Growth of semiconductor production across EU set to generate 10.8 sq m of warehouse demand by 2030

The Covid-19 pandemic caused significant disruption in the semiconductor market, with the impact on the global supply chain creating numerous challenges for production and delivery. Factory shutdowns, logistical issues and reduced capacity due to safety measures all increased lead times.

Subsequently, a sudden surge in demand for electronics and automobiles outpaced the available manufacturing capacity, resulting in supply shortages, which has been exacerbated by geopolitical issues.

Looking at the geographical breakdown, Savills has seen significant changes over the past 30 years in regard to semiconductor production. For example, China has grown to be the largest market by global revenue accounting for 24% in 2015, before increasing its share to 32% in 2022. In contrast to Asia’s expansion, the US has seen its share of global production fall from 37% in 1990 to 12% in 2021. Savills anticipates that this trend is likely to reverse, with Europe also now looking to attract their own manufacturing base and supply chain.

Andrew Blennerhassett, associate in the industrial & logistics research team at Savills, comments: “We expect semiconductor demand to continue to grow sharply over the next decade, amid megatrends including AI, electric vehicles, cloud computing and automation. Whilst Europe does face stiff competition from more established markets, sensible policymaking will provide the ingredients for successful growth. Ultimately, if the EU hits its target of 20% of global output, we expect to see up to 10.8 million sq m of additional logistics demand by 2030.”

From a real estate perspective, the link between manufacturing activity and demand in the industrial and logistics market is self-evident. As long-term demand for manufactured goods rises, occupiers will expand their physical footprint to increase capacity.

In 2021, European manufacturing revenues reached €5,209 billion, while semiconductor revenues reached €53.8 billion, equating to just over 1% of the total figure. Savills suggests that if manufacturing grows at the compound annual growth rate experienced between 2011 and 2021 (1.07%) and European semiconductor revenues reach the €241.56 billion figure needed to achieve the EU’s targets, this share could rise to 4.2% by 2030. This growth represents an additional increase in manufacturing revenues of 2.9% over the period, driving take-up in the European logistics sector.

Savills, therefore, predicts that if the EU successfully increases its share of semiconductor production as set in the EU Chips Act, then it is expected to create an additional 1.6 million jobs in direct and indirect employment, generating 4.2 million sq m of demand for logistics space from consumer spending. Countries including Ireland, Germany, Italy Poland and Spain all have the potential to benefit.

Marcus de Minckwitz, head of EMEA industrial & logistics at Savills, adds: “We are receiving a growing number of enquiries from semiconductor manufacturers and other related occupiers, which presents an exciting opportunity for the European markets. This is another demonstration of the diverse nature of the industrial and logistics sector, and Onshoring, together with renewed growth in E-commerce, will fuel demand in the coming years.’