What is the State of the Global Trade Integrated Circuits: Controllers and Processors? Part 2
Category: International Trade
By: Emmanuel Wa-Kyendo,
Introduction
Integrated circuits with controllers and processors are intermediate products. These products are purchased by manufacturers who use them as inputs for the production of other goods. Households consume integrated circuits as components embedded in finished products. Firms consume integrated circuits as both intermediate and as components embedded in finished products. With increasing digitization, governments too are consuming integrated circuits as the foundation of information technology used to facilitate the digitization of government services. This blog post is part of a series exploring the landscape of the trade in semiconductor devices in general and integrated circuits in particular within the context of the developing world. This blog post is the second part in a series exploring the state of the global trade in semiconductor devices and its importance in development. This blog explores the state of the global trade in controllers and processors, a specialized subset of the integrated circuit, and the state of the global trade in integrated circuits themselves.
What is the State of the Global Trade in Integrated Circuits?
Source: Observatory Economic Complexity
Chart 1 above illustrates the state of global trade in the year 2020. In the year 2009, global trade in crude petroleum was valued at $862 billion and took 7.9% of the total $12.2 trillion of global trade. In that year, the value of the trade in integrated circuits was valued at US$277 billion and took 2.28% of global trade. By the year 2020, global trade was valued at US$16.7 trillion. The global trade in crude petroleum was valued at $640 billion and took 3.82% of the global trade. In the year 2020, integrated circuits were the worlds most traded product. The value of trade in the product was $669 billion. In that year, the trade in the integrated circuit took a 4% share of the total value of world trade. By the year 2020, the global trade in integrated circuits had overtaken the global trade in crude petroleum. Integrated circuits are now the most important product in global trade.
Integrated circuits harmonisation code HS 8542, is a less specialized version of the integrated circuits with controllers and processors. This product was the subject of the first part of this blog post series. In the year 2009, the value of the global trade in integrated circuits with controllers and processors was valued at US$116 billion. Between the years 2009 and 2020, the value of global trade grew 1.32 times while the value of the trade in basic integrated circuits grew almost 3 times. The trade in integrated circuits with controllers and processers itself grew by just about 2.2 times from $116 billion to $260 billion. The trade in both of these two kinds of integrated circuits has grown at a faster pace than growth in the value of total global trade and growth in the value of crude petroleum consumption. By the year 2020, the value of the global trade in crude petroleum had actually shrank to 70% its size in the year 2009. The global trade in two important types of integrated circuits is growing.
How Does the Trade in Controllers and Microprocessors Compare to the Trade in Integrated Circuits in General?
It is remarkable to note that by the year 2020, the global trade in processors and controllers – a more specialized derivative subgroup of the integrated circuit, was greater than the global trade in integrated circuits in 2009. That is, the demand for processors and controllers today has surpassed the demand for integrated ciruits in the recent past. In the industry, chips and integrated circuits are not interchangeable terms. This means that the range of devices that require computing capabilities is increasing at a dramatic rate. This change is an indicator of the accelerating pervasiveness of integrated circuits in the daily lives of consumers all around the world. In the developing world, too, the demand for integrated circuits is growing, albeit indirectly.
What is the State of the Global Trade in Processors and Controllers?
Which Countries Exported Integrated Circuits: Processors and Controllers in the year 2020?
Chart 2 and Chart 3 above illustrate the export trade in the global market for integrated circuits: processors and controllers, a specific product with the harmonized system code HS 854231. This is a derivative of the standard integrated circuit specialized in carrying out instructions to make calculations and control electronic devices. With total trade in the year 2020 valued at $260 billion, this was the worlds 6th most traded product by value. Between 2019 and 2020, the export market of the product grew by 6.78% from $244 billion to $260 billion. This product represented 1.54% of total world trade. In the year 2020, global trade was valued at $16.7 trillion.
In the year 2020, Malaysia, Chinese Taipei, China and the United States were the largest exporters of the product with trade export values totaling $48.8 billion, 33.9 billion, $33.8 billion and $25 billion respectively. The top importers of the product were China, Hong Kong and the United Staes. Import values were $54.2 billion, $53.4 billion and $20.4 billion respectively.
Between the years 2010 and 2020, the value of exports in this type of integrated circuit doubled from $100 billion to $200 billion. In that time, global trade expanded from $14.7 trillion to $16.7 trillion. While global trade expanded by 13%, the trade in this type of integrated circuit grew by almost 100%.
The global trade in ICs with computers was dominated by the East Asian region of the world. This indicates that the East Asian region enjoys comparative advantages in IC computer chips trade that are not shared with other regions in the world. The first part of this blog post series explains the implications of these geographic comparative advantages. Suffice it to say that East Asia controls a significant portion of the global value chain of computer chip manufacturing. Nations that were not important exporters but emerge as important importers of computer chips have a comparative advantage in the manufacture of goods that require computer chip inputs. China is the most significant importer of computer chips.
