Asia Pacific destined to become anchor of global semiconductor industry

The Asia Pacific region is set to surge to 62% of a more-than-USD1 trillion global semiconductor market by 2030 as drivers of demand expand beyond consumers to businesses, according to a new report from Deloitte.

The report, Anchor of Global Semiconductor – Asia Pacific Takes Off, reflects on market developments over the past 10 years, driven largely by consumer demand, and looks ahead to the coming decade, which will see a shift to "consumer + corporate" demand, driven by digital technologies including 5G, artificial intelligence (AI), and Internet of Things (IoT).

Signs of Asia Pacific's dominance are already evident in it being home to five of the world's top 15 semiconductor enterprises by revenue, notes Deloitte China Technology Sector Leader Mark Lian. 

"South Korea, Japan, the Chinese Mainland, and Taiwan (China) have each played a critical role in the development of the Asia Pacific semiconductor industry, from upstream to downstream," he adds. "Over the next 10 years, we expect South Korea to devote R&D efforts towards AI- and 5G-related products, Japan to strive to develop mid- and downstream as it seeks to revive its semiconductor industry, China to advance towards self-sufficiency, and Taiwan (China) to continue to reinvent its tech ecosystem, including the development of sustainable and green semiconductors." 

In the industry's development trajectory, governments play a crucial role in promoting the semiconductor sector in the Asia Pacific region. Mainland China, Japan, South Korea, Taiwan (China) and other regions have successively released investment plans, established tax reduction and exemption policies, and talent training initiatives to consolidate the semiconductor value chain.

"State backing has long been essential to development of the semiconductor industry, which is widely regarded as one of the most strategically significant sectors," Lian says. "This isn't limited to funding and financial incentives like tax breaks, but also programs to develop talent – which is crucial if Asia-Pacific's semiconductor industry is to remain competitive and enhance its place in the global market." 

Turning to semiconductor demand, the report explores the increasing role of AI, which is expanding beyond consumer technology, dominated by smartphones, to industries like financial services and healthcare.

"AI is a powerful catalyst for semiconductor development in a whole range of sectors, with a wave of related applications and innovations set to emerge over the next 10 years," says Deloitte China Semiconductor Sector Leader Leo Chen. "This transformation will see semiconductor companies break through technological barriers, and have a massive impact on chip production technology."

Intelligent autonomy will also be a key driver of semiconductor demand, according to the report. Advances in pure electric vehicles will see them overtake internal combustion engine (ICE) vehicles, prompting a surge in demand for power semiconductors and third-generation chips. Asia Pacific currently represents a third of the global automotive semiconductor market, with Japan the clear leader. 

"Automotive semiconductor demand will be driven not just by the end of the 'ICE age', but also intelligentization and connectivity boosting demand for side-of-vehicle, road sensor, and communication semiconductors," concludes Chen. "We expect automotive semiconductors to be the industry's fastest growing segment, with predicted growth of around 14.3% seeing its annual revenue nearly double from 2020's USD38.7 billion to USD75.5 billion in 2025."