applications with annual global revenue projected by PwC to reach US$1tn by 2030.

Over the past five years, the sector has seen strong overall growth with sharp cyclical swings. The surge in demand during the COVID-19 pandemic led to a global chip shortage from Q3 2020 through to Q4 2022. The subsequent surplus of inventory, combined with global inflation, resulted in an industry downturn in 2023.

However, revenue bounced back in 2024, and World Semiconductor Trade Statistics (WSTS) data reveal that annual sales totalled US$630.5bn worldwide – a 19% increase from the previous year and the highest ever peak.

The latest figures from the Semiconductor Industry Association show that Q2 2025 semiconductor sales totalled US$179.7bn worldwide, a 20% increase compared to the same period in 2024.

The global semiconductor industry encompasses several distinct segments, each playing a role in bringing products from concept to market.

IDMs are traditional semiconductor companies that oversee the whole production process in-house, from initial design through to manufacturing and sales. These firms operate their own fabrication plants for manufacturing, also known as foundries or fabs.

Notable companies:

• Intel
• Samsung Electronics
• SK Hynix
• Texas Instruments

Fabless companies specialise in designing semiconductors but outsource all physical manufacturing to third-party foundries. This model allows them to focus resources on innovation and product development.

Notable companies:

• Advanced Micro Devices (AMD)
• Broadcom
• Nvidia
• Qualcomm

Pure-play foundries manufacture semiconductors designed by other companies, operating as contract manufacturers. These firms focus on fabrication technology and capacity to serve multiple customers across different market segments.

Notable companies:

• GlobalFoundries
• Semiconductor Manufacturing International Corporation (SMIC)
• Taiwan Semiconductor Manufacturing Company (TSMC)
• United Microelectronics Corporation (UMC)

Intellectual property vendors develop and license the building blocks of semiconductor design, such as processor architectures, interface standards and specialised circuit designs. They generate revenue through licensing fees and royalties paid by firms who incorporate their IP into products.

Notable companies:

• ARM Holdings
• Imagination Technologies
• Synopsys
• Silicon Storage Technology (SST)

EDA companies provide specialised software tools that chip designers use to create, simulate and verify semiconductor designs before manufacturing. These tools are essential for managing the complexity of modern semiconductor design and optimisation.

Notable companies:

• Cadence Design Systems
• Keysight Technologies
• Siemens EDA
• Synopsys

OSAT companies provide the final steps in semiconductor manufacturing, encasing chips in protective housings and conducting quality assurance testing before shipment to customers as finished products ready for integration into electronic devices.

Notable companies:

• Advanced Semiconductor Engineering (ASE)
• Amkor Technology
• JCET
• UTAC

East Asia dominates the semiconductor industry as both a hub of manufacturing and consumption. Roughly 75% of the world’s semiconductor production capacity is concentrated in Taiwan, South Korea, mainland China, and Japan.

Taiwan stands as the global leader in chip fabrication, home to the Taiwan Semiconductor Manufacturing Company (TSMC). As a foundry, TSMC controls more than 67% of the world’s contract semiconductor manufacturing market, according to TrendForce data. Remarkably, 92% of the world’s most advanced semiconductor manufacturing capacity is in Taiwan, with the remaining 8% located in South Korea.

South Korea is a key player in memory and advanced chip fabrication. Samsung Electronics, headquartered in South Korea, was ranked the top semiconductor vendor in 2024 by Gartner with global revenue of US$66.5bn. In addition to Samsung, SK Hynix is another major Korean company, specialising in memory chips and consistently ranking among the world’s top semiconductor companies.

Mainland China is the largest single market, accounting for 42% of global semiconductor spending according to DBS. However, there is an increasing shift towards domestic suppliers and self-sufficiency as technology firms and manufacturers face pressure from US sanctions. Chinese foundries, designers and packaging firms receive billions in government subsidies and support, SCMP reports. In addition, China is the world leader in rare earth elements production, which are core components in semiconductor manufacturing, accounting for 51% of mining and 76% of refining according to International Energy Agency data.