What is the State of The Trade in Integrated Circuits: Processors and Controllers in Africa?
Imports and Exports of Integrated Circuits: Processors and Controllers in Africa (2020)
Source: Observatory Economic Complexity
The African trade in processors and controllers is paltry, relative to the rest of the world. The most important exporter of the product was Morocco. Kenya exported $906,000 of the product and imported $2.06 million of the product. The data on the sources and destinations of this product for Kenya was unavailable at the time of writing. Given the prohibitive cost of producing integrated circuits, it is more likely that these products, although exported from Africa, were produced elsewhere. Owing to their small size, high value, physical sensitivity and low margins that may demand speedy and just in time delivery to the market, computer chips are usually transported by air. These goods may have transited through the airports of these African nations.
Imports to the African continent of this product were greater in value than the exports. Imports to Kenya of this product were also greater than exports. This implies that the controllers and processors did find some use in Kenya and around the continent. It is likely that there are electrical engineers and firms that specialize in programming controllers and processors to perform specific tasks that they might be used as inputs in other finished goods. There are a number of devices that might be custom built to meet specific standards including speed governors and other devices with cybernetic functions, to name but one application. A device with a cybernetic function can sense changes within a system or in the environment, measure those changes – that is, compute this changes – against specified targets and then carry out instructions in response to those changes.
What Development Questions Arise from This Trade?
Processors and controllers are an intermediate product. Direct consumers of processors and controllers manufacture a wide and growing range of products that require the logic and algorithm processing and memory storage capabilities of processors and controllers. Manufacturers of microwaves, washing machines, smart phones and motor vehicles are just some examples of consumers of these intermediate products. The growth in the trade of this product reflects demand in the manufacturing market which is itself a reflection of growing demand for manufactured products that require some computing and control function. Developing countries like Kenya are not important consumers of these intermediate products. More precisely, the firms in Kenya and other similar countries in the developing world that may find use for this intermediate product are few. Anecdotally speaking, there are Kenyan manufacturers of products like speed governors and other devices that require controller-processor inputs. These manufacturers must work with electronic engineers who can select, import and program the controller-processors so that they can carry out specific instructions. This means that controller-processor variants of integrated circuits are job creators in Kenya. This implies that Kenyan trade policies governing the imports of the machine tools used to build devices that use these integrated circuits, the imports of the circuits themselves and the exports of the final products can have effects on the cost of production, the price to consumers and employment. These are anecdotes that deserve further investigation to establish a base of empirical evidence on which to generate new trade and development policy or challenge prevailing trade and development policy.
How are Developing Countries Indirect Consumers of Controllers and Microprocessors?
Developing countries are consumers of semiconductor products, albeit indirectly. This is because these products are embedded in every day consumer items. During the onset of the COVID19 pandemic, restrictions on movement drove up the demand for consumer electronics and which in turn caused an increase in the demand for processors and controllers. Where demand for consumer electronics or other products with microprocessor intermediates may not have experienced a spike due to COVID19, it is still conceivable that demand for these products will grow. As long as Kenyans import cars, smartphones, microwaves and refrigerators, they will continue to be indirect consumers of this product. Integrated circuits with computing capabilities are ubiquitous and their demand will only grow.
Conclusion
Put together, this data is an illustration of the fact that global markets are moving deeper into the age of computing. Computers are growing in their importance in everyday life. Since the 1990s, at the very least, the markets for crude oil and cars have been the most important markets in global trade. The fact that the global trade in microprocessors has surpassed the value of integrated chips in 2009 and that the value of the global trade in integrated circuits has itself surpassed the value of the global trade in crude oil and cars could be telling of the times. Perhaps these are some of the material signals of the growing reliance on computers exemplified by trends such as the growing interest, research and investment in the integrated circuit reliant internet of things.
Sources:
Observatory Economic Complexity
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What is the State of the Global Trade Integrated Circuits: Controllers and Processors? Part 2
| Post date: Mon, Apr 3, 2023 |
| Category: International Trade |
| By: Emmanuel Wa-Kyendo, |
Introduction
Integrated circuits with controllers and processors are intermediate products. These products are purchased by manufacturers who use them as inputs for the production of other goods. Households consume integrated circuits as components embedded in finished products. Firms consume integrated circuits as both intermediate and as components embedded in finished products. With increasing digitization, governments too are consuming integrated circuits as the foundation of information technology used to facilitate the digitization of government services. This blog post is part of a series exploring the landscape of the trade in semiconductor devices in general and integrated circuits in particular within the context of the developing world. This blog post is the second part in a series exploring the state of the global trade in semiconductor devices and its importance in development. This blog explores the state of the global trade in controllers and processors, a specialized subset of the integrated circuit, and the state of the global trade in integrated circuits themselves.
