Reverse Globalization
Over the past three decades, the semiconductor industry has arguably been the best example of a globalized industry. However, in recent years, as semiconductors play an increasingly important role in the information industry, the semiconductor industry has shown a trend of “Reverse Globalization” under the influence of geopolitical considerations. It reached a new level in 2022.

Naturally, the initiator of the reverse globalization of the semiconductor industry is the world’s largest economy, the United States. On August 9, 2022, President Joe Biden signed the Chip and Science Act into law. The bill amounts to $280 billion spread over five years. The bill seeks not only to entice semiconductor companies to set up shops in the United States through investment subsidies but also to discourage them from increasing production in China by limiting eligibility for subsidies. Critics point out that the U.S. administration is using its administrative power to change the international division of labor in chip manufacturing. These practices violate market rules, distort the global semiconductor supply chain, and disrupt the normal order of international trade.
It is these high subsidies that are luring chip and wafer manufacturers back to America at a faster pace. In addition to Intel, an American company, which has increased its investment in its home country, major semiconductor companies such as Taiwan Semiconductor, Samsung and NXP have all announced their latest investment plans in the United States. Among these, the biggest gift package for the US is that Taiwan Semiconductor Manufacturing announced on December 6 that it will continue to invest in the US, increasing to 40 billion US dollars, and will manufacture the most advanced process of 3-nanometer chips in the US.
Major economies in the world, especially the key areas of semiconductor industry development, mainly East Asia and Europe, have also announced large-scale semiconductor industry construction plans. As a result, the capital expenditure of the semiconductor industry is surging due to reverse globalization despite the sluggish market. It is also unclear whether high capital expenditure will become an unbearable burden for the global semiconductor industry in the future.
It can be said that the anti-globalization provoked by the United States has promoted and intensified the fragmentation and chaos of the global semiconductor industry supply chain, and brought serious impact to the global chip industry chain. At the same time, it will increase the cost and risk of semiconductor enterprises’ production and operation, which will hamper the innovation and development of the global semiconductor industry.
Market Decline
In 2022, the global semiconductor market demand declined. The biggest indication of the market’s decline is the severe decline in global mobile phone sales. Among them, China, as the world’s largest mobile phone market, has the most representative data: from January to October, the total shipment of mobile phones in the Chinese mainland market accumulated 220 million units, down 21.9% year-on-year.
In addition to mobile phones, sales of smart wearable devices are also declining. For the full year 2022, global shipments are expected to fall 3.3 percent to 515.6 million units, the first full-year decline since 2013. Shipments of PCS and tablets also continued to decline.
As a result, consumer electronics chip shipments are no longer soaring. Therefore, since the beginning of this year, Samsung, Qualcomm, Mediatek, Jisei, Tongxin electric, United Yong, Duntai, and other semiconductor manufacturers are facing huge destocking pressure. At the same time, Taiwan Semiconductor Manufacturing, which was already fairly saturated, has also released some of its capacity.
Amid the weak market, semiconductor makers’ earnings have also fallen short of expectations. Among them, SK Hynix, Micron, and AMD profit decline, a recession is obvious; Samsung Electronics posted its first drop in net profit in three years, while Taiwan Semiconductor Manufacturing Co., at the top of the chipmaking pyramid, bucked the trend with growth in the third quarter but warned of a semiconductor slump next year and began cutting investment spending.
Layoffs
Due to the sluggish market, the news of layoffs at large semiconductor companies continues to come out. First came ARM, which announced 1,000 job cuts, followed by Philips, the Dutch company, which said it would cut 4,000 jobs worldwide to improve its performance due to supply chain problems and the impact of a respiratory recall.
The situation intensified in the final quarter of 2022 when Intel was the first to announce that it would start a program of layoffs expected to involve thousands of jobs. Intel CEO Henry Kissinger said “people optimization” will be part of the cost reduction plan. Intel will drive down costs by $3 billion in 2023. Intel was followed by Intel’s announcement that it was cutting 800 jobs worldwide or nearly 6% of its workforce. Micron recently announced it would cut 10% of its workforce. In addition, the large equipment factory Pan Forest Group is locked in China layoffs. No semiconductor companies in mainland China have announced layoffs, but Xiaomi Group, which is closely linked to the semiconductor industry, added a chill to the end of the year last week when it said it would cut 6,000 jobs.
DRex believes that, on the back side of the wave of layoffs, there is still a deep hole in semiconductor technology talent. According to a September report by McKinsey, American companies will face a shortage of 300,000 engineers and 90,000 technicians next year. In mainland China, too, there is a shortage of semiconductor engineers. The shortfall is expected to be as much as 200,000 by 2025, with a shortage of semiconductors in everything from car manufacturing to electricity, consumer goods, and healthcare, stifling production and innovation. The semiconductor industry is expected to be hot and cold in the future, with talent shortages and layoffs occurring simultaneously