Semiconductor Technology: An Overview of the Global Patent Landscape

This blog post is the first in a series that discusses intellectual property opportunities for high-tech businesses looking to innovate in the competitive semiconductor industry.

In recent years, the semiconductor industry has seen substantial and increasing patenting activity throughout the world — highlighting the technology’s continued importance in a fast-changing global market:

• According to one firm’s analysis, global semiconductor patent filings have increased 22%, from 66,416 in 2022/3 to 80,892 in 2023/4.
• Anaqua’s 2024 analysis of USPTO patent statistics found that in terms of most granted patents, semiconductor technology has topped the list for the third year running.

Today, semiconductor technology accounts for the second-highest level of research and development (R&D) spending worldwide. It’s no wonder, then, that McKinsey projects that the industry’s global market will reach $1 trillion by 2030.

If your tech company is innovating in this field, there are clearly ample opportunities for business growth. But given that the sector is also fiercely competitive, you’ll want to understand current trends in order to craft a smart IP strategy that best serves your business needs.

Given how much ground there is to cover, we’ll be examining this topic across a series of posts. First, let’s begin with a broader discussion about the current state of the global industry for semiconductor technology.

Why is the semiconductor industry so important?

Semiconductors see widespread use today in almost all industries. Of course, semiconductors are foundational to the computer industry, accounting for the processors, memories, and wireless chips in every laptop, table,t and smartphone.

In the world of high-end computing, the most significant recent advances in semiconductor technology have led to the powerful graphics processing units (GPUs) used by artificial intelligence (AI) systems. Indeed, NVIDIA has become the most valuable company in the world, propelled by sales of their superior GPUs.

But the importance of semiconductor products goes well beyond computing. Chips have become critical components in a variety of other industries—automobiles, medical devices, and telecommunications equipment, to name a few. Chips are everywhere!

Because semiconductor products are ubiquitous in other industries, semiconductor IP can influence prices and market dynamics across many different market sectors. For example, royalties for semiconductor IP factor into the prices of everything from smartphones to luxury cars and televisions. 

At the device level, semiconductors products can take a few different functional forms. Semiconductor devices can be sorted into four broad categories:

1. Memory chips: Ensure that systems can retain and rapidly access stored data
2. Microprocessors: Process information and perform calculations to execute various tasks
   1. CPU (Central processing unit): The main logic chip in a computer
   2. GPU (Graphics processing unit): Best suited for repetitive and highly-parallel computing tasks, from rendering images to processing calculations. They’re especially relevant today for functions involving artificial intelligence (AI)
3. ASIC (Application-specific integrated circuits): Integrated circuits custom-designed for a specific use only
4. SOC (“System On a Chip”): Integrated circuits that combine most or all components of a computer or electronic system. These are smaller and consume less power than conventional CPUs; however, they cannot be customized or upgraded

And each of these broad categories can be adapted for specific applications and functions within a bigger system. So when we talk about the semiconductor industry, we aren’t just talking about computer components. It’s a whole universe of products and components within other products.

Because of the range of devices, products, and industries—from relatively simple to highly sophisticated—semiconductor IP can take a number of forms, including copyright, patent, and trade secret protection.

Given the need to distribute physical products, which are often subject to reverse engineering and outright copying, and considering the need to collaborate with other companies, governments, and development partners, patent protection has emerged as a dominant form of legal and strategic protection for the vast majority of companies in the semiconductor industry.

Semiconductor patent landscape: Top patent assignees

Companies based in the United States play a significant role in the semiconductor IP market —holding a whopping 55% of patents worldwide, according to at least one source. Indeed, several U.S. semiconductor companies—Qualcomm, Texas Instruments, Micron, Intel, and AMD, to name a few—are consistently among the top patent earners across all technologies each year. This tells us that a significant amount of semiconductor R&D investment is led by U.S. companies.

But the semiconductor industry is truly a global ecosystem, with significant players across the U.S., Europe, and Asia. Thus, the semiconductor IP landscape stretches across many jurisdictions, with companies based in Taiwan, Korea, China, Japa,n and Europe owning sizeable patent portfolios.

