Top 10 Semiconductor Manufacturing Countries in the World

Published on December 8, 2022 at 12:06 pm by Ramish Cheema in Lists, News

In this piece, we will take a look at the top ten semiconductor manufacturing countries in the world.

Semiconductor fabrication is one of the most lucrative yet one of the most difficult industries in the world. Chips are responsible for powering the information-driven, modern day economy. However, manufacturing them comes after decades have been spent on research and development and billions of dollars have been spent in capital expenditure to procure the right equipment. Sometimes, even this is not enough as chip manufacturers, also called fabs, are only a single player in a vast supporting ecosystem that ranges from the equipment needed to prepare and transform silicon into the wafers for fabrication to the actual testing of the chips once they have been ‘printed’ inside expensive machines.

Therefore, chip production is concentrated in geographic pockets, with some countries having an edge over others since the supporting foundry ecosystem enables companies to set up facilities there much more easily. An example is the U.S. state of Arizona, which is known for hosting chipzilla Intel Corporation (NASDAQ:INTC)’s foundries and subsequently has a strong ecosystem that consists not only of companies that provide the necessary raw materials, but also universities that tailor their programs to meet Intel Corporation (NASDAQ:INTC)’s needs and ensure that it has a steady stream of engineers ready to build chips. The strength of the Arizonian ecosystem has also enticed the Taiwan Semiconductor Manufacturing Company (NYSE:TSM) to build its new American chipmaking plant in the state as well, after scouting for multiple locations.

As an estimate of the investment required to keep the foundries and ecosystem running, a brief look at the capital expenditure of the industry is relevant. According to the research firm IC Insights, worldwide semiconductor spending will sit at a whopping $185.5 billion next year. The spending has grown exponentially in just four decades, as in 1980 it had stood at a mere $14.7 billion.

Moving towards units shipped, coverage from the Semiconductor Industry Association (SIA) shows that by the end of 2021, global semiconductor sales had stood at a stunning $555 billion, growing at a compounded annual growth rate (CAGR) of 7.18% since 2001. The U.S. continued to dominate the market, as it held 46% of the overall pie, with South Korea coming in at second place with a 21% share and Japan and the European Union in third place with 9% market shares, each. Crucially, U.S. firms had also commanded half of the Chinese market, which was the largest in the world with and worth $192.4 billion. However, while American companies were the worldwide chip leaders, the Americas market is the third largest in the world and was valued at $121.5 billion last year.

Top 10 Semiconductor Manufacturing Countries in the World

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Our Methodology

We looked through the major semiconductor foundries all over the world and determined the countries (or special regions such as Taiwan) in which they are operating in. The regions are then ranked according to the number of fabs that are present in them, and the list is not exhaustive and it also includes plants that are under construction. Also, do check out 16 Largest Semiconductor Companies by Market Cap if you want to know about the largest semiconductor companies in the world. Some of the companies on that list include Intel Corporation (NASDAQ:INTC), QUALCOMM Incorporated (NASDAQ:QCOM) and Taiwan Semiconductor Manufacturing Company (NYSE:TSM).

Top 10 Semiconductor Manufacturing Countries in the World

10. State of Israel

Number of Operational and Planned Fabs December 4, 2022: 4

The State of Israel is a Western Asian country that is also one of the most advanced nations in the world. Despite a population of a mere 9.6 million people, the country’s economy is worth $497 billion which lends it a high GDP per capita of $52,173. Israel also boasts one of the largest startup ecosystems in the world and has the most NASDAQ listed companies after the U.S. and China as of 2016, indicating the strength of its business ecosystem. Additionally, the country also runs a current account surplus as of 2019, leaving it with little need to be dependent on foreign capital to fund its economy through loans.

Owing to the fact that it is an economic and technology hub, the State of Israel also has four semiconductor foundries. Two of these belong to the U.S. chipmaking giant Intel Corporation (NASDAQ:INTC), and two below to Tower Semiconductor, but with Intel Corporation (NASDAQ:INTC) being in the process of acquiring the Israeli chipmaker, soon all the chipmaking facilities in the country will come under chipzilla’s umbrella.

