Using Global Value Chain analysis to study the current structure of the Global
Semiconductor Industry
Author:
James Horton ’23Co-Authors:
Faculty Mentor(s):
Shahram Azhar, EconomicsFunding Source:
Douglas K. Candland Undergraduate Research FundAbstract
Despite the swath of media coverage on the Semiconductor Industry and the shortages of
semiconductor components experienced over the past two years, conventional dialogue often
neglects to consider the heterogeneity within this sphere of industrial activity. To address these
shortcomings, this paper offers a Global Value Chain (GVC) framework by which to model the
current structure of the Semiconductor Industry. Section 1 provides a synopsis of semiconductor
components, the industry responsible for their production, and proposes a GVC framework by
which to evaluate both. Sections 2, 3, and 4 outline the input-output structure of the value chain,
the key players that operate within the industry, and the geography of the value chain,
respectively. Section 5 equips and applies this model to discuss three highly relevant topics: the
end-use demand for semiconductors, the economics of foundries, and the industry’s sales cycle.
Section 6 builds upon these applications as well as the GVC framework to examine the causes of
and implications behind the recent global semiconductor shortage. Section 7 offers our
concluding remarks on these matters as well as our key takeaways.