Many companies have moved production to foundries based in Southeast Asia to take advantage of lower labour costs. Malaysia, for example, has long been a hub for chip assembly, packaging and testing. In 2024, the country launched its National Semiconductor Strategy and partnered with Arm to train more than 10,000 local engineers. Similar initiatives have been announced in Vietnam, Thailand and Singapore. Across the wider region, India’s government established the India Semiconductor Mission in 2021, offering incentive schemes aimed at manufacturers and design firms.

The US is a world leader in chip design. US-headquartered firms make up 72% of global chip design software and license sales according to US Congress reports. It is home to major industry players such as Intel and Nvidia, which were ranked number two and number three respectively among top semiconductor vendors by revenue in 2024, according to Gartner.

In recent years, the US has taken significant steps to boost domestic semiconductor manufacturing and innovation, notably through the CHIPS and Science Act which was enacted in August 2022. This framework provides over US$50bn in federal funding, grants and tax credits to drive industrial expansion, research and talent development, while restricting US companies from advanced manufacturing in foreign countries of concern, particularly China. Forecasts from BCG indicate that the US will attract roughly 28% of global capital expenditures in the sector as a direct result of these policies.

Europe (led by Germany, the Netherlands and France) holds a relatively small share of the semiconductor market, focusing on specialised areas. European firms excel in sectors like automotive semiconductors, power electronics, sensors, and equipment. For example, ASML, headquartered in the Netherlands, is the sole producer worldwide of EUV lithography machines essential for advanced chip fabrication. Infineon in Germany and STMicroelectronics, headquartered in Switzerland, are notable for automotive and industrial chips.

In response to increasing competition and the need for greater technological sovereignty, the European Chips Act was enacted in September 2023 to strengthen Europe’s position in the global supply chain. The EU’s Digital Decade programme aims to increase its share of global semiconductor manufacturing capacity from 10.5% to 20% by 2030.

The UK’s strength is in R&D capability, IP development, chip design and specialised activities such as compound semiconductors. The industry has grown at an annual rate of 8% over the past 10 years and revenues are estimated to reach up to £17bn by 2030 according to research by the Department for Science, Innovation and Technology. The same report states that the sector generated £9.6bn in revenue (2% of global revenue), contributed £7.4bn in Gross Value Added (GVA) and employed 15,000 people in the UK in 2022. As of 2024, there were 623 companies involved in the UK semiconductor sector, with 92% identified as SMEs.

Arm, based in Cambridge, is the UK’s leading industry player, accounting for 54% of total revenue and 32% of total employment by dedicated semiconductor companies headquartered in the UK. South Wales is home to CSconnected, the world's first compound semiconductor cluster bringing together research institutions, prototyping facilities and fabrication plants.

Semiconductors play a pivotal role in the UK Industrial Strategy Digital and Technologies Sector Plan, announced in June 2025. Funding is focused on boosting collaboration across industry, academia and government on R&D, chip design innovation and the talent pipeline. The plan builds on the 2023 National Semiconductor Strategy, which commits up to £1bn in investment over the next 10 years.

The rapid adoption of generative AI is reshaping semiconductor demand and industry economics. Training and deploying large language models (LLMs) and other AI systems requires specialised chips including graphics processing units (GPUs), custom AI accelerators and high-bandwidth memory (HBM). Projections cited by the Council for Science and Technology predict that AI-related chips could account for more than half of global semiconductor revenue by 2030, at a CAGR of 28.9% from 2024 to 2030.

Nvidia has emerged as the main beneficiary of this trend, capturing most of the market for AI training chips. This creates the potential for significant risk. Nvidia now represents roughly 8% of the S&P 500’s total value, meaning that any disruption to its business (from shifts in demand, increased competition or export controls limiting access to key markets) could trigger volatility well beyond the semiconductor sector.

