Enabling the Hyperconnected

Age: the role of semiconductors

November 2014

Neil McCullough

Associate Director

Oxford Economics

Redefining society, culture and communications

Mobile devices: social media, web

browsing, entertainment, and various forms

of connectivity

Automobiles: keyless cars, infotainment

systems and safety features

Wearable devices: heart rate, glucose

levels, food intake, and real time data for

Doctors

Unparalleled possibilities

None of it possible without the

semiconductor

Top innovations since the wheel

1. Printing press

2. Electricity

3. Penicillin

4. Semiconductor

5. Eyeglasses

6. Paper

7. The steam engine

Source: http://www.theatlantic.com/magazine/archive/2013/11/innovations-list/309536/

June 2014, Facebook more than

1.32bn monthly active users

More than 7bn mobile devices

now outnumber global

population

By 2017, c.10bn devices will

have downloaded 77bn apps

By 2020 there will be 50bn

networked devices (Cisco)

Though some find this number

conservative, as less than 1% of

objects are connected to the

internet.

Semiconductors’ global footprint (in 2012)

$290bn in annual revenue in

2012

Expectations that this will

exceed $400bn in 2017

A direct contribution to

global GDP - the industry’s

turnover less its costs, also

known as its “value-added”

of $202bn

Sustaining 1.3m high-value

jobs

Direct employment by type of semiconductor firm

10% in Europe

10.8%

21%

5.3%

IDM dominates with c.66.6% of direct GDP and 61.9% of jobs

Fabless account for 17.7% of GDP, but only 9.3% of jobs

c.75% of foundry jobs in Taiwan (57%), China (10%) and US

(9%)

OSAT – 2nd largest employer (18.5%) but only 6.4% of GDP

EDA / IP – 4 economies account for over 75% of jobs, US

(25%), Europe (21%), China (15%) and Taiwan (15%)

Geographic distribution of direct employment

Directly supports 1.3 million jobs around the world in 2012

A truly global sector

US highest number of jobs, but China estimated to have nearly as many,

given lower cost of labor and the growing importance

GDP impacts of the semiconductor industry

Advanced economies US, Europe and Japan enjoyed the largest impacts

But the impact is sizable elsewhere

The economic impact of semiconductors

Quantifying full effect is

complicated

Innovation in the

semiconductor industry

grew at close to 9% over

the period from 1960 to

2007 in the US

25 times the innovation

growth rate for the

economy as a whole

Estimated to have counted

for nearly 30% of the US’

aggregate economic

innovation over this period.

Source: Samuels, Jon D. (2012): "Semiconductors

and U.S. Economic Growth".

The downstream economic impact (US $ bn)

Most important contributions of semiconductor advancements are felt

in sectors where semiconductors are vital inputs.

Unsurprisingly, consumer electronic appliances, particularly

computers, account for nearly 50% of the downstream contribution

Why semiconductors matter to policymakers

$155,000 per full-time employee -

37% higher than US economy as a

whole

Recognized that boosting skills in

STEM can raise national

competitiveness

Semiconductor industry employs

such skills, and the quality reflected

in the industry’s pay levels

The US semiconductor & electronic

component manu. sector employed:

■ 62,000 engineers with average

salary of almost $97,000 in 2012

■ 27,000 computer & mathematical

occupations, with average salary

of $94,000

Semiconductor R&D from 1978 to 2013

(forecast)

Conclusions for policymakers

Recognize the contributions of the semiconductor industry

Consider:

■ Funding and scholarships for students in STEM, and programs to expand

and diversify the talent pipeline;

■ R&D tax credits;

■ Patent reform;

■ Immigration reform;

■ Increased collaborations with research units; and

■ Aid in developing research consortia that foster and accelerate pre-

commercial innovation in semiconductor materials, fabrication

technologies, and architecture.

Contact Details:

Neil McCullough

nmccullough@oxfordeconomics.com

Oxford Economics

Lagan House

Sackville Street

Lisburn

County Antrim

BT27 4AB

UK

Tel: 028 9263 5400