semiconductors

Overview

The semiconductor industry designs and manufactures the integrated circuits, or chips, that power essentially every piece of modern electronics — computers, phones, vehicles, industrial equipment and the data centres behind artificial intelligence. It's also one of the fastest-growing major industries by revenue: global semiconductor sales reached $791.7 billion in 2025, according to the Semiconductor Industry Association, up 25.6% from $630.5 billion the year before, a growth rate driven substantially by surging demand for the specialised chips used in AI accelerators and data-centre hardware.

While silicon is the base material for the vast majority of chips, the industry depends on a much wider basket of specialty metals to actually manufacture and package a working semiconductor, several of which are used nowhere else in significant volume — which is exactly what makes the industry's metal demand disproportionately influential on the prices of those smaller, less-traded metals.

Metals in Chip Manufacturing

Gallium and indium go into compound semiconductors — gallium arsenide and gallium nitride, in particular — used for high-frequency and high-power applications like radio-frequency chips, power electronics and LEDs, distinct from the pure-silicon chips used in general computing. Indium also has a second, unrelated role coating circuit boards and touchscreens as indium tin oxide. Tantalum is essential for the small, reliable capacitors used throughout circuit boards and mobile devices, valued for storing more charge in a smaller size than most alternatives. Tin remains the primary solder metal joining components to circuit boards across essentially the entire electronics industry, while copper carries current both within chip packaging and throughout the printed circuit boards chips are mounted on.

Market Dynamics

Semiconductor manufacturing is geographically concentrated in a handful of countries and companies capable of the enormous capital investment advanced chip fabrication requires, with Taiwan, South Korea, the United States and China together accounting for the large majority of global capacity. That concentration, combined with the industry's dependence on specific, thinly-traded specialty metals for advanced packaging and compound semiconductors, means a supply disruption or demand surge in chip manufacturing can move prices for metals like indium, gallium and tantalum far more sharply, in percentage terms, than it moves prices for larger, more liquid metals like copper or aluminium.

How the Industry Operates

Making a chip starts with growing a large, ultra-pure silicon ingot, which is sliced into thin wafers and polished to a mirror finish. Those wafers then go through hundreds of photolithography, etching, deposition and doping steps inside a cleanroom fabrication plant, or fab, building up the microscopic transistor structures layer by layer — a process that can take several months from raw wafer to finished chip. Once fabrication is complete, wafers are cut into individual dies, packaged into the protective casings that connect them to a circuit board, and tested before shipping. The industry splits broadly into two business models: integrated device manufacturers that design and fabricate their own chips, and a fabless model where a design company outsources fabrication to a dedicated foundry — a split that concentrates the most advanced, capital-intensive manufacturing in relatively few companies worldwide.

Byproducts & Waste Streams

Chip fabrication is a chemically intensive process, and fabs generate significant volumes of used acids, solvents and process gases that require dedicated on-site treatment before discharge. Wafer slicing and polishing produce silicon slurry and kerf loss — fine silicon waste that's difficult to recover economically, though some fabs recycle it back into lower-grade silicon uses. Fabs are also unusually water-intensive, since ultra-pure water is used to rinse wafers between nearly every processing step, making wastewater treatment and water reuse a major operating cost and, in drought-prone manufacturing regions, a genuine constraint on expansion. Packaging and testing stages add further scrap in the form of defective dies and substrate offcuts, most of which is too specialized for standard metal recycling streams.

Who It Serves

Consumer electronics makers are semiconductors' most visible customer, but far from the only significant one — automakers now use hundreds of chips per vehicle for everything from engine management to driver-assistance systems, and industrial equipment makers embed chips throughout modern machinery. Data center and cloud computing operators have become one of the fastest-growing buyers, driven by demand for the specialized processors that power artificial intelligence workloads. Telecommunications equipment makers rely on chips for network infrastructure, and defense contractors are major buyers of specialized, often domestically-sourced chips for military systems. Because chips are embedded rather than sold directly to end consumers in most cases, the industry's customer base is really every other manufacturing sector at once.

Role in Everyday Life

Chips are inside nearly everything with an on/off switch — phones, cars, kitchen appliances, payment cards, traffic lights, medical devices — to the point that a global chip shortage, as happened in the early 2020s, can delay car deliveries and push up prices for products that seem to have little to do with electronics. Most people never see a semiconductor directly, but the steady improvement in what chips can do at a given cost is a big part of why phones, computers and cars have gained capability year after year without becoming proportionally more expensive. That invisible presence is exactly why disruptions in this industry ripple so widely and so quickly into daily life.