Semiconductors: Value chain, from upstream to the customer
Chip designers and fabs making logic, memory, analogue and power chips from silicon
Value chain, from upstream to the customer
Criticality to the chain: 5 · Chokepoint 4 · Critical 3 · Important 2 · Supporting 1 · Commodity service Stage 1 Design tools and IPSell the software used to design and verify chips and license ready-made circuit blocks such as processor cores and interfaces to chip designers.2,5
Why chokepoint: Synopsys, Cadence and Siemens EDA hold over 85% of a roughly US$ 18 billion tool market, and no chip can be taped out without their software, which is why EDA has been used as an export-control lever. Technologies Electronic design automation (synthesis, place and route, verification) Licensable processor cores (Arm, RISC-V) Interface IP (PCIe, DDR, SerDes) Process design kits from foundries AI-assisted design optimisation Depends on Energy DC Data centres Industries Software and IT servicesData centres and cloudExamples: Synopsys, Cadence, Siemens EDA, Arm · ≈ US$ 18 billion EDA market in 20255Define and design chips (GPUs, smartphone processors, networking and analogue chips), pay foundries to make them and sell the finished chips to device makers.2
Why critical: US-headquartered firms hold 51% of the design market and a few (Nvidia in AI accelerators, Qualcomm in phone modems) are hard to replace, though many designers exist overall. Technologies System-on-chip architecture AI accelerator design Chiplets and die-to-die interconnect Low-power and analogue/mixed-signal design Firmware and software stacks Depends on Energy DC Data centres Industries Software and IT servicesExamples: Nvidia, Qualcomm, Broadcom, MediaTek, Mindgrove TechnologiesBuild and service the lithography, deposition, etch, cleaning, implant and inspection tools that fabs buy, a market of about US$ 110 billion.2
Why chokepoint: One European company holds 87% of the lithography market and is the only EUV supplier; most other tool classes have two or three makers in the US, Japan and the Netherlands. Technologies Extreme ultraviolet (EUV) and deep ultraviolet lithography Atomic layer deposition and etch Ion implantation Optical and e-beam inspection and metrology Vacuum and plasma systems Depends on Commodities St SteelAl AluminiumREE Rare earthsCu Copper Chemicals PTFE Fluoropolymers (PTFE, PVDF) Energy PE Transformers and power electronics Industries Machinery and equipmentElectrical equipmentMetal productsExamples: ASML, Applied Materials, Lam Research, Tokyo Electron, KLA · ≈ US$ 110 billion equipment market2Grow single-crystal silicon ingots from polysilicon, then slice and polish them into 200 mm and 300 mm wafers sold to fabs.2
Why critical: Five firms in Japan, Taiwan, Germany and Korea make almost all 300 mm wafers and qualifying a new supplier takes many months. Technologies Czochralski crystal growth Wafer slicing and polishing Epitaxial wafers Silicon-on-insulator Silicon carbide substrates for power chips Depends on Commodities Si SiliconQz Silica sandGr Graphite Chemicals pSi PolysiliconAr ArgonHF Hydrofluoric acid Energy HVAC AC transmission Industries Machinery and equipmentExamples: Shin-Etsu Chemical, SUMCO, GlobalWafers, Siltronic, SK SiltronSupply photoresists, ultra-pure acids and solvents, CMP slurries and specialty gases, part of a materials market of about US$ 64 billion.2
Why critical: Photoresists and several gases come from a few mainly Japanese, US and European firms, and every change of material must be requalified by the fab. Technologies Photoresist chemistry for EUV and ArF Parts-per-trillion purification Specialty gas synthesis (NF3, WF6, neon blends) On-site gas generation Bulk chemical delivery systems Depends on Commodities F FluorsparHe HeliumW TungstenS Sulfur Chemicals PR PhotoresistsESG Electronic specialty gasesUPW Ultra-pure wet chemicalsCMP CMP slurries and padsHF Hydrofluoric acidN2 Nitrogen gas Energy HVAC AC transmission Industries Water and sanitationExamples: JSR, Tokyo Ohka Kogyo, Entegris, Linde, Air Liquide · ≈ US$ 64 billion materials market2Manufacture chips designed by others on shared production lines, selling processed wafers to fabless firms and system companies.2,3
