In charts: Asia’s manufacturing dominance

{"text":[[{"start":12.19,"text":"Decades of investment from wealthy economies into lower-cost locations have entrenched geographical shifts in manufacturing. "}],[{"start":19.7,"text":"Production of semiconductors — the essential components of our digital infrastructure, vehicles and devices — has steadily declined in the west, with East Asia emerging as the main manufacturing hub. "}],[{"start":31.58,"text":"The US’s share of global semiconductor manufacturing capacity fell from 37 per cent in 1990 to just 12 per cent last year, while Europe saw a 35 percentage point decline in the period, to 9 per cent. "},{"start":43.971999999999994,"text":"China’s mainland expanded its share from almost nothing to 15 per cent, a figure that is expected to rise to 24 per cent in the next decade. "}],[{"start":null,"text":"

"}],[{"start":52.51,"text":"Three-quarters of the world’s chip production capacity is now concentrated in East Asia. "},{"start":57.552,"text":"National champions such as Taiwan’s TSMC and South Korea’s Samsung, along with manufacturers in Japan and China, combine to dominate global production capacity. "}],[{"start":67.85,"text":"The recent chip shortage in the automotive sector has intensified efforts in the US and EU to boost domestic capacity and cut their reliance on Asian producers. "}],[{"start":null,"text":""}],[{"start":77,"text":"However, such moves are costly. "},{"start":79.679,"text":"The Semiconductor Industry Association, a US trade body, and Boston Consulting Group, the consultancy, estimate that a new fabrication facility to produce semiconductors could cost roughly one-third more to build and operate in the US over 10 years than a similar facility in Taiwan, South Korea or Singapore. "}],[{"start":98.57,"text":"A foundry in China costs between 37 and 50 per cent less than in the US, thanks to Chinese government incentives. "},{"start":105.46199999999999,"text":"Along with expertise in the region, these cost differentials have helped China become the leading destination for foreign semiconductor investments, globally. "}],[{"start":114.55,"text":"Some 84 greenfield foreign direct investment (FDI) projects have been announced in China’s semiconductor industry since 2015 — of which 44 per cent were in manufacturing, according to fDi Markets, an FT-owned database. "},{"start":128.379,"text":"The US attracted 45 foreign semiconductor projects in the same period, followed by India (37), the UK (36), and Taiwan (29). "}],[{"start":null,"text":""}],[{"start":139.44,"text":"

Automakers

"}],[{"start":141.79,"text":"Since joining the World Trade Organization in 2001, China has become increasingly important in other sophisticated global supply chains. "},{"start":150.057,"text":"Between 2005 and 2019, China’s share of global vehicle production rose from 9 per cent to 28 per cent, as its domestic car market grew to become the largest in the world. "}],[{"start":161.04,"text":"Europe’s share of global vehicle production fell from 31 per cent to 24 per cent in the same period, and North America’s suffered a similar decline. "},{"start":169.257,"text":"Supply chains in the auto industry are also increasingly concentrated around low-cost hubs. "}],[{"start":null,"text":""}],[{"start":174.79999999999998,"text":"China supplies parts to automotive original equipment manufacturers (OEMs) in South Korea and Japan. "},{"start":181.42899999999997,"text":"Meanwhile, Mexico and eastern Europe are the chosen locations for auto suppliers in the North American and western European markets, respectively. "}],[{"start":190.36999999999998,"text":"This entrenchment of supply chains within regional hubs continues. "},{"start":194.36199999999997,"text":"Between 2015 and 2019, exports of parts from China to Japan increased by 17 per cent to $3.2bn, according to data provider IHS Markit. "}],[{"start":205.55999999999997,"text":"As carmakers move to electrify their fleets, East Asia is likely to benefit from further supply chain shifts. "},{"start":211.95199999999997,"text":"IHS Markit predicts that between 2020 and 2026, the global share of automotive battery cell suppliers headquartered in South Korea will rise from 14 per cent to 47 per cent. "},{"start":222.65699999999998,"text":"It predicts that Greater China will experience a 14 percentage point increase in share. "}],[{"start":227.25999999999996,"text":""}]],"url":"https://creatives.ftacademy.cn/album/001091929-1616679627.mp3"}