What is the State of the Global Trade in Integrated Circuits?
Source: Observatory Economic Complexity
Chart 1 above illustrates the state of global trade in the year 2020. In the year 2009, global trade in crude petroleum was valued at $862 billion and took 7.9% of the total $12.2 trillion of global trade. In that year, the value of the trade in integrated circuits was valued at US$277 billion and took 2.28% of global trade. By the year 2020, global trade was valued at US$16.7 trillion. The global trade in crude petroleum was valued at $640 billion and took 3.82% of the global trade. In the year 2020, integrated circuits were the worlds most traded product. The value of trade in the product was $669 billion. In that year, the trade in the integrated circuit took a 4% share of the total value of world trade. By the year 2020, the global trade in integrated circuits had overtaken the global trade in crude petroleum. Integrated circuits are now the most important product in global trade.
Integrated circuits harmonisation code HS 8542, is a less specialized version of the integrated circuits with controllers and processors. This product was the subject of the first part of this blog post series. In the year 2009, the value of the global trade in integrated circuits with controllers and processors was valued at US$116 billion. Between the years 2009 and 2020, the value of global trade grew 1.32 times while the value of the trade in basic integrated circuits grew almost 3 times. The trade in integrated circuits with controllers and processers itself grew by just about 2.2 times from $116 billion to $260 billion. The trade in both of these two kinds of integrated circuits has grown at a faster pace than growth in the value of total global trade and growth in the value of crude petroleum consumption. By the year 2020, the value of the global trade in crude petroleum had actually shrank to 70% its size in the year 2009. The global trade in two important types of integrated circuits is growing.
How Does the Trade in Controllers and Microprocessors Compare to the Trade in Integrated Circuits in General?
It is remarkable to note that by the year 2020, the global trade in processors and controllers – a more specialized derivative subgroup of the integrated circuit, was greater than the global trade in integrated circuits in 2009. That is, the demand for processors and controllers today has surpassed the demand for integrated ciruits in the recent past. In the industry, chips and integrated circuits are not interchangeable terms. This means that the range of devices that require computing capabilities is increasing at a dramatic rate. This change is an indicator of the accelerating pervasiveness of integrated circuits in the daily lives of consumers all around the world. In the developing world, too, the demand for integrated circuits is growing, albeit indirectly.
What is the State of the Global Trade in Processors and Controllers?
Which Countries Exported Integrated Circuits: Processors and Controllers in the year 2020?
Chart 2 and Chart 3 above illustrate the export trade in the global market for integrated circuits: processors and controllers, a specific product with the harmonized system code HS 854231. This is a derivative of the standard integrated circuit specialized in carrying out instructions to make calculations and control electronic devices. With total trade in the year 2020 valued at $260 billion, this was the worlds 6th most traded product by value. Between 2019 and 2020, the export market of the product grew by 6.78% from $244 billion to $260 billion. This product represented 1.54% of total world trade. In the year 2020, global trade was valued at $16.7 trillion.
In the year 2020, Malaysia, Chinese Taipei, China and the United States were the largest exporters of the product with trade export values totaling $48.8 billion, 33.9 billion, $33.8 billion and $25 billion respectively. The top importers of the product were China, Hong Kong and the United Staes. Import values were $54.2 billion, $53.4 billion and $20.4 billion respectively.
Between the years 2010 and 2020, the value of exports in this type of integrated circuit doubled from $100 billion to $200 billion. In that time, global trade expanded from $14.7 trillion to $16.7 trillion. While global trade expanded by 13%, the trade in this type of integrated circuit grew by almost 100%.
The global trade in ICs with computers was dominated by the East Asian region of the world. This indicates that the East Asian region enjoys comparative advantages in IC computer chips trade that are not shared with other regions in the world. The first part of this blog post series explains the implications of these geographic comparative advantages. Suffice it to say that East Asia controls a significant portion of the global value chain of computer chip manufacturing. Nations that were not important exporters but emerge as important importers of computer chips have a comparative advantage in the manufacture of goods that require computer chip inputs. China is the most significant importer of computer chips.
What is the State of The Trade in Integrated Circuits: Processors and Controllers in Africa?
Imports and Exports of Integrated Circuits: Processors and Controllers in Africa (2020)
Source: Observatory Economic Complexity
The African trade in processors and controllers is paltry, relative to the rest of the world. The most important exporter of the product was Morocco. Kenya exported $906,000 of the product and imported $2.06 million of the product. The data on the sources and destinations of this product for Kenya was unavailable at the time of writing. Given the prohibitive cost of producing integrated circuits, it is more likely that these products, although exported from Africa, were produced elsewhere. Owing to their small size, high value, physical sensitivity and low margins that may demand speedy and just in time delivery to the market, computer chips are usually transported by air. These goods may have transited through the airports of these African nations.
