05 Jul 2023 -

Is the semiconductor industry the world’s most vulnerable supply chain?


The world’s most advanced chips are produced in a single facility in Taiwan, and this poses a serious risk to the global economy, says Design and Development Today. The Taiwan Semiconductor Manufacturing Company (TSMC) is the maker of these chips, and its fabs are located on the western coast of Taiwan, just 110 miles from mainland China. This makes them vulnerable to both natural disasters and geopolitical tensions.

If China were to invade Taiwan, TSMC’s fabs would likely become inoperable. This would have a devastating impact on the global economy, as semiconductors are essential to the production of everything from smartphones to cars to military equipment.

The Biden administration has taken steps to address this risk by signing into law the CHIPS and Science Act, which provides $280 billion in new funding to boost semiconductor research and manufacturing in the United States. The U.S. has also provided generous subsidies to TSMC to build two new state-of-the-art fabs in Arizona.

However, these measures are not enough to fully mitigate the risks associated with relying on a single facility for semiconductor manufacturing. The U.S. needs to do more to diversify its supply chain and bring more chip manufacturing back to the country. This will require a long-term commitment from the government and the private sector.

The good news is that there is a growing recognition of the need to diversify the global semiconductor supply chain. Other countries, such as South Korea and Japan, are also investing in chip manufacturing. This is a positive development, as it will help to reduce the risk of a single-point failure.

The future of the global semiconductor industry is uncertain, but one thing is for sure: the world cannot afford to rely on a single facility for its most advanced chips. The U.S. and other countries need to take steps to diversify their supply chains and bring more chip manufacturing back to home shores.

In addition to the risks mentioned above, there are other reasons why it is important to diversify the global semiconductor supply chain. For example, natural disasters can also disrupt chip production. In 2011, a tsunami damaged a semiconductor plant in Japan, causing a global shortage of chips.

Another reason to diversify the supply chain is to reduce the risk of geopolitical tensions. For example, the United States and China are currently engaged in a trade war, and this could lead to further disruptions in the semiconductor supply chain.

Diversifying the global semiconductor supply chain is a complex challenge, but it is one that must be addressed. The world cannot afford to rely on a single facility for its most advanced chips. By taking steps to diversify the supply chain, the U.S. and other countries can help to ensure that the global economy remains strong and resilient.

To avoid electronics supply-chain disruptions, you may also wish to consult an expert in electronics component supply. With more than three decades of supply-chain expertise, Astute Electronics is ideally placed to work with you on your daily component requirements.

For more help with looking at supply chain options, contact Astute Electronics

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