Australia has a semiconductor ecosystem of around 180 organisations, with credible strengths in R&D, design and IP, advanced materials, photonics, quantum-related technologies and specialised devices but its also has a significant “missing middle”.   

Without coordination and greater self-reliance in critical inputs, Australia risks missed investment opportunities, growing exposure to global supply shocks and weakened national prosperity.

With no government strategy in place, S3B has released the Shaping Australia’s Semiconductor Future Discussion Paper and is urging the sector to take part in a survey that will help shape Australia’s first National Semiconductor Roadmap.

The Semiconductor Sector Service Bureau is Australia’s only industry hub for the semiconductor sector.

Established three years ago with funding from the Office of the NSW Chief Scientist and Engineer, S3B supports the growth of the semiconductor sector across NSW and nationally. Its vision is to build a thriving, globally connected sector in Australia and increase its economic impact.

Its Shaping Australia’s Semiconductor Future Discussion Paper identifies key opportunities for Australia and sets out the priorities needed to establish a much-needed national approach.

Semiconductors are foundational to modern life, economic productivity and national security.

They underpin the technologies Australia relies on every day, from communications networks, energy systems, medical technologies and transport to defence capability, artificial intelligence, quantum technologies and advanced manufacturing.

S3B Acting Director Matthew Worsman says now was the time for Australia to grow the industry.

“The global economy is becoming more digital, automated and electrified, and semiconductor capability is becoming central to how nations build resilience, capture value and stay competitive,”

“Australia is currently playing to selective strengths in the knowledge-intensive, design-led and application-linked parts of the value chain, rather than running a full-stack semiconductor economy,” Mr Worsman said.

“Other countries are investing significantly in this sector, and Australia needs to consider how it can secure its place in the global ecosystem.”

“There is no coordinated national approach. S3B has released this Discussion Paper to spark conversations and gather input from across the sector, so together we can build a Roadmap for an end-to-end value chain and make sure that, as a nation, we’re not left behind.” he said.

Deloitte Access Economics¹ estimates that Australia’s $1 billion semiconductor ecosystem supports approximately 5,790 full-time equivalent jobs, including both direct and indirect employment.

Activity is concentrated in knowledge-intensive and application-linked segments, including research and development, design, intellectual property, advanced materials, photovoltaics, photonics, quantum-related technologies, specialised devices and semiconductor-enabled products and applications.

“The sector will always rely on international partnerships, with ties across the United States, Japan, South Korea, Taiwan and the European Union, and deepening engagement with Singapore, India and Vietnam,” Mr Worsman said.

“Australia’s dependence on offshore capabilities creates a strategic risk and highlights the need for more diversified and trusted supply-chain access,” said Worsman

“As nations make increasingly deliberate choices about where semiconductor capability is developed and scaled, Australia’s ability to capture value and participate in future industries will depend on how effectively it connects its domestic strengths to international partners, markets and infrastructure.” he said.

Australia’s domestic manufacturing capability remains limited, but targeted investments in advanced packaging, photonic packaging, device assembly and related prototyping infrastructure are beginning to add depth to the national infrastructure base.

The Shaping Australia’s Semiconductor Future Discussion Paper is designed to encourage sector input so S3B can build Australia’s first National Semiconductor Roadmap—a 15-year, sector-led strategic plan intended to guide policy, investment and capability development.

Members of the semiconductor and broader technology sectors can contribute their views through a survey and a series of national webinars that will help shape the Roadmap and establish a shared direction for the sector.

The Roadmap’s purpose is not to replicate the semiconductor ecosystems of other economies, but to identify where Australia can build genuine depth, contribute meaningfully to global value chains and capture greater economic and strategic value over time.

Strategic areas for consultation include Australia’s strategic position; capability priorities; supply chains; international engagement; skills and workforce; infrastructure and investment; and government policy and coordination.

Australia’s former Chief Scientist, Dr Cathy Foley, said Australia has credible capability at the early stages of the value chain but lacks depth when it comes to scaling commercially.

“There’s a missing middle—in infrastructure beyond research scale, in accessing global capability and capital, and in workforce depth at the mid-career, senior and production levels,” Dr Foley said.

“These challenges are all connected. Together, they determine whether ideas and prototypes can progress to deployable products, and whether we build lasting industrial capability and capture long-term value.”

“It’s great to see commercial advanced-packaging capability being built at Bradfield in Western Sydney.”

“But we still need a Roadmap that prioritises the capabilities, investments and partnerships needed, while providing a pathway for government and industry to work together to grow the sector and support economic resilience.” said Dr Foley

The evidence-based, industry-informed Shaping Australia’s Semiconductor Future Discussion Paper proposes strengthening Australia’s semiconductor ecosystem through greater investment in translation infrastructure and deeper workforce capability.

It also calls for expanded access to global fabrication, packaging, design and supply-chain pathways, while directing national resources towards areas where Australia already has established expertise and competitive strengths.

The recent pandemic and geopolitical events have shown how easily supply chains can be disrupted, making the secure supply of semiconductor technology increasingly important to the broader critical technology industry.

At a minimum, Australia needs the ability to undertake small-scale production and manufacturing onshore.

“The Australian semiconductor sector comprises 180 organisations and presents a significant but largely unrecognised opportunity for the economy,” Mr Worsman said.

“There are priority issues we need to tackle if we’re going to grow this critical ecosystem and realise its genuine economic potential.” said Mr Worsman

“Growth and diversification are key, and if we want high-value jobs and industries for the future, we need a shared direction and a nationally coordinated approach.”

“The release of the Discussion Paper marks an important step in defining Australia’s place in the global semiconductor ecosystem and unlocking the contribution this strategically important sector can make to the nation’s future prosperity.” he said.