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Global Supply Chains, Value Added and Production Intensity: Case Semiconductors

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  • Holmström, Harald
  • Kenney, Martin
  • Seppälä, Timo

Abstract

Semiconductor chips and their production are foundational for future innovation, future developments of digitalization, and economic prosperity. However, the role of production when discussing who is creating and capturing value across different industrial supply chains has often been underestimated. In this report, we analyze the distribution of the value added in the semiconductor supply chain. Value added analysis is insufficient on its own to understand the importance of production; therefore, we also examine the share of operating profits that has been reinvested in the growth of tangible and intangible assets. Based on value added and reinvesting cycle analysis, we discuss production intensity, and we draw conclusion regarding how important production is for different supply chains and industries.

Suggested Citation

  • Holmström, Harald & Kenney, Martin & Seppälä, Timo, 2021. "Global Supply Chains, Value Added and Production Intensity: Case Semiconductors," ETLA Reports 113, The Research Institute of the Finnish Economy.
    • Handle: RePEc:rif:report:113
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    References listed on IDEAS

    as
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    3. Jyrki Ali-Yrkkö & Petri Rouvinen & Timo Seppälä & Pekka Ylä-Anttila, 2011. "Who Captures Value in Global Supply Chains? Case Nokia N95 Smartphone," Journal of Industry, Competition and Trade, Springer, vol. 11(3), pages 263-278, September.
    4. Jonathan West, 2002. "Limits to globalization: organizational homogeneity and diversity in the semiconductor industry," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 11(1), pages 159-188, February.
    5. Namchul Shin & Kenneth L. Kraemer & Jason Dedrick, 2012. "Value Capture in the Global Electronics Industry: Empirical Evidence for the “Smiling Curve” Concept," Industry and Innovation, Taylor & Francis Journals, vol. 19(2), pages 89-107, February.
    6. Oecd, 2019. "Measuring distortions in international markets: The semiconductor value chain," OECD Trade Policy Papers 234, OECD Publishing.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Semiconductor industry; Value chain; Value added; Value creation; Manufacturing; Tangible assets;
    All these keywords.

    JEL classification:

    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment

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