Global chip shortage over, local policy shortage endures

A couple of years ago, the importance of the semiconductor industry was a hot topic, for businesses, consumers, and policy-makers.

The chip shortage of 2020 – 2023 saw companies adopt measures like redesigning products and building extra capacity to hoard supplies.

Consumers saw extended wait times on things like cars and appliances.

And politicians had no choice but to respond to all the inconvenience, which has been blamed on factors including increased demands for electronics as people shifted to working from home, severe drought in Taiwan, and geopolitical tensions.

Is it fair to say that, since then, we’ve forgotten about the importance of microchips?

“I would say that yes, as far as kind of mainstream media is concerned, there was a lot going on a couple of years ago. But equally, there are things like Nvidia being the largest company in the world a couple of months ago, and that is a fabless semiconductor company,” Dr Nadia Court (pictured below), Director of the Semiconductor Sector Service Bureau (S3B), tells @AuManufacturing.

She adds that the topic has become more nuanced and certainly not gone away at the business or government level.

“So it’s still kind of making the news, but perhaps, as you said, people don’t necessarily understand where semiconductors fit within our everyday life.”

S3B is part of an upcoming effort to educate investors and others about the microelectronics industry, in the form of the Semiconductor Australia 2024 conference, which it is co-hosting with BluGlass and ShareCafe.

(More information on the event can be seen here.)

Stef Winwood (main picture) from BluGlass — a rare vertically-integrated semiconductor company operating in Australia — shares that there’s “a huge dearth of understanding” when it comes to the potential of the industry here.

“So there’s very few ASX companies in Australia that are semiconductor companies,” the Head of Corporate Communications and Investor Relations at ASX-listed BluGlass tells us. 

“So [in] the Australian market I think 0.03 per cent of ASX companies are semiconductor companies, versus 15 per cent on the Nasdaq.” 

The local sector is an extreme example of the proverbial “pockets of excellence”. There are small but world-leading contributors – for example in quantum computing and photonics startups and research – but there’s a scale and fragmentation that encourage obscurity.

Part of what’s needed is coordination, believes Winwood.

“Australia has a national quantum strategy, a national solar strategy – solar [cells are] a semiconductor – a national robotics strategy,” she says. 

“All of these things are underpinned by semiconductors. So it’s time that we actually create this national semiconductor strategy as well.”  

Another observation is that long-term, sustained investment and policy-making are needed to maximise the nation’s role when it comes to the technology that underpins practically every other technology.

That’s what you see among the world-leading nations, for example Taiwan. 

“They make 90 per cent of the world’s most advanced chips, they are an integral piece of the global semiconductor supply chain. And they made a very considered decision 30-plus years ago now to say ‘this is the industry that we are going to put a lot of money and investment in,’” says Court.  

“And they have continually looked to make sure that the policy settings are right and that companies want to do business in Taiwan. And that’s something that we haven’t seen here in Australia. We don’t even have anything to do with a semiconductor policy or strategy yet. And that’s something that I think is really missing in our economy.”

In this episode of @AuManufacturing Conversations, we hear from Court and Winwood about the state of Australia’s semiconductor sector and some ideas on how to strengthen it.

Episode guide

0:25 – Introduction to guests.

1:42 – BluGlass and its rarity as an Australian vertically-integrated semiconductor company.

3:34 – Has the public forgotten about the importance of the industry after the global chip shortage?  

6:50 – What we have going for us in terms of our contribution to the chip industry.

8:10 – People don’t necessarily understand the overlap between quantum computing and semiconductor technology.

10:48 – A strong chip sector and the benefits in sovereign capability and economic development benefit.

12:30 – A sector in a state of transition, and this is influencing policy decisions and investments.

13:30 – What nations that have flourishing industries have done that we haven’t.

15:25 – Why has all this been overlooked when it comes to A Future Made In Australia?

17:20 – A national strategy needed.

19:30 – About Semiconductor Australia and what it hopes to achieve.

Pictures: supplied

Further reading

Australia’s place in the semiconductor world: A case for connectedness

New NSW semiconductor bureau to set up at Sydney’s tech precinct

Semiconductor Australia announced for October

New report looks at skills needed for Australian semiconductor moonshot

Australia’s place in the semiconductor world: repositioning Australia’s chip industry

Australia’s place in the semiconductor world: Talking about a moonshot

Rethinking what Australia can and should do in silicon