Visualizing The Global Semiconductor Supply Chain
Connect with us

Sponsored

Visualizing The Global Semiconductor Supply Chain

Published

on

The following content is sponsored by ASE Global

Visualizing The Global Semiconductor Supply Chain Main

Visualizing The Global Semiconductor Supply Chain

Our digitally-driven society is powered by an extremely robust semiconductor supply chain, and until the COVID-19 pandemic, not many people thought about it.

But a sudden surge in demand for digital goods, improved technologies, and recovering economies put the strain and spotlight directly on semiconductors.

The millions of digital devices we use, from smartphones to electric cars, computers, robotics, and the businesses they enable, only function thanks to the intricate chips built on semiconductors. By some estimates, up to 22.5% of global GDP is made up by the global digital economy.

This graphic from ASE Global highlights the complex and global semiconductor supply chain that powers our modern world.

How Important are Semiconductors and Chips?

Fully understanding the importance of semiconductors to the modern world is sometimes tricky, especially when the devices themselves are so small.

But a semiconductor device—also known as an integrated circuit (IC) or chip—actually contains many smaller circuits comprised of millions of transistors, all packed onto a few millimeters of silicon (the semiconductor).

These semiconductor devices allow electronics to make computations, and in essence, function and operate. That makes them vital for modern electronics, with semiconductors being the fourth-most traded product in the world behind crude oil, motor vehicle parts, and refined oil.

Here’s a breakdown of different applications of semiconductor devices by market sizes in 2019:

Semiconductor Applications by Market (2019)Market Size
Smartphone25.3%
Personal Computing20.5%
Servers, Data Centers, Storage14.6%
Industrial Electronics11.7%
Consumer Electronics10.0%
Automotive9.8%
Wired/wireless Infrastructure8.1%

Modern smartphones, for example, utilize semiconductor devices with many different smaller integrated circuits for different functions. For example, these modern chips can include the phone’s CPU, GPU, neural processing, and image processing cores.

And as the recent strain on automotive manufacturing demonstrated, semiconductors are even vital for vehicles. Cars are packed with up to 1,400 semiconductor devices controlling everything from airbags to the engine, and electric vehicles utilize even more.

What the Semiconductor Supply Chain Looks Like

So how do these complex devices make their way from concept to your devices?

An integrated semiconductor supply chain that involves thousands of companies, millions of people, and billions of dollars. The chain can be broken up into stages which happen across the globe, better known as the foundry model:

  1. Design: Semiconductor chip designs are created for specific or general device usage.
  2. Manufacturing (Front End): Silicon wafers are processed through an extensive series of manufacturing steps then diced into multiple chips (also called dies or devices).
  3. Manufacturing (Back End): Chips are layered and assembled into packages that can be mounted onto circuit boards. Packaged chips are then tested under different electrical and temperature conditions.
  4. End Product Integration: Chips are integrated by electronics and equipment manufacturers to create end products for consumers.
  5. Consumption: End products are shipped to companies, retailer, and consumers worldwide.

The entire process, from starting design and production to end product integration, takes months. But in the end, those manufactured chips end up in smartphones, computers, cars, servers, smart homes, and other technology all around the globe.

Different Types of Companies in Semiconductor Manufacturing

In 2020, despite an economic slowdown from the pandemic, an estimated 1.4 trillion semiconductor chip units were shipped around the globe.

Those chips were manufactured by many types of companies that occupy different parts of the supply chain. Some are household names in electronics, while others are lesser-known manufacturing stage companies responsible for most of the world’s chip consumption.

These companies operate under the foundry model, which is also known as fabless design. The model outsources different stages of production to specialized companies:

  • Fabless semiconductor companies and electronics manufacturers (and independent design companies) create the design and specifications required for their chips.
  • Foundries are contracted to manufacture the designed chips.
  • OSAT (outsourced semiconductor assembly & test) companies assemble, package, and test the chips for consumption. ASE Global is the market leader in assembly and testing services, capturing 30% of the global OSAT market in 2021.
  • OEM (original equipment manufacturers) and contracted EMS (electronics manufacturing service) companies integrate the packaged chip into devices. ASE Global is also a leading EMS provider, and over the course of the company’s history, has helped manufacture more than three trillion chips.
  • Devices are then sold by the fabless companies and electronics manufacturers at the start of the chain.

At the same time, there are also IDMs (integrated device manufacturers) that design, manufacture and sell their own chips. This was the traditional model of chip development and IDMS generally weren’t considered a part of the foundry model, but many IDMs now outsource part of their production cycles as well.

Unlocking the Potential of the Digital Economy

The companies that make up the semiconductor supply chain are spread all over the globe, from the U.S. to China, South Korea, Taiwan, and Germany. A finished chip can contain components that have traveled more than 25,000 miles by the time of final product integration.

