Understanding the Semiconductor Value Chain 📀 | Wright Research

The semiconductor value chain is highly complex, involving a multitude of distinct stages that are geographically dispersed. The chain spans from material procurement to end-product manufacturing, with key processes including semiconductor R&D and chip design, fabrication, and assembly, testing, and packaging (ATP). 🔌

The industry operates under two primary business models: Integrated Device Manufacturers (IDMs), which manage all stages internally, and fabless companies, which focus on design and outsource manufacturing to foundries. This segmentation allows for specialization but also creates dependency on global supply networks. Semiconductor manufacturing is dominated by three types of chips: logic, memory, and analog. The sophistication of these chips is measured in nanometers, with the most advanced logic chips operating at 2–3 nm. 💽

The global value added by semiconductor manufacturing was $445 billion in 2019 (see image below). Fabrication contributed the most (38.4%), followed by design (29.8%) and fab tooling (14.9%). As the industry grows, these proportions are expected to remain consistent, reflecting the critical roles of design and fabrication in the semiconductor supply chain. 👨🏽‍🏭

India’s Growing Role in Semiconductor ATP Market ⚡
The ATP market refers to the Assembly, Testing, and Packaging segment of the semiconductor industry. While there is significant activity for firms in the United States and Taiwan, the actual ATP activities are highly concentrated in Asia, particularly in China and Taiwan, which account for 75% of the total global ATP market combined. 👨🏻‍🔧

Given its recent successes in attracting investment from companies like Micron, India is well-positioned to expand its role in the ATP segment. The proximity to the broader electronics manufacturing ecosystem , cost competitiveness, and supportive government policies can further boost India’s position in this market. 👇

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🙋‍♂️ About us: Wright Research is an AI powered investment advisory and research firm that uses quantitative research and machine learning to create stable Equity & Mutual Fund investment options that generate return potential across different market conditions. The investment products are available for retail investors as Robo-advisory portfolios. Optimize your portfolio and work towards your financial goals with our bundles, designed with the power of Data Science.

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