Germany is a Key Supplier in Global Semiconductor Production

Germany is among the nine most important countries in total worldwide when it comes to global semiconductor production. That is according to a study by the ifo Institute and EconPol Europe, which will be presented today at the Munich Security Conference. South Korea, Taiwan, Singapore, Malaysia and China produce over 50 percent of the chips traded worldwide. Germany, Japan, the United States and the Netherlands contribute a large proportion of the equipment for chip production. “Looking at not only trade in finished chips, but also at the equipment for production and the raw materials, Germany exports more than it imports. That makes dependencies in global semiconductor production reciprocal instead of one-sided,” says Lisandra Flach, Director of the ifo Center for International Economics. 

Trade data also shows that China and Taiwan are the main exporters especially for all types of integrated circuits. The United States, Germany and Japan, on the other hand, play an important role with regard to power and optical chips, and in sensor technology. South Korea is the market leader for memory chips. In total, there are around 75 different types of semiconductors that are used in different places and whose production has to meet different requirements. This high level of complexity in production means that semiconductor production is concentrated in a few countries. That leads to the risk of supply bottlenecks with serious economic and security consequences. 

“Manufacturing all chips solely in Europe in the future is also associated with a high degree of uncertainty and is not very realistic. Responding to the alleged Chinese-Taiwanese dominance with trade restrictions or export controls is also not expedient,” says Dorothee Hillrichs, co-author of the study. “Instead, governments should consider differentiated political approaches that promote innovation at every stage of the production process, from development and production to assembly, testing and packaging.”  

Questions can be directed to: Dr. Dorothee Hillrichs, 0049 / 89 / 9224-1393; Hillrichs@ifo.de