It’s a complicated but necessary supply chain that empowers the technology of the present and the future. From advances in 5G and AI to smart factories and advances in automotive and quantum computing, the companies in the semiconductor supply chain make it all possible.

Support the Future of Data Storytelling

Sorry to interrupt your reading, but we have a favor to ask. At Visual Capitalist we believe in a world where data can be understood by everyone. That’s why we want to build the VC App - the first app of its kind combining verifiable and transparent data with beautiful, memorable visuals. All available for free.

As a small, independent media company we don’t have the expertise in-house or the funds to build an app like this. So we’re asking our community to help us raise funds on Kickstarter.

If you believe in data-driven storytelling, join the movement and back us on Kickstarter!

Thank you.

Support the future of data storytelling, back us on Kickstarter
Click for Comments

Sponsored

Operational Health Tech: A New Billion Dollar Market

Operational health tech is poised to be a multi-billion dollar industry. This graphic breaks down how its disrupting healthcare as we know it.

Published

on

Operational Health Tech: A New Billion Dollar Market

Many lessons were learned throughout the COVID-19 pandemic, but what has become most apparent is the need to invest in healthcare on all fronts. In fact in just a few short years, businesses, governments, and consumers have had to entirely reassess healthcare in ways not quite seen before.

What’s more, this elevated importance placed on health could be here to stay, and one area in particular is poised for significant growth: operational health tech.

The graphic above from our sponsor Bloom Health Partners dives into the burgeoning market that is operational health tech, and reveals the key driving forces behind it.

What is Operational Health?

To start, operational health is an industry that provides health services to employees to help keep companies running smoothly.

A critical piece of operational health is workplace health, which is expected to soar in value. From 2021 to 2025, the market for workplace health is expected to grow 200% from $6.5 billion to $19.5 billion.

The industry is undergoing a tremendous amount of innovation, specifically in relation to technological advances.

Operational Health Tech: Disrupting Healthcare

The operational health tech industry is disrupting traditional healthcare by providing direct services to employees in the workplace.

For decades now, the U.S. has increasingly become a statistical outlier for healthcare spending relative to health outcomes. For instance, the average American incurs $9,000 in healthcare spending per year, nearly twice that of OECD countries, yet life expectancy is flatlining while other countries see rises.

A worsening and increasingly expensive health dynamic makes the environment ripe for disruption and is allowing for new ideas to be brought to the table.

In addition, people are already responding to these inefficient practices by shifting greater emphasis on health within the job market. For example, studies show that workers care more about healthcare benefits over the salaries when choosing an employer.

Going forward, employees will gravitate towards employers that provide standout health benefits like workplace healthcare options offered by operational health. Here are some additional factors that act as catalysts for this space.

1. Healthcare as Smart Business

What do companies that rank as some of the best to work for have in common? First, they all tend to outperform relative to the S&P 500 on a cumulative stock performance basis. Second, many offer superior healthcare benefits.

Moreover, from 2012 to 2022, companies that were the best to work for saw shares appreciate nearly 500%, compared to around 300% for the broader market. Data like this suggests investing in healthcare and keeping employees happy is smart business that pays dividends.

2. Healthcare as a Differentiator

Since 2020, labor markets have changed dramatically. As a result, employees now have more options and are much more selective about where they work. This is evident from the difference between job openings and hires which has risen to unrecognizable levels. For example, the data shows that there are nearly 12 million job openings, but only around 6-7 million hires in 2022.

Altogether, with an oversupply of jobs relative to workers, employers will have to find new ways to differentiate. One way to stand out is through healthcare and initiatives around operational health tech.

3. The Looming Mental Health Epidemic

Today some 700 million people suffer from some form of a mental health condition and COVID-19 has continued to exacerbate the problem.

Moreover, the cost of mental health for the global economy is estimated to be a whopping $6 trillion by 2030, over double compared to the $2.5 trillion figure in 2010.

Under the umbrella of services operational health tech covers, mental health will stand to benefit. Especially in the years to come as we look for new ways to combat its mounting costs.

Investing in Operational Health Tech

Bloom Health Partners is an operational health tech company looking to revolutionize workplace health by supplying employers with data to better understand their employee base and business.

One way Bloom stands out is with Bloom Shield—its flagship cloud-based big data platform for employee health data management. With Bloom Shield, new health insights become available to make better decisions. Employers can get insight into demographic data and age trends within the workplace, pre-screening detection for cancer and diabetes, and testing for management to tackle the spread of disease.

Click here to learn more about investing in operational health tech with Bloom Health Partners.

Continue Reading

Sponsored

How Environmental Markets Advance Net Zero

The global price of carbon increased 91% in 2021. Below, we show how environmental markets are supporting a greener future.

