The Global Semiconductor Supply Chain: Key Inputs
Throughout the four phases in semiconductor production, there are several critical material and equipment inputs that pose additional supply chain challenges.
The following table provides a summarized assessment of several of the critical inputs in the semiconductor supply chain. Phases highlighted in blue are those in which the U.S. has secure domestic capabilities while phases highlighted in red are those in which U.S. capabilities are minimal and vulnerable.
| Supply Chain Input |
Main Source Countries |
| Critical Minerals |
China is the main source country for many required critical minerals including REEs, Gallium, Germanium, Arsenic, and Copper. The U.S. is highly import-dependent. |
| Polysilicon |
China accounts for 79% of global raw silicon and 70% of global silicon production. The U.S. has just 9% of global silicon production. |
| Semiconductor Wafers |
Global wafer production capacity is in: Japan (56%), Taiwan (16%), Germany (14%), South Korea (10%), and China (<5%). The U.S. has no wafer production capacity. |
| Photomasks and Photoresists |
Photomasks production: Japan (53%), U.S. (40%), and Taiwan (7%)
Photoresists production: Japan (90%), U.S. and South Korea (remaining 10%)
|
| Gases and Wet Chemicals |
Gases Sources: The U.S., Japan, France, and South Korea control over half of the global supply for the required gases.
Wet Chemicals Sources: The U.S., Germany, and Japan control 60% of global supply for the required chemicals. |
| Manufacturing Equipment |
The U.S., Japan, and the Netherlands dominate global production of most equipment and the most advanced machinery. China lacks the capacity to produce most of this equipment. |
Critical Minerals
Multiple critical minerals, critical metals, and rare earth elements (REEs) are required for the various components of semiconductors, and many of the supplies for these minerals are dominated by China. China controls 80% of the world’s REE supply for which the U.S. is 100% import-dependent. Currently, the U.S. imports 80% of REE directly from China, while remaining portions are indirectly sourced from China through other countries. Other critical minerals for semiconductors include:
Germanium:
• U.S. import-dependence: >50%
• U.S. import sources: China (58%), Belgium (21%), Germany (10%), Russia (8%), and other (3%)
Gallium:
• U.S. import-dependence: 100%
• U.S. import sources: China (55%), UK (11%), Germany (10%), and other (24%)
Arsenic:
• U.S. import-dependence: 100%
• U.S. import sources: China (58%), Morocco (38%), Belgium (2%), and other (2%)
Copper:
• U.S. import-dependence: 30%
• U.S. import sources: China (59%), Canada (24%), and Mexico (11%)
Therefore, regardless of downstream production or manufacturing capabilities, the U.S. will still rely on China for several of the key raw materials necessary for semiconductors.
Polysilicon
Another key raw material for semiconductors is polysilicon which is used to make the silicon ingot that is sliced into wafers. Semiconductors require ultrahigh purity polysilicon which is 1,000 times purer than the level required for solar panels and produced by just four companies globally. China accounts for approximately 79% of raw silicon (2016) and controls the production capacity for over 75% of global polysilicon production, compared to the U.S.’ 9%.
Semiconductor Wafers
Once the polysilicon is produced, it must be turn into thin disk-shaped silicon wafers used in the chip manufacturing process. Global wafer production is dominated by Japan (56%), Taiwan (16%), Germany (14%), and South Korea (10%). China controls less than 5% while the U.S. has no wafer production capacity.
Photomasks and Photoresists
Photomasks and photoresists are materials that contain and imprint the circuit pattern on the wafers. The photomask market is controlled by Japan (53%), the U.S. (40%), and Taiwan (7%). The photoresist market is dominated by Japan (90%) with the U.S. and South Korea making up the remaining 10%.
Gases and Wet Chemicals
Approximately 49 different gases are used throughout the semiconductor production process, with U.S., Japanese, French, and South Korean firms controlling half of the overall market for these gases. 60% of the global market for the wet chemicals required in semiconductor manufacturing is controlled by U.S., German, and Japanese firms.
Manufacturing Equipment
Due to the highly complex and technical nature of producing semiconductors, advanced equipment, tools, and machinery is required throughout the process. The U.S. and its allies control the supply chain for this manufacturing equipment while China possesses virtually no capacity to make this advanced equipment.
Manufacturing/Fabrication Equipment: The U.S. dominates the supply chain for equipment used the manufacturing/fabrication production phase, controlling 41.7% of the global market, followed by Japan (31.1%) and the Netherlands (18.8%). U.S. firms control the majority market shares for five of the major manufacturing processing equipment categories (deposition tool, dry/wet etch and cleaning, doping equipment, process controls, and testers). However, the production of the lithography equipment is concentrated in the Netherlands and Japan, with Dutch firm ASML the only firm in the world that produces EUV lithography machines necessary to manufacture advanced chips less than 7nm.
Packaging Equipment: For the equipment used in the packaging phase of the semiconductor production, the U.S. has a market share of just 4.9% compared to Japan’s 35.7%, China’s 22.9%, and the Netherlands’ 11.1%.
Testing Equipment: The U.S. and Japan lead the global production of equipment used in in the testing production phase, with 33.5% (U.S.) and 48.65% (Japan) of the global market share.
However, while the production of much of this equipment is concentrated with U.S., Japanese, and Dutch firms, each of these pieces of equipment is highly complex and requires extensive material inputs. Therefore, each piece of equipment has its own complex global supply chain with further complicates the security of supply chains for the semiconductor end product.