9. Netherlands

Number of Operational and Planned Fabs December 4, 2022: 4

The Netherlands is a European country that is the largest constituent of the Kingdom of the Netherlands. It is one of the most liberal countries on Earth, and also one of the most densely populated regions as more than 500 people live in each square kilometer of the country. The country’s GDP stood at a whopping $1.2 trillion in purchasing power parity terms this year, lending it a high GDP per capita of $69,715. The Netherlands is a net exporter and has a large current account surplus, which lends it credibility with global financial markets and lets it borrow trillions of dollars to fuel its growth and keep its credit outlook stable at the same time.

Some of the largest multinational firms in the world are also located in the country, and one of the most crucial firms headquartered there is ASML. ASML, like Intel Corporation (NASDAQ:INTC), QUALCOMM Incorporated (NASDAQ:QCOM) and Taiwan Semiconductor Manufacturing Company (NYSE:TSM), is one of the biggest semiconductor companies in the world. ASML is the only company in the world that is capable of manufacturing high end machines that print semiconductors. The chip industry’s progress depends on these machines, and therefore they are always in high demand, even when the industry is facing a downturn as chipmakers are continuously planning for the future. Additionally, the Euronext Amsterdam stock exchange is the oldest exchange in the world, since it was set up centuries ago in 1602. Chip manufacturing plants in the Netherlands belong to NXP and Philips, among others.

8. Malaysia

Number of Operational and Planned Fabs December 4, 2022: 7

Malaysia is a Southeast Asian country that gained independence from the United Kingdom in 1957 and then united with three other colonies, including Singapore, to become Malaysia in 1963. However, Singapore was expelled from the union in 1967, with economic and political disagreements and racial tensions fueling the decision to prevent bloodshed. Malaysia’s GDP is estimated to be worth more than a trillion dollars, and the country also runs a current account surplus. Malaysia exports semiconductors and natural resources, among other products.

Seven chipmaking plants are located in the country, with four belonging to the German firms Infineon and Osram Licht. Another belongs to a Belgian firm and two belong to Malaysian entities.

7. United Kingdom of Great Britain and Northern Ireland

Number of Operational and Planned Fabs December 4, 2022: 12

The United Kingdom of Great Britain and Northern Ireland is a European country, which when combined with Ireland, is surrounded by the Atlantic Ocean. It has a unique and distinct history, which has seen it not only rule the world but have deep ties to the Roman Empire via its City of London financial hub which is part of Greater London. The U.K. has also pioneered many modern day inventions such as the automobile and the jet engine.

The United Kingdom of Great Britain and Northern Ireland is home to one of the most consequential semiconductor designers, Arm Ltd. Arm’s products are at the heart of most of the world’s smartphones and its designs are also used in data center chips. Chip fabrication facilities in the country are owned by Dutch and American firms, among others.

6. Republic of Korea (ROK)

Number of Operational and Planned Fabs December 4, 2022: 15

The Republic of Korea (ROK), also known as South Korea, is an East Asian country that became a republic in 1949. The country is one of the most prosperous nations in the world, with a $2.7 trillion GDP and a GDP per capita of $53,051. South Korea’s exports stood at $644 billion in 2021, out of which integrated circuits, or semiconductors, formed the largest chunk as they accounted for more than 15% of the overall pie.

The strength of its chip exports is unsurprising as some of the largest chip companies are located in the Republic of Korea (ROK). The country is home to two of the world’s three largest memory manufacturers – SK Hynix and Samsung. The pair collectively controlled roughly two thirds of the global memory market as of September 2022. Samsung’s chipmaking divisions are also responsible for manufacturing semiconductors for other companies, and Samsung Foundry is only of two companies in the world (the other being TSMC) that make chips for others with leading edge process technologies such as 5-nanometer and now 3-nanometer. Out of the 15 chipmaking fabs in South Korea, eight are owned by Samsung which also makes processors and graphics processing units (GPUs) for its own smartphone lineup. These are used in international variants of the devices that are sold outside the United States due to an agreement with the U.S. chip giant QUALCOMM Incorporated (NASDAQ:QCOM).

