Resilience is critical for supply chain success

Exiger’s Skyler Chi talks to Silicon Semiconductor reflecting on what the semiconductor industry supply chain will look like in the ‘new normal’ and the impact this will have on businesses and why they must diversify their supply chain to prevent disruption.

SS: What does the semiconductor industry supply chain look like in the ‘new normal’, in a world where energy prices and geopolitics are causing ongoing, major disruption?

CT: The semiconductor industry supply chain in 2023 and beyond will likely face ongoing challenges due to the effects of global regulatory changes and investment decisions. The CHIPS Act and other similar initiatives aim to boost domestic semiconductor production, leading to a fragmented and less globalised supply chain.

Additionally, the increasing focus on renewable energy sources and reducing carbon footprint will likely drive investment in new technologies such as edge computing and 5G, further complicating the supply chain. The ongoing geopolitical
tensions may also lead to stricter regulations and trade restrictions, causing supply chain disruptions and hindering the flow of goods and resources.
In this new normal, companies in the semiconductor industry will need to adapt to the changing landscape through greater supply chain resilience, diversification, and investment in innovation.

Additionally, the US-China trade tensions and the efforts by the US to reduce its dependence on Chinese suppliers will result in a shift in the industry’s supply chain dynamics.

Companies will need to look for alternative sources and suppliers, leading to a more fragmented and localised supply chain. This could result in higher costs, longer lead times, and increased risks for companies.

Additionally, the US government’s efforts to encourage domestic semiconductor production through initiatives like the CHIPS Act may lead to increased competition and reduced reliance on foreign suppliers. This could result in a more stable and secure supply chain but may also lead to higher costs and reduced innovation as companies adapt to the new landscape.

Overall, the US effort to remove China from its most critical supply chains will likely lead to significant changes in the semiconductor industry supply chain, including increased localisation, greater competition, and the need for companies to adopt new strategies to manage risks and ensure stability.