Europe fails to compete as China leads chip manufacturing spend
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The point that Europe has no appetite for manufacturing chips is underlined decisively by the sales of semiconductor manufacturing equipment in 2024, as compiled by the industry body SEMI.
European politicians have repeatedly said that Europe has about 10 percent of global chip production and that increased spending could allow Europe to double its share. The latest data reveals the depth of that self-delusion.
Europe’s spend in 2024 on FEOL and BEOL semiconductor manufacturing equipment fell to US$4.85 billion, about 4.1 percent of the worldwide spend. Compare this to China in the same year, which spent US$49.55 billion. China spent 42.3 percent of global spending and more than ten times the spending of Europe.
Semiconductor Manufacturing Equipment market by region (US$ billions). Source: SEMI and Semiconductor Equipment Association of Japan.
Europe’s drop in spending was due to weak demand in its traditional end markets of automotive and industrial and due to more general economic weakness.
At the same time Chinese anticyclical spending helped global sales of semiconductor manufacturing equipment increase 10 percent to US$117.1 billion in 2024 from $106.3 billion in 2023, SEMI has reported.
In 2024 the FEOL showed good growth with sales of wafer processing equipment increasing by 9 percent and other front-end segments rising by 5 percent. SEMI said this growth was driven by capacity expansion for both leading-edge and mature logic, and of high-bandwidth memory (HBM), alongside a rise in investment in China.
The BEOL recovered after two years of decline driven by the demand of AI and HBM. Assembly and packaging equipment sales increased by 25 percent, while test equipment billings rose by 20 percent year-over-year, reflecting the industry’s push toward supporting advanced technologies and such things as chiplet-based multi-die components.
China, Korea and Taiwan remained the top three markets for semiconductor equipment spending, collectively accounting for 74 percent of the global market, up from 71.7 percent in 2023.
There can be little doubt where the vast majority of the world’s chip production is going to take place for the next decade.
North America’s 14 percent rise in semiconductor investment to US$13.7 billion, driven by increased focus on domestic manufacturing and leading-edge technology nodes was only enough to keep its spending at just over 11 percent of the total.
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