Report: Top countries spending the most money on semiconductor research and development (R&D), 2023

The digital economy hinges upon the worldwide semiconductor industry, as it is utilized in many different areas, including communication, healthcare, automotive, and defense. It’s essential to consider this industry’s growth rate, geopolitical repercussions, and the interventions of governments.

CEOWORLD magazine Insights has projected that the semiconductor market will reach a value of $1.8 trillion by 2030, expanding at a compound annual growth rate (CAGR) of 12.5 percent from 2022. Asia Pacific, led by China, is expected to retain its largest market share, while North America is seen to benefit from research and development (R&D) activities. Additionally, the communication and networking sector is expected to be a major driving force of the semiconductor industry in Europe.

As a result, the U.S. government launched the CHIPS and Science Act in August 2022 to attract private investments to strengthen the semiconductor industry. This was done to help counter the effects of the global semiconductor shortage crisis.

Around the world, countries are participating in semiconductor competition, with China providing tax breaks and substantial financial backing to back its semiconductor sector. India’s Semiconductor Mission (ISM), is a forward-thinking initiative to revolutionize semiconductor manufacturing and design in India. The European Union is also acting, having put forward the EU Chips Act in April 2023 to double their global chip output share by 2030 with public and private investment. Japan, South Korea, Taiwan, and other countries are likewise making a serious attempt to grow their semiconductor industry through various endeavors, tax reliefs, and budgeting for R&D.

We used information from the Semiconductor Industry Association (SIA) to determine which nations invest the most in semiconductor research and development (R&D). We based our assessment on two variables: R&D expenditure as a percentage of sales, and percentage share of worldwide semiconductor exports. Our analysis is presented in ascending order according to our primary metric.

Top countries spending the most money on semiconductor research and development (R&D), 2023

Here, we present a comprehensive overview of the top countries by semiconductor research and development (R&D) spending as a percentage of sales, along with their percentage share of global semiconductor exports. These countries play a significant role in shaping the global semiconductor landscape.

1. United States
   R&D Expenditure as a Percentage of Sales: 18%
   Percentage Share of Global Semiconductor Exports: 4.75%
   The United States boasts a vital semiconductor industry, with the highest R&D expenditure as a percentage of sales across all industries. This investment sustains the country’s dominance in global sales and job creation, contributing to 345,000 direct jobs and nearly 2 million indirect jobs. In 2022, U.S. semiconductor exports reached $61.1 billion.
2. Germany
   R&D Expenditure as a Percentage of Sales: 17%
   Percentage Share of Global Semiconductor Exports: 6.29%
   Germany holds a prominent position in the European semiconductor industry, housing some of the world’s largest semiconductor companies. In 2022, Germany accounted for 6.29% of the global semiconductor exports, signifying its significant role in the sector.
3. Netherlands
   R&D Expenditure as a Percentage of Sales: 16%
   Percentage Share of Global Semiconductor Exports: 2.45%
   The Netherlands boasts a multitude of small and large semiconductor companies, contributing 2.45% to the total global semiconductor exports. The country’s commitment to semiconductor industry R&D is substantial.
4. France
   R&D Expenditure as a Percentage of Sales: 15%
   Percentage Share of Global Semiconductor Exports: 1.15%
   France stands as a leading European player in the semiconductor industry, representing 1.15% of the global semiconductor exports. The French government’s policies are geared toward fostering an enabling environment for semiconductor companies to thrive.
5. Austria
   R&D Expenditure as a Percentage of Sales: 14.5%
   Percentage Share of Global Semiconductor Exports: 0.89%
   Austria, a European nation, contributed 0.89% to the global semiconductor exports share. The country hosts prominent semiconductor companies, and its government is actively investing to further bolster the semiconductor segment.
6. Italy
   R&D Expenditure as a Percentage of Sales: 14.3%
   Percentage Share of Global Semiconductor Exports: 0.77%
   Italy, a European nation, holds a significant market share in global semiconductor exports. It plays a substantial role in the European semiconductor landscape, contributing 0.77% to global semiconductor exports.
7. United Kingdom
   R&D Expenditure as a Percentage of Sales: 14.1%
   Percentage Share of Global Semiconductor Exports: 0.5%
   The United Kingdom boasts one of the highest semiconductor R&D spending percentages globally. The government’s commitment is notable, with plans to invest nearly GBP 1 billion in the semiconductor industry over the next decade. It stands as a prominent semiconductor manufacturing country.
8. Hungary
   R&D Expenditure as a Percentage of Sales: 12%
   Percentage Share of Global Semiconductor Exports: 0.43%
   Hungary, located in Europe, displays significant semiconductor R&D investments, with the industry thriving under government support and the presence of large companies in the region.
9. Taiwan
   R&D Expenditure as a Percentage of Sales: 11%
   Percentage Share of Global Semiconductor Exports: 5.42%
   Taiwan ranks among the world’s leading semiconductor producers. Committing 11% of sales to R&D in both 2021 and 2022, Taiwan’s robust foundation in semiconductor technology and skilled workforce positions it as a key player in the industry. Its largest company, Taiwan Semiconductor Manufacturing Co. (TSMC), comprises 50% of the market on its own. Makes chips for Apple, AMD, Nvidia, Qualcomm, more.
10. South Korea
    R&D Expenditure as a Percentage of Sales: 9.1%
    Percentage Share of Global Semiconductor Exports: 3.93%
    South Korea boasts one of the highest semiconductor R&D spending percentages among countries. Allocating 9.1% of sales to R&D in 2021 and 2022, South Korea’s strong position in the Asia Pacific semiconductor market relies on sustained investments in research and development. Accounts for 17% of global foundry market, and is expanding.
11. Japan
    R&D Expenditure as a Percentage of Sales: 8.3%
    Percentage Share of Global Semiconductor Exports: 8.77%
    Japan stands as one of the foremost semiconductor-producing countries globally. The nation allocated 8.3% of its total sales to R&D in both 2021 and 2022, maintaining its significant presence in the Asia Pacific semiconductor landscape.
12. China
    R&D Expenditure as a Percentage of Sales: 7.6%
    Percentage Share of Global Semiconductor Exports: 39%
    China, a significant player in the semiconductor market, has consistently allocated 7.6% of its sales to R&D in 2021 and 2022. Geopolitical tensions with the US have fueled China’s drive toward self-sufficiency, resulting in substantial R&D investments.

For investors seeking exposure to the global semiconductor industry, prominent companies to consider researching include IQE plc, Synopsys, Inc., NVIDIA Corporation, and Intel Corporation. These countries exemplify diverse approaches to semiconductor R&D spending, each contributing uniquely to the global semiconductor landscape. Their investments, policies, and exports play critical roles in shaping the industry’s trajectory and impact on the world economy.

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