Published

on

Environmental Markets

How Environmental Markets Advance Net Zero

In 2021, roughly 20% of global carbon emissions were covered by carbon pricing mechanisms.

Meanwhile, the global price of carbon increased 91%, bolstered by government, corporate, and investor demand. This puts traditional fuel sources at a disadvantage, instead building the investment case for renewables.

This infographic from ICE, the first in a three part series on the ESG toolkit, explores how environmental markets work and their role in the fight against climate change.

What are Environmental Markets?

First, meeting a goal of net zero carbon emissions involves limiting the use of the world’s finite carbon budget to meet a 1.5°C pathway.

Achieving net zero requires us to:

  • Change how we utilize energy and transition to less carbon-intensive fuels
  • Put a value on the conservation of nature or “natural capital” and carbon sinks, which accumulate and store carbon

Environmental markets facilitate the pathway to net zero by valuing externalities, such as placing a cost on pollution and placing a price on carbon storage. This helps balance the carbon cycle to manage the carbon budget in the most cost-effective manner.

What Is the Carbon Budget?

To keep temperatures 1.5°C above pre-industrial levels, we have just 420 gigatonnes (Gt) of CO₂ remaining in the global carbon budget. At current rates, this remaining carbon budget is projected to be consumed by 2030 if no reductions are made.

Carbon Budget1.5°C1.7°C2.0°C
Remaining GtCO₂4207701270
Consumed GtCO₂247524752475

Each scenario based on a 50% chance of success
Source: IPCC AR6 WG; Friedlingstein et al 2021; Global Carbon Budget 2021

Across three different scenarios, the above table indicates the amount of carbon emissions humanity can emit to prevent the worst effects of climate change.

What are Negative and Positive Externalities?

Second, when companies compensate for CO₂ emissions, they can fall across two categories: negative and positive externalities.

  • Negative externalities include pollution. Carbon cap and trade programs, using carbon allowances, put a cost on pollution.
  • Positive externalities include renewables, such as wind and solar power that generate carbon-free electricity. The value of renewable energy can be expressed with a renewable energy certificate.

Natural capital is another example of a positive externality, which involves the capturing and storing of carbon. The value of this type of natural capital can be expressed using a carbon credit.

Environmental Markets and the Energy Transition

Next, environmental markets can drive the transition to cleaner energy sources by ascribing a cost to pollution and putting a premium on renewables, to change how we use energy.

As one example, in 2013 the UK government introduced the Carbon Price Support mechanism to complement the emissions cap and trade program and weaken the investment case for coal. Between 2013 and 2020, Britain’s overall CO₂ emissions fell by 31%.

Here’s how coal was phased out of the UK’s energy mix, while renewable energy sources such as wind, solar, and bioenergy played a greater role.

DateCoal Gas Wind and SolarBioenergy
Q1 200031 TWh40 TWh0 TWh1 TWh
Q1 200541 TWh36 TWh1 TWh2 TWh
Q1 201031 TWh47 TWh2 TWh3 TWh
Q1 201528 TWh23 TWh13 TWh6 TWh
Q1 20203 TWh27 TWh28 TWh9 TWh

Source: Digest of UK Energy Statistics (DUKES); BP; EMBER via Our World in Data (2021)

Today, less than 5% of the UK’s electricity is coal-generated, with remaining plants expected to be decommissioned by 2024.

How Environmental Markets are Advancing Net Zero

Finally, as governments increase their commitments to net zero, carbon prices are rising towards a level that requires industries to decarbonize and meet those goals.

In fact, between 2014 and 2021, the global price of carbon has increased over sixfold.

DateGlobal Carbon Price (Year End)Annual % Change
2021$47.7891%
2020$24.9637%
2019$18.16-7%
2018$19.56102%
2017$9.6729%
2016$7.52-24%
2015$9.887%
2014$9.2432%

As indicated by the ICECRBN Global Carbon Price (CPW Weighted)
Source: ICE (Apr 2022)

As companies begin to treat their carbon footprints as liabilities, there will be increasing demand for environmental attributes, such as carbon allowances and carbon credits.

Managing Risk and Opportunity

Quoted markets like ICE Futures Exchanges and NYSE allow stakeholders to precisely value positive and negative externalities to:

  • Manage emissions cost effectively
  • Hedge climate transition risk
  • Allocate capital to facilitate the energy transition and build carbon sinks
  • Create an asset class for Natural Capital
  • Invest in assets to meet climate obligations

Everyone is exposed to climate risk which means it needs to be measured and managed.

That’s why balancing the carbon cycle will be critical to managing the world’s carbon budget. Markets are providing greater access, liquidity and opportunity in supporting net zero ambitions.

In part two of the series sponsored by ICE, we’ll look at four motivations for using ESG data.

Continue Reading

Subscribe

Popular