Semiconductor Monthly News
6/1/2023 by Carlos Romero
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Our semiconductor news for May 2023. In this edition, we cover the UK government's strategy for the semiconductor industry, the 'Hiroshima Accord', Apple's deal with Broadcom, and much more.
As we reach the midway point of 2023, the semiconductor industry has seen a flurry of developments that could shake up the whole industry. In this month’s edition of Semiconductor Monthly, we break down the biggest headlines of this year so far.
This month, the UK Government finally announced their long-awaited plans for the Semiconductor Industry, revealing a decade-long plan to support both the UK’s biggest strengths and the collective industry's weaknesses that led to the semiconductor shortage; Chip design, R&D, compound semiconductors and their national supply chain. The strategy itself has been criticized by countless industry experts including the Founder and Chief Executive of Paragraf, Seaman Thomas, who publicly said the UK Government’s strategy for the Semiconductor industry was “frankly flaccid”.
Others see the strategy in a different light, heralding it as focusing on strengthening the areas where the UK currently excels as opposed to taking on the global leaders in high-end chip manufacturing. Whilst the £1bn figure may pale in comparison to the US Science and CHIPS Act ($52bn) and the EU Chips Act (€42bn), announced in autumn 2022, it won't be spent on building new fabs. Instead, the UK’s strategy will focus on sharpening its already competitive edge with £200m pledged towards these niches by 2025.
We previously broke down the US Science and Chips Act in our February Semiconductor Monthly, you can read it here.
These niches are expected to continue to grow in the coming years, following the global semiconductor growth predictions of a compound annual growth rate (CAGR) OF 7.9%. Considering the geopolitical tensions surrounding advanced technology, the UK must receive more funding and support to strengthen its domestic market, which could see it become a major player in the semiconductor industry.
UK Prime Minister Rishi Sunak met with Japan Prime Minister, Fumio Kishida, to sign the historic ‘Hiroshima Accord’. The accord sets out cooperation between the two nations to strengthen defence and the semiconductor supply chain.
“The Hiroshima Accord will see us step up cooperation between our armed forces, grow our economies together and develop our world-leading science and technology expertise,” Sunak said.
The accord commits to:
The Hiroshima Accord is a significant step forward for the two nations in making progress toward stabilising the global supply chain, which is currently threatened by the geopolitical tensions between the US and China. The agreement is expected to create jobs, boost investment, and drive economic growth for both the UK and Japan.
Here are some specific things we could see:
It will be interesting to see how the partnership between these two nations develops over time., and whether other countries will follow suit.
Apple has announced a new multibillion-dollar deal with Broadcom, a US-based semiconductor manufacturer. This new deal is to develop 5G and wireless components, like thin-film bulk acoustic resonators (FBAR), used in every smartphone. Apple aims to remove its reliance on foreign suppliers by designing and manufacturing semiconductors and components in the US domestic market. This is a tactical adjustment following the ongoing dispute between the two nations of the US and China.
Apple has been gradually diversifying its supply chains away from China, and now utilises countries like India and Vietnam. Since 2017, it has been making iPhones in Tamil Nadu in southern India. Continuing the relationship with India, Apple opened its first retail stores there earlier this year, in Mumbai and Delhi.
In 2021, Apple announced plans to invest $430bn into the US economy. With the continuous development of their domestic markets, Apple can fulfil this plan and strengthen the US semiconductor market.
“We’re thrilled to make commitments that harness the ingenuity, creativity, and innovative spirit of American manufacturing,” Apple’s chief executive, Tim Cook, said in a statement.
Under the Apple-Broadcom deal, components for Apple devices will be designed and built in Colorado and other parts of the US.
The Japanese government is planning to implement tighter regulations on manufacturing equipment exports for cutting-edge semiconductors to China. This cutting-edge technology is essential to the development of Artificial Intelligence (AI) and supercomputers.
March saw Japan draft a revision to a ministry ordinance on the foreign exchange and foreign trade act, which aims to strengthen export controls of 23 items of chipmaking equipment. This is an effort to work with the US to prevent China from developing its military arsenal, however, these restrictions could negatively impact the business performance of Japanese manufacturers with a high share of China-bound shipments in their exports.
It will be interesting to see how these revisions impact the Japanese economy and how other nations continue to work with the US to slow China’s development in the race for better technology; will these efforts help to ease tensions between China and Taiwan, or heighten them?
Earlier this month, Beijing requested Chinese companies to stop purchasing products from Micron Technology, a US-based company. Micron Technology is a manufacturer of memory chips that are used in mobile phones, laptops, computers, and other electronic devices.
The Cyberspace Administration of China conducted a review of the US company in late March. The administration concluded Micron products as “relatively serious cybersecurity problems”. They further added that the problems could “seriously endanger the supply chain of China’s critical information infrastructure” and threaten national security.
Some industry experts argue that this could be a retaliation to the sanctions placed on Chinese companies within the semiconductor industry by the US. Others state that China may have also used this tactic to minimise the disruptions to China’s semiconductor industry and avoid further reliance on supplies the US could potentially cut off with more sanctions.
Micron built its first factory in China in 2007, however, in recent years, it has downsized operations in China and East Asia. The impact of this decision could be significant, as 2022 saw Micron report $3.3bn in sales in China, roughly 11% of its global sales that year ($30.8bn).
This year has seen various mass layoffs and a reduction in entry-level hiring from Big Tech companies, yet the semiconductor industry has seen more entry-level applications than ever before. Recent graduates are flicking to the industry, to no surprise given the technological developments in the past year with AI and Machine Learning (ML) and their rise in popularity powered by social media.
In a report by Handshake, a recruiting platform, the number of submitted job applications at semiconductor companies was up 79% compared to last year, while other industries increased by 19%. Applications to internships were up 163% for the semiconductor industry in comparison to 21% for other industries.
The report further states that graduates value growth factors and stability. It appears that graduates are shying away from the volatility that other sectors have. This could be a result of the Science and CHIPS Act and the subsidy incentives to acquire local talent in the US.
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