Abstract:
Semiconductor supply is subject of sizable subsidy schemes in the US, the EU, China, Japan, Korea, and India. Chip imports are concentrated in few countries, with the EU accounting for less than 5 percent of worldwide chip sales. Chips are highly heterogeneous products that serve different functions and are tailored to end-use applications. Demand growth for chips varies by region and chip type, pointing to technological change as a key driver. Even with subsidies, firms only have an incentive to invest in chips for which they are competitive and can expect long-term demand.
