US Firms Still Dominate Chip Subsidies

Arthur T Knackerbracket writes:

China's support is greater relative to semiconductor industry revenue:

A report from the Organization for Economic Co-operation and Development (OECD) has found that semiconductor firms based in the United States received more government support than those based in any other region.

However, support for China's chip industry was larger relative to the revenue generated by Chinese semiconductor firms, reaching close to 10 percent of sales in the early 2020s.

The OECD - a forum for members espousing the market economy and democracy - said the global semiconductor market was worth $631 billion in 2024. It expected continued growth on the back of investment in datacenters, artificial intelligence, and autonomous driving. Its measure of the market includes chip design, manufacturing, testing and packaging, but not manufacturing equipment such as photolithography machines.

Firms based in the United States and Asia (eg Japan, Korea, and Taiwan) have long been the key players in the semiconductor sector, with Asia's role growing in importance as part of the supply chain was relocated there. Asia has, over the last two decades, become a global center for chip manufacturing and trade, although the United States maintains an important role in high-value segments of the supply chain, including in chip design. The sample of firms covered by the OECD MAGIC database thus includes a relatively large number of firms based in Asia and the United States, as well as large actors based in Europe, which largely serve the automotive industry. The sample is estimated to cover between 64 percent and 83 percent of global sales, depending on the year and how the sector's scope is defined.

"In absolute terms, firms based in the United States were the largest beneficiaries of government support, which notably includes the support these firms received in other jurisdictions in which they operate (eg in Asia), as well as the introduction of new subsidy programs in the United States. Subsidies to firms based in the OECD Asia-Pacific region also expanded steadily throughout the period for similar reasons. While subsidies to semiconductor manufacturers based in China have been modest in absolute terms, they represented a significant amount relative to their sales, reaching close to 10 percent of revenue in the early 2020s," the report said.

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