Speaking the same chip language: why a shared semiconductor taxonomy matters for global co-operation and supply chain resilience

Semiconductors are more than just chips; they power modern life. From enabling groundbreaking technologies to driving global innovation, semiconductors are indispensable. However, the global semiconductor value chain is complex and vulnerable to disruptions. The production of some types of chips is concentrated in a few regions, making the value chain susceptible to shocks like geopolitical tensions, natural disasters, or supply-demand mismatches. In this context, international co-operation is essential to enhance transparency, manage risks, and ensure the resilience of this critical sector.

To address these challenges, the OECD is fostering international collaboration to make the semiconductor ecosystem more resilient. A key milestone is the creation of a semiconductor taxonomy—a shared framework that helps policymakers, industry leaders, and researchers gather data and navigate this critical industry. 

Through the Semiconductor Informal Exchange Network, senior government officials from 38 economies are working together to address vulnerabilities and build resilience in semiconductor value chains. The network’s efforts are organised into three key workstreams: 

1. Mapping dependencies and bottlenecks: Have better data to identify and address challenges in the semiconductor value chain. This includes comparable data on global semiconductor production capacity in terms of regional capabilities, capacities and interdependencies, as well as a comprehensive map of the semiconductor value chain, identifying key actors and segments. It helps economies better identify and monitor potential vulnerabilities and manage associated risks.

2. Inventorying policies supporting the semiconductor ecosystem: As governments worldwide implement various policy actions to support the semiconductor industry, this workstream aims to improve transparency in policymaking by promoting information sharing and cataloguing policy initiatives, with a view to identifying best practices.

3. Enhancing preparedness: To foster resilience in the semiconductor ecosystem by helping policymakers be better prepared for potential disruptions in the global semiconductor supply chain. This workstream develops and analyses scenarios involving challenges to the evolving ecosystem and includes running tabletop exercises on relevant scenarios.

A key element underpinning the success of these workstreams is the development of a common understanding of various chip types. The OECD's recent paper, "Chips, Nodes and Wafers: A Taxonomy for Semiconductor Data Collection", offers a comprehensive framework for classifying semiconductors and their production facilities.

What the taxonomy does:

1. Enables international co-operation: Promotes a shared understanding of semiconductor types and production processes to enhance the resilience of semiconductor value chains.
2. Facilitates data collection and sharing: Provides a consistent way to gather and compare semiconductor data and production facilities across economies.
3. Enhances policy analysis: Provides a framework for policymakers to identify bottlenecks, monitor supply-demand imbalances, and assess the potential for substitution in case of disruptions.

Key features of the taxonomy:

1. Categorises semiconductor products into four broad types: Logic, Memory, Analog, and Others, with further sub-classifications provided based on specific functions and technologies such as CPUs, GPUs, FPGAs, and others.
2. Includes a framework for classifying front-end semiconductor production facilities (fabs), based on general company and plant information (location, ownership, operational status, capability (chip types produced, process technologies used) and capacity (production capacity, clean room size).
3. Designed to evolve with technology, enabling efficient updates.

This comprehensive approach allows for a more nuanced understanding of the global semiconductor manufacturing landscape, enabling policymakers and industry stakeholders to better assess production capabilities, potential bottlenecks, and opportunities for collaboration and diversification. 

As the OECD Semiconductor Informal Exchange Network continues its work, this newly developed taxonomy will serve as a foundation for future analyses and policy discussions, ensuring that international co-operation in semiconductors remains relevant and effective.

Digital technologies are reshaping the world at an unprecedented pace, and semiconductors remain at the heart of this transformation. By building a shared language that can evolve with technological advancements and fostering international co-operation, the OECD is helping governments and industries navigate the complexities of the semiconductor ecosystem to ensure a more resilient and connected future.