For Stephen Nellis
Apr 1 (Reuters) – A new study by a US industry group reveals that the global semiconductor supply chain is increasingly vulnerable to natural disasters and geopolitical shocks as suppliers have increasingly focused on certain regions.
The report is released against the backdrop of a global chip shortage that began with Taiwan’s factories overloading late last year, and has since been exacerbated by a fire at a plant in Japan, a frost that left no electricity to the state of Texas, in the US, and the worsening drought in Taiwan this year. The lack of chips has caused the paralysis of some production lines in car factories in the United States, Europe and Asia.
Modern chip manufacturing involves more than a thousand stages and requires a complex system of intellectual property, tools, and chemicals from around the world. However, the Semiconductor Industry Association, which represents the majority of U.S. chipmakers, claimed Thursday that it had found more than 50 points in the supply chain where a single region has more than 65 % of market share.
The intellectual property and software for designing next-generation chips, for example, are dominated by the United States, while the key specialty gases for making chips come from Europe. On the other hand, the manufacture of the most advanced chips is completely located in Asia: 92% in Taiwan.
According to the report, if Taiwan couldn’t make chips for a year, the global electronics industry would lose nearly half a trillion dollars in revenue: “The global electronics supply chain would come to a halt.”
Even so, the study warns that an isolated approach in which governments try to replicate the supply chain at the national level is unfeasible because it would cost 1.2 trillion dollars globally – of which up to 450 billion dollars would correspond only to States. United – and the price of chips would skyrocket.
However, in some cases, the study calls for incentives to create “minimum viable capacity” in regions that have no part of the supply chain.
In the case of the United States and Europe, that would mean the creation of new advanced chip factories to balance the existing concentration in Taiwan and South Korea.
“We don’t have enough semiconductor manufacturing in the United States … And it needs to be fixed with the help of the US government,” John Neuffer, the association’s CEO, told Reuters.
(Additional reporting from Stephen Nellis in San Francisco; edited by Kenneth Maxwell; translated by Flora Gómez at the Gdansk newsroom)