Germany’s Prominent Role in Global Chip Production
Joint Study Highlights Germany’s Contribution to Semiconductor Equipment
A joint study conducted by the ifo Institute and the EconPol Europe network has revealed Germany’s significant position in the global supply of equipment for chip production. Alongside Japan, the United States, and the Netherlands, Germany plays a crucial role in manufacturing machinery used in chip manufacturing.
Germany’s Positive Export Balance in Chip-Related Trade
The study extends its analysis beyond finished chips to encompass equipment and raw materials used in the production process. In this broader context, Germany emerges as a net exporter, indicating a strong position in the global chip industry.
"The dependencies in global semiconductor production are not one-sided but reciprocal," explained Lisandra Flach, head of the ifo Center for Foreign Trade, highlighting the mutually beneficial nature of international collaboration in chip production.
Regional Distribution of Chip Production and Exports
According to the study, South Korea, Taiwan, Singapore, Malaysia, and China account for over 50% of globally traded chips. Trade data shows that China and Taiwan dominate exports across all types of integrated circuits.
In contrast, the United States, Germany, and Japan excel in the production of power semiconductors, optical chips, and sensor technology. South Korea maintains a strong lead in memory chip manufacturing.
Complexities and Concentrated Production of Semiconductors
The study highlights the complexity of semiconductor production, with approximately 75 different types of semiconductors used for diverse applications and production processes catering to specific requirements. This complexity has led to the concentration of semiconductor production in a limited number of countries, potentially creating risks of supply disruptions with severe economic and geopolitical implications.
Cautious Approach to Reshoring and Trade Restrictions
"Producing all chips exclusively in Europe in the future is just as fraught with uncertainties and hardly realistic," remarked Dorothee Hillrichs, co-author of the study. She cautioned against resorting to trade restrictions or export controls as a response to perceived Chinese-Taiwanese dominance, emphasizing the potential for unintended consequences.
Policy Recommendations for Sustainable Chip Production
Instead, Hillrichs and the study’s authors advocate for government support of innovation throughout the semiconductor value chain, from research and development to manufacturing, assembly, testing, and packaging. Such measures would foster a robust and sustainable chip industry, reducing the risk of supply disruptions and safeguarding both economic and national security interests.