The semiconductor industry’s global supply chain has become a focal point of geopolitical competition and national security concern. Semiconductor manufacturing has even been described as a nation state activity.

Major economies around the world are pursuing different but overlapping objectives. The US hopes to constrain China's technological advancement while securing domestic capacity. Europe seeks to establish greater technological sovereignty and reduce dependence on both Asia and the US. China is developing self-sufficiency and introducing export controls in response to these restrictions.

US technology policy towards China has intensified throughout 2024 and 2025, with expanding export controls restricting Chinese access to advanced chips and manufacturing equipment, alongside tariffs and entity blacklisting that complicate cross-border business relationships. Meanwhile, Taiwan’s dominance in advanced manufacturing, often called its “Silicon Shield”, has become both a geopolitical asset and a point of vulnerability, with North American and European governments increasingly concerned about overreliance on a region facing potential cross-strait tensions.

However, the economics of semiconductor manufacturing favour existing production hubs. Operating a fabrication facility in the US will cost up to 35% more than comparable operations in Taiwan according to McKinsey, driven by differences in energy costs, labour, supply chain proximity, and operational maturity. Companies must balance cost efficiency against supply chain security, regulatory compliance, and access to government incentives.

The semiconductor industry is known for its cyclical swings, experiencing nine boom-and-bust cycles over the past 34 years driven by mismatches in supply and demand. Small changes in demand can trigger a bullwhip effect up the supply chain. When demand is high, manufacturers expand capacity and customers build up inventory; however, when demand drops, overcapacity and inventory corrections can persist for multiple quarters.

The industry emerged in 2024 from a significant downturn, but recovery has been uneven. Companies involved in AI-related segments are experiencing strong growth while segments without exposure to generative AI (such as traditional PCs, smartphones and communications) are underperforming according to Deloitte analysis.

Semiconductor manufacturing is a highly resource-intensive industrial process which is responsible for 50 megatons of CO2 emissions annually, as reported by Imec. The most notable environmental impacts stem from the release of greenhouse gases, water consumption, energy consumption (often from non-renewable sources), and the mining and processing of raw materials. For example, a single fabrication plant can consume up to 38m litres of water per day. TSMC alone accounted for 8% of all electricity consumption in Taiwan in 2023 and reports suggest that this will rise to 24% by 2030.

These resource demands create significant business constraints as European and North American governments seek to reshore semiconductor manufacturing. Water scarcity, high energy prices and regulatory pressures on carbon emissions, particularly in the EU, will drive up operational expenses and compliance requirements.

The global semiconductor industry comprises a broad range of companies, with specialisms ranging from design and IP to packaging and testing.

ICAEW’s Library & Information Service can provide information on UK and Irish participants in the semiconductor industry via its wide range of company information services. This includes:

• Information on company acquisitions in the sector
• Private company transaction multiples
• Company data
• Beta values for companies and the sector
• P/E ratios for companies and the sector

For more information, please contact our enquiry team on +44 (0)20 7920 8620 or at library@icaew.com to discuss your requirements.

The websites of professional bodies in this sector are a useful source of industry overviews, contacts and statistics.

UK

• Compound Semiconductor Applications Catapult
• IET (Institution of Engineering and Technology)
• Silicon Catalyst UK
• TechWorks
• techUK
• UKTIN

Europe

• European Semiconductor Industry Association (ESIA)
• Imec

Americas

• Semiconductor Industry Association (SIA)
• Silicon Catalyst

Asia

• China Semiconductor Industry Association (CSIA)
• Japan Semiconductor Industry Association (JSIA)
• Korea Semiconductor Industry Association (KSIA)
• Singapore Semiconductor Industry Association (SSIA)
• Taiwan Semiconductor Industry Association (TSIA)

Global

• Global Semiconductor Alliance (GSA)
• IEEE
• International Microelectronics Assembly and Packaging Society (IMAPS)
• SEMI (Semiconductor Equipment and Materials International)
• SPIE
• World Semiconductor Council (WSC)