Australia's first semiconductor roadmap calls for growth

The Semiconductor Sector Service Bureau has released Australia's first National Semiconductor Roadmap, which calls for the sector to triple by 2040.

The roadmap sets out a national vision for semiconductors and urges the federal government to adopt a formal strategy for the industry. It argues Australia should focus on areas where it already has an established presence, rather than try to build a full end-to-end chip manufacturing base.

According to the document, Australia's semiconductor sector includes more than 200 organisations, spanning start-ups, small and medium-sized businesses, larger companies, university-linked ventures and research groups. In 2025, the sector generated close to AUD $1 billion in semiconductor-related revenue, contributed AUD $820 million in total value added and supported about 5,790 full-time equivalent jobs.

Modelling by Deloitte Access Economics shows the industry could triple its output by 2040 if it grows at a rate comparable with overseas semiconductor ecosystems. Under that scenario, the sector could support more than 10,000 additional jobs and deliver an AUD $5.3 billion gain in present value terms.

If current constraints remain, the modelling points to an AUD $14.7 billion loss to the economy and almost 12,500 fewer jobs. The difference between the two paths is estimated at AUD $20 billion.

"Australia faces a $20 billion choice on semiconductors, and the time to act is now. The first steps need decisions: adopt the national ambition, develop a whole-of-government strategy, and recognise semiconductors as a priority," said Dr David Skellern, board chair of S3B.

Skellern said the required workforce, infrastructure and industrial base would take time to build. "Government, industry, investors, educators and researchers all have vital roles to play. The capabilities, infrastructure and workforce we need cannot be built overnight. The longer we wait, the harder it becomes to establish Australia's place in the global semiconductor industry," he said.

Areas of focus

Rather than recommending a domestic industry that covers every stage of production, the roadmap identifies four areas where Australia already has strengths: materials, including semiconductor-grade inputs linked to critical minerals and advanced materials; technologies such as quantum, photonics, power and radio; manufacturing services, including advanced packaging, metrology and testing; and products and applications such as device design and system integration.

The report also lists five priorities for scaling those strengths: national coordination and policy, workforce development, market access and investment, commercial translation, and strategic infrastructure linked to global supply chains.

Matthew Worsman, a director at S3B, said the sector needed a common direction and stronger policy support. "For decades, Australian ingenuity has contributed to semiconductor innovation. This roadmap gives the sector a shared direction to become an Australian industry that designs and makes technologies the world depends on, while remaining a trusted partner in global supply chains," he said.

Worsman said Australia stood apart from several close partners by lacking a national policy framework for semiconductors. "Governments worldwide have responded to semiconductor supply risk with national strategies and public investment on an unprecedented scale. Australia is the only AUKUS or Quad partner without a national semiconductor strategy or coordinated national semiconductor policy framework," he said.

Global demand for semiconductors has risen sharply as industries invest in artificial intelligence, electrification and digital infrastructure. The roadmap says worldwide semiconductor sales reached about USD $792 billion in 2025, while recent supply disruptions exposed the risks of relying on a narrow set of overseas manufacturing centres for advanced chips.

Since 2020, governments around the world have committed more than USD $500 billion to semiconductor development. More than 20 economies, including the United States, Japan and the European Union, now have dedicated semiconductor strategies and policy frameworks.

The roadmap argues that without action, Australia's semiconductor ecosystem and specialised workforce could begin to contract from 2027. It also says the sector faces a shortage of industry-ready talent, a gap between research funding and commercial scale, limited pilot-scale infrastructure, weak national coordination and restricted access to trusted global supply chains.

Industry examples

The bureau highlighted local companies as examples of what the sector can do when research moves towards commercial production. One is Millibeam, which is developing a lightweight counter-drone system called Rakurai using its own semiconductor technology. The company also supplies radio frequency and millimetre-wave chips and packaged antennas to overseas civilian markets, including satellite and communications.

"One of the biggest opportunities is to create a local foundry to bolster national resilience. There could be a pathway for a small local foundry that keeps operating even if global foundry supply chains are disrupted, and that can support defence and sovereign needs. Semiconductors are critical to national resilience. So if resilience is a key priority, building this capability has to be part of the equation," said Dr Venkata Gutta, chief executive officer and founder of Millibeam.

Another example is Sydney-founded Diraq, which builds quantum bits from modified silicon transistors using semiconductor materials and production methods developed over decades. The company says access to established foundry lines, trusted overseas supply chains and Australian investment is important to its growth.

"We could start with high-quality, world-class packaging capabilities, then build towards a more affordable, less advanced tier-2 foundry. Over time, as the industry grows, it may eventually make sense to establish a tier-1 foundry in Australia. But whatever we build needs to be cutting-edge, so Australian and international customers will want to access it rather than go offshore," said Dr Andrew Dzurak, chief executive officer of Diraq.

Dr Cathy Foley, former chief scientist of Australia and current AMRF board chair, pointed to packaging and design as practical starting points for local expansion. "Australia doesn't need to build every part of the semiconductor supply chain to compete globally. We have real opportunities in areas such as design, quantum technologies, advanced packaging and critical minerals, and can build on these strengths to capture more value onshore. The planned AMRF Semiconductor Advanced Packaging Facility in Western Sydney is an important step in translating Australian research and expertise in sensor technology into manufactured products. By combining our strengths in critical minerals and design with advanced manufacturing, Australia can move beyond supplying raw materials to capture a greater share of the global semiconductor market," she said.

Worsman said the immediate decision now sits with government. "The first step is a government decision to adopt the national ambition, develop a whole-of-government strategy and recognise semiconductors as a priority sector. Australia has the capabilities, the opportunity and is united in the direction we need to take. Now we call on government to respond and take action," he said.