Imports to the African continent of this product were greater in value than the exports. Imports to Kenya of this product were also greater than exports. This implies that the controllers and processors did find some use in Kenya and around the continent. It is likely that there are electrical engineers and firms that specialize in programming controllers and processors to perform specific tasks that they might be used as inputs in other finished goods. There are a number of devices that might be custom built to meet specific standards including speed governors and other devices with cybernetic functions, to name but one application. A device with a cybernetic function can sense changes within a system or in the environment, measure those changes – that is, compute this changes – against specified targets and then carry out instructions in response to those changes.
What Development Questions Arise from This Trade?
Processors and controllers are an intermediate product. Direct consumers of processors and controllers manufacture a wide and growing range of products that require the logic and algorithm processing and memory storage capabilities of processors and controllers. Manufacturers of microwaves, washing machines, smart phones and motor vehicles are just some examples of consumers of these intermediate products. The growth in the trade of this product reflects demand in the manufacturing market which is itself a reflection of growing demand for manufactured products that require some computing and control function. Developing countries like Kenya are not important consumers of these intermediate products. More precisely, the firms in Kenya and other similar countries in the developing world that may find use for this intermediate product are few. Anecdotally speaking, there are Kenyan manufacturers of products like speed governors and other devices that require controller-processor inputs. These manufacturers must work with electronic engineers who can select, import and program the controller-processors so that they can carry out specific instructions. This means that controller-processor variants of integrated circuits are job creators in Kenya. This implies that Kenyan trade policies governing the imports of the machine tools used to build devices that use these integrated circuits, the imports of the circuits themselves and the exports of the final products can have effects on the cost of production, the price to consumers and employment. These are anecdotes that deserve further investigation to establish a base of empirical evidence on which to generate new trade and development policy or challenge prevailing trade and development policy.
How are Developing Countries Indirect Consumers of Controllers and Microprocessors?
Developing countries are consumers of semiconductor products, albeit indirectly. This is because these products are embedded in every day consumer items. During the onset of the COVID19 pandemic, restrictions on movement drove up the demand for consumer electronics and which in turn caused an increase in the demand for processors and controllers. Where demand for consumer electronics or other products with microprocessor intermediates may not have experienced a spike due to COVID19, it is still conceivable that demand for these products will grow. As long as Kenyans import cars, smartphones, microwaves and refrigerators, they will continue to be indirect consumers of this product. Integrated circuits with computing capabilities are ubiquitous and their demand will only grow.
Conclusion
Put together, this data is an illustration of the fact that global markets are moving deeper into the age of computing. Computers are growing in their importance in everyday life. Since the 1990s, at the very least, the markets for crude oil and cars have been the most important markets in global trade. The fact that the global trade in microprocessors has surpassed the value of integrated chips in 2009 and that the value of the global trade in integrated circuits has itself surpassed the value of the global trade in crude oil and cars could be telling of the times. Perhaps these are some of the material signals of the growing reliance on computers exemplified by trends such as the growing interest, research and investment in the integrated circuit reliant internet of things.
Sources:
Observatory Economic Complexity
More Blogs
Kenya’s National Budget: A Matatu Ride Reflecting Fiscal Volatility and Structural Inefficiencies
Introduction The matatu metaphor can be used to analytically frame Kenya’s budget as a system that is subject to binding constraints, evolving expectations, and continuous adjustment to shocks. Like the matatu sector, fiscal policy reflects a balancing act between efficiency and quick action seeking to respond to public service delivery while constrained by competing sector […]
NTSA Should Not Regulate Public Service Vehicle Fares
Introduction Imagine paying the same fare to travel at 6 a.m. as you would at 6 p.m., even though the matatu is half-empty in the morning and packed in the evening. At 6 a.m., there may be more seats available than passengers willing to pay for them. By 6 p.m., the situation is reversed. Hundreds […]
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Absurd hypotheticals are useful precisely because they stress-test a system until its constraints become visible. This note asks what would break first if SpaceX, now a public company following its record-breaking Nasdaq debut in June 2026, with a post-IPO market value of approximately US$ 2.5 trillion, sought a secondary cross-listing on the Nairobi Securities Exchange. […]
The Arithmetic of Ambition: What Kenya’s First-World Dream Really Requires?
Kenya’s proposed post-2030 Vision commits the country to high-income status “within a generation.” One positive issue that should be emulated is that the document seeks to solve the most important policy decision and the foundational problem in economics, which is to expand output and labour. Skeptics ask the most important question, why would this plan […]
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According to the Annual Debt Report 2024/25, as shown in Chart 1 below, Kenya today is such that for every one hundred shillings the Kenyan government raises in tax revenue, approximately ksh71 goes directly into servicing existing debt before a single hospital is staffed, a classroom is built, or a kilometre of road is constructed. […]