Charting Africa’s path to semiconductor leadership

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From consumer electronics to electric vehicles, renewable energy, and defence systems, semiconductors power it all. The global semiconductor industry is set to see a decade of growth, with projections indicating it will become a trillion-dollar sector by 2030. Around 70 percent of this growth is expected to stem from three key industries: automotive, computing and data storage, and wireless. The automotive sector will likely see the fastest growth, with demand potentially tripling due to advances in autonomous driving and e-mobility.

The global semiconductor industry is set to see a decade of growth, with projections indicating it will become a trillion-dollar sector by 2030.

Currently, the United States (US), European Union (EU), and East Asian nations (particularly China, Taiwan, and South Korea) dominate the industry. Africa, home to almost one-third of the world’s critical minerals, supplies materials like cobalt, copper, graphite, silicon, and tantalum that are vital for semiconductor production. However, Africa’s involvement essentially stops at extraction, contributing less than 1 percent to the global market share. With its vast mineral resources, growing economies, and youthful population, Africa has significant potential to develop a more integrated and resilient semiconductor industry.

Africa’s contribution at different stages of the value chain

The semiconductor value chain is broadly divided into three stages—extraction, design and manufacturing, and Assembly, Testing, and Packaging (ATP)—each with its respective challenges and opportunities. Since the African continent lacks advanced design labs and large-scale fabrication plants, which limits access to critical technologies and processes essential for semiconductor production, its contribution significantly drops after the extraction stage. Thus, it contributes little to the subsequent design and manufacturing stage. Similarly, Africa has fallen behind in the ATP stage due to insufficient Research and Development (R&D), low investment, and a skills gap.

Africa’s potential at different stages of the value chain:

Extraction:

Africa already has a position of prominence in this stage due to its large mineral reserves and extensive mining operations. However, it can use its position better by:

• Introducing export controls to better manage the flow of valuable raw materials: For example, the Democratic Republic of Congo (DRC) has designated cobalt as a “Strategic Mineral,” enabling the government to enforce stricter regulations on its extraction and export.
• Strengthening legal frameworks: For example, Botswana’s Mines and Minerals Act of 1999, requires the cutting and polishing of diamonds to occur locally instead of exporting them in their raw form.
• Enhancing contract transparency to ensure greater accountability in mineral contracts and leases: The Extractive Industries Transparency Initiative (EITI) is an excellent example in this regard. In West Africa, Liberia became the first African country to fully comply with EITI in 2009, committing to publish all mining contracts and revenues generated from natural resource extraction, enabling better scrutiny of deals between the government and foreign companies. Similarly, Ghana made the details of all mining contracts publicly accessible since 2016 as part of its commitment to EITI standards.
• Advocating for fairer compensation: This was demonstrated by the Simandou Iron Ore Project in Guinea. In 2020, Guinea renegotiated agreements with foreign mining companies to secure more favourable terms, including higher royalties and commitments to local infrastructure development, such as railways and ports.
• Allocating some portion of the raw materials towards indigenous semiconductor production: Namibia, for example, has adopted a ‘Minerals Policy’ that prioritises local value addition and processing before export, especially for strategic minerals like uranium.

Design and manufacturing stage:

• At this stage, local African governments must enhance infrastructure and policies related to energy and technology investment. Some small but promising initiatives are already in progress, such as South Africa’s establishment of the Microelectronics and Nanotechnology Centre at the Council for Scientific and Industrial Research (CSIR).
• Similar to the Offset Clause in India’s defence industry, which requires foreign companies to reinvest a portion of their profits into the local industry, African raw material suppliers could introduce a similar clause that puts a contractual obligation on the buyers of raw materials from Africa to invest a certain percentage of their profits into building up the indigenous capabilities of African semiconductor industry.

ATP stage:

As the semiconductor value chain advances, the demand for specialised skills grows. To close this gap, Africa will need to invest more in R&D and align education with industry needs, producing more STEM graduates to strengthen the local value chain. Initiatives like Kenya’s Konza Technopolis, popularly known as Africa’s Silicon Savannah, and Rwanda’s Kigali Innovation Smart City project offer promising platforms for skilled African job seekers to find local opportunities instead of migrating to East Asia or the US. For example, Konza Technopolis signed a US$1.4 million deal with South Korean firms in 2023 to boost electronics manufacturing.

African nations should also establish legislation to support this growth. South Africa’s Electronic Communications Act and Nigeria’s National Information Technology Development Agency Act provide practical and effective frameworks for Information and communications technology (ICT) sector development.

Africa must design policies that reap benefits from this scientific diaspora, who would be keen to contribute to developing their home countries.

Further, Africa must also reap the rewards from its STEM diaspora. More than 30 million African Diaspora live in different parts of the world, working for the scientific development of their host countries. Africa must design policies that reap benefits from this scientific diaspora, who would be keen to contribute to developing their home countries. Further, Africa may take inspiration from India, particularly its Vaishvik Bhartiya Vaigyanik (VAIBHAV) fellowship programme, which produces significant results for India.

International partnerships

Africa could benefit from bilateral and multilateral partnerships with different countries and organisations in the semiconductor value chain. For example, the agreement on a feasibility study between the US Trade and Development Agency (USTDA) and Semiconductor Technologies Limited (STL) Kenya, to boost semiconductor manufacturing in East Africa, could serve as a model for the continent. The US aims to establish more manufacturing hubs in East Africa to avoid future supply chain disruptions like the COVID-19 pandemic. However, it is too early to determine whether this will serve as a blueprint for future deals between countries at different levels of the value chain.

Way forward

The global semiconductor value chain remains highly complex, strategic, and geopolitically significant. Despite its current challenges, Africa’s unique combination of capabilities, from raw material extraction to emerging technology production, presents a significant global collaboration opportunity towards a comprehensive semiconductor ecosystem. With substantial investments in education, infrastructure, and technology, Africa has the potential to become a hub of innovation and manufacturing excellence. As costs rise in established markets, Africa’s competitive pricing and untapped innovation potential offer a promising solution.

Africa could benefit from bilateral and multilateral partnerships with different countries and organisations in the semiconductor value chain.

Africa must move beyond being a mere supplier of critical minerals to becoming a hub for semiconductor innovation and manufacturing. It must forge partnerships with advanced economies and other countries in the Global South that offer favourable deals. For example, the US CHIPS and Science Act presents a valuable opportunity for Africa to attract investment. Similarly, with its leading role as one of the world’s largest semiconductor design hubs, India can provide crucial support in the design stage.

In 2000, the Economist magazine called Africa a ‘Dark continent’. Within 10 years, it changed its cover to ‘Africa Rising’. As the continent marches ahead, it has the potential to transform into the “Silicon Savannah” of semiconductor design and testing. However, this will require sustained and proactive policy efforts to consolidate its position as a critical actor in the semiconductor industry. Ultimately, Africa’s semiconductor ambition would depend on how well African leaders adopt a long-term vision, prioritising strategic investments and aligning local policies with international goals and investment.

Samir Bhattacharya is an Associate Fellow at the Observer Research Foundation

Yuvvraj Singh is a Research Intern at the Observer Research Foundation.

• International Affairs
• Cyber and Technology
• Africa
• European Union
• USA and Canada
• africa semiconductor industry
• global semiconductor value chain
• namibia minerals policy
• semiconductor manufacturing countries in africa
• silicon savannah
• top semiconductor manufacturing countries
• us kenya technology partnership

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