As the demand for semiconductors grow around the world, companies like Intel Corporation (NASDAQ:INTC), QUALCOMM Incorporated (NASDAQ:QCOM) and Taiwan Semiconductor Manufacturing Company (NYSE:TSM) are set to experience record profits in the long term.

5. Federal Republic of Germany

Number of Operational and Planned Fabs December 4, 2022: 20

The Federal Republic of Germany is a Central European country that is also the largest European economy and one that is a global economic powerhouse. The German economy was worth a whopping $5.3 trillion in 2022, making it the fifth largest in the world and lending it a per capital income of $63,835. The bulk of the country’s exports are services, and industry comes in second place.

German exports stood at a staggering $1.6 trillion in 2021, with the U.S. and China the country’s largest trading partners. There are 20 chipmaking facilities in the country, belonging to various countries – both German and international.

4. People’s Republic of China (PRC)

Number of Operational and Planned Fabs December 4, 2022: 70

The People’s Republic of China (PRC) is the largest country in the world when it comes to population and the second largest when it comes to the economy. It is also one of the oldest countries in the world, and has deep historical roots that stretch back to ancient times. Over the years, the People’s Republic of China (PRC) has opened itself up to foreign countries, and it is a global manufacturing hub due to abundant labor and low costs.

China’s Semiconductor Manufacturing International Corporation (SMIC) is one of the largest contract chip manufacturers in the world, and the country is also aiming to achieve self reliance in chip manufacturing this century. Fabs in China are owned by both local and international firms.

3. United States of America

Number of Operational and Planned Fabs December 4, 2022: 76

The US is one of the most prosperous and technologically advanced nations in the world. Commonly referred to as a ‘hyperpower’, the U.S. is the most powerful nation in human history when it comes to military dominance. Its air and naval forces command the skies and the sea, and it leads in aerospace, biotechnology, artificial intelligence, and semiconductor fabrication, all of which are at the forefront of today’s technological revolution.

U.S.’s crown semiconductor jewel is Intel Corporation (NASDAQ:INTC), which is credited with having invented the modern day semiconductor. Intel has some of the most advanced chipmaking facilities in the world, and it has pioneered leading transistor designs such as FinFET.

2. Republic of China (ROC)

Number of Operational and Planned Fabs December 4, 2022: 77

While the Republic of China (ROC), or Taiwan, is not recognized as a country, and its legal nature is still up for debate, it is one of the most important regions in the world. Taiwan is home to the Taiwan Semiconductor Manufacturing Company (NYSE:TSM), which is the world’s largest contract chip manufacturer both in terms of market capitalization (as of December 4th, 2022) and output. TSMC is often referred to by the Taiwanese as the ‘sacred mountain’ as the firm’s importance in global trade lends Taiwan a unique security advantage (and disadvantages as well).

Taiwan is home to some of the most advanced chipmaking facilities in the world, including the brand new 3-nanometer fabs that just entered production in the latter half of 2022.

1. Japan

Number of Operational and Planned Fabs December 4, 2022: 102

Japan is one of the most technologically advanced nations in the world, and also one of the most prosperous. Its economy was worth a massive $5 trillion in 2022, making it the fifth largest in the world in terms of purchasing power parity. Japanese exports were $729 billion in 2021 and its foreign exchange reserves of $1.2 trillion in October 2022 were the second largest in the world.

Japan also has one of the strongest semiconductor ecosystems in the world, and 102 chipmaking facilities operate in the country. These are owned by a mix of different firms, several of them Japanese as well, and others too including Taiwanese and American companies.

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