Why chokepoint: TSMC took about 70% of foundry revenue in Q2 2025 and Taiwan hosts over 70% of sub-10 nm capacity; a new leading-edge fab costs tens of billions of dollars and takes years. Technologies 3 nm and 2 nm FinFET and gate-all-around transistors EUV patterning Cleanrooms and automated wafer handling Ultra-pure water systems Yield analytics Depends on Commodities H₂O WaterCu CopperCo CobaltTa TantalumHf HafniumHe Helium Chemicals ESG Electronic specialty gasesPR PhotoresistsUPW Ultra-pure wet chemicalsCMP CMP slurries and padsN2 Nitrogen gasAr ArgonH2 Hydrogen Energy HVAC AC transmissionHP Heat pumps, air conditioning and refrigerationDist Distribution grids, mini-grids and interconnectors Industries Machinery and equipmentWater and sanitationConstruction and infrastructureExamples: TSMC, Samsung Foundry, SMIC, GlobalFoundries, Tata Electronics (Dholera fab under construction)Design and manufacture their own chips (memory, analogue, power, microcontrollers) and sell them directly or through distributors.2,6
Why critical: SK hynix, Samsung and Micron took about 92% of DRAM revenue in Q3 2025, so supply shocks move memory prices sharply; analogue and power chips have more makers. Technologies DRAM and high-bandwidth memory stacking 3D NAND with hundreds of layers Analogue and power processes on 200 mm and 300 mm wafers Silicon carbide and gallium nitride power devices Depends on Commodities H₂O WaterGa GalliumW TungstenCu Copper Chemicals ESG Electronic specialty gasesUPW Ultra-pure wet chemicalsPR Photoresists Energy HVAC AC transmissionHP Heat pumps, air conditioning and refrigeration Industries Machinery and equipmentWater and sanitationExamples: Samsung Electronics, SK hynix, Micron, Intel, Texas InstrumentsMake the fine-line substrates, interposers and lead frames on which chips are mounted and connected to circuit boards.2
Why critical: Advanced substrates come from a few Japanese, Taiwanese and Korean firms, and qualifying a new substrate for a large chip takes months. Technologies ABF build-up substrates Silicon and organic interposers Copper lead frames Glass-core substrates (emerging) Depends on Commodities Cu CopperAu GoldQz Silica sand Chemicals EPX Epoxy resinsUPW Ultra-pure wet chemicals Energy HVAC AC transmission Industries Plastic and rubber productsExamples: Ibiden, Unimicron, Shinko Electric, AT&SCut wafers into dies, package, test and burn in chips for designers and IDMs; leaders also run advanced 2.5D and 3D packaging for AI chips.2,4
Why important: Many capable firms exist for mainstream packages (a market of about US$ 95 billion), though China and Taiwan host nearly 60% of capacity and advanced packaging is scarce. Technologies Wire bonding and flip-chip 2.5D/3D packaging (CoWoS-type, hybrid bonding) Fan-out wafer-level packaging Automated test equipment System-in-package Depends on Commodities Au GoldCu CopperAg SilverSn Tin Chemicals EPX Epoxy resinsN2 Nitrogen gas Energy HVAC AC transmissionHP Heat pumps, air conditioning and refrigeration Industries Machinery and equipmentWater and sanitationExamples: ASE, Amkor, JCET, Tata Electronics, Kaynes Semicon · ≈ US$ 95 billion ATP market2Hold stock, break bulk and support design-in for tens of thousands of smaller electronics makers that do not buy direct from chipmakers.
Why supporting: Several global and many regional distributors compete, and large customers can buy direct, so switching takes weeks. Technologies Inventory and demand-forecasting systems Design-in engineering support Traceability and anti-counterfeit controls E-commerce catalogues Depends on Energy Bld Energy in buildings Industries Transport and logisticsSoftware and IT servicesExamples: Arrow Electronics, Avnet, WPG Holdings, Digi-Key