According to Parola Analytics, the top assignees of U.S. patents as of August 2024 are:

1. Samsung Electronics (KR)
2. TSMC (TW)
3. IBM (US)
4. Intel (US)
5. Samsung Display (KR)
6. SK Hynix (KR)
7. Kioxia (JP)
8. LG Display (KR)
9. Micron Technology (US)
10. Applied Materials (US)

Meanwhile, in the EU, the top patent assignees within the same timeframe are:

1. CEA (FR)
2. Samsung Electronics (KR)
3. Mitsubishi Electric (JP)
4. LG Innotek (KR)
5. IMEC (BE)
6. STMicroelectronics (FR/IT)
7. Renesas Electronics (JP)
8. LG Electronics (KR)
9. Infineon Technologies (DE)
10. NXP (NL)

These lists show that the semiconductor IP granted in each jurisdiction is owned by a truly international mixture of companies. The order of the rankings varies from year to year, but semiconductor IP has been a significant component of the global economy for over two decades.

Semiconductor manufacturing: Where is it concentrated?

Semiconductor manufacturing is highly concentrated in just a few regions, with around 92% of facilities located in the United States, the European Union, and East Asia (mainly Taiwan, China, South Korea, and Japan).

Even within that group, East Asia dominates — holding about three-quarters of global semiconductor production capacity.

Not all semiconductor fabrication plants (fabs) are capable of making advanced or “leading-edge” chips. In 2024, that standard was set by semiconductors with node sizes of 10 nanometers or less. In other words, East Asian dominance could be even greater than the numbers indicate; it’s been estimated that Taiwan alone might manufacture up to 90% of the world’s most advanced semiconductors.

The reasons behind East Asia’s market position are, briefly, that these countries have access to a mature supply chain, a large and skilled talent pool, and supportive government policies. Conversely, most other countries do not possess the same infrastructure or know-how, and catching up would be time-consuming and expensive.

Given the ubiquity of microchips in everyday life, being dependent on a small handful of countries to supply this technology comes with risks — from creating supply chain vulnerabilities to disrupting a country’s competitive edge in an already oversaturated market.

Government policies to encourage semiconductor fabrication in more jurisdictions

Based on recent legislation, it’s clear that governments worldwide have a vested interest in addressing these supply-side challenges. Let’s take a closer look at a couple of examples — which could also provide insight into important funding opportunities for semiconductor businesses.

United States: CHIPS and Science Act of 2022

U.S. semiconductor manufacturing capacity has sharply declined in recent years — dropping from 37% of global supply in 1990 to just 12% today.

Signed into law in 2022, the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act aims to revitalize the semiconductor industry in the United States, as well as address economic and national security issues caused by chip manufacturing taking place abroad.

To accomplish this, the CHIPS Act directs $280 billion in spending over the next ten years. Of that sum, $52.7 billion is specifically for semiconductor manufacturing, R&D, and workforce development. In addition, $39 billion has been earmarked for fab construction.

However, funding recipients may not expand semiconductor manufacturing in China and countries that pose a national security threat to the United States.

For businesses able to meet this geographic restriction, the CHIPS Act could provide essential opportunities to diversify production lines and upskill existing talent.

European Chips Act

Presently, the EU’s share of the global chips market is just 10%. Entered into force in September 2023, the European Chips Act similarly aims to increase the jurisdiction’s competitiveness and resilience in the semiconductor industry.

To accomplish this, member countries of the EU will mobilize €43 billion in funding to help ease the industry’s financial barrier to entry. In the short run, the Act hopes to build more fabs across the EU; in the long run, the Act aims to encourage higher levels of innovation by fostering R&D.

The Act’s goal is to double the EU’s global market share in chip production to 20% by 2030.

Japanese subsidies

A former global leader in the semiconductor industry, Japan’s market edge has diminished significantly over the years. In the 1980s, Japan held over half of the global market share; by 2022, it held just 9%.

To try and regain a competitive edge, in late 2024, Japan announced 10 trillion yen ($65 billion USD) of subsidies — to be provided by 2030 — to boost the country’s chip and AI industries.

Through this initiative, the Japanese government hopes to triple sales of domestically produced chips to more than 15 trillion yen by 2030.

Moving away from vertical integration: The fabless/foundry model

The rising costs of developing and maintaining competitive fabs, combined with the industry developing global standardized processes for semiconductor manufacturing processes, gave rise to today’s fabless/foundry model.

In brief, there are three different types of semiconductor companies:

1. A fabless company focuses on innovating and designing microchips, but outsources production to a third-party foundry.
2. A foundry manufactures microchips based on a fabless company’s designs; the foundry does not design their own products.
3. An integrated device manufacturer (IDM) handles the entire production process of chips, from design to manufacture.

We’ll go into more detail about each company type and their respective IP strategies in the next part of this blog series — so watch this space! In the meantime, if you have any additional questions, please feel free to contact us.