Global chip supply chain is vulnerable to massive disruption: study - TechCentral

Global chip supply chain is vulnerable to massive disruption: study

A new study from a US industry group found that the global semiconductor supply chain has become increasingly vulnerable to natural disasters and geopolitical disruptions because suppliers have become more concentrated in distinct regions.

The report comes amid a global chip shortage that started with overbooked factories in Taiwan late last year, but has since been exacerbated by a fire at a plant in Japan, a freeze that knocked out electricity in the US state of Texas and a worsening drought in Taiwan this year. The shortage has idled some production lines at automobile factories in the US, Europe and Asia.

Modern chip-making involves more than a thousand steps and requires complex intellectual property, tools and chemicals from around the world. But the Semiconductor Industry Association, representing most US chip makers, on Thursday said it found more than 50 places in the supply chain where a single region has more than 65% market share.

Intellectual property and software to design cutting-edge chips, for example, is dominated by the US, while special gases key to fabricating chips come from Europe. And the manufacturing of the most advanced chips is completely located in Asia — 92% of it in Taiwan.

If Taiwan were unable to make chips for a year, it would cost the global electronics industry almost half a trillion dollars in revenue, the report found. “The global electronics supply chain would come to a halt.”

‘Not enough’

Still, the study warned, a go-it-alone approach in which governments try to replicate the supply chain domestically is infeasible because it would cost US$1.2-trillion globally — with up to $450-billion of that cost in US alone — causing the price of chips to skyrocket.

In some cases, though, it called for incentives to create “minimum viable capacity” in regions that lack any part of the supply chain. In the case of the US and Europe, that would mean new advanced chip factories to balance concentration in Taiwan and South Korea.

“We don’t have enough semiconductor manufacturing in the US… And it’s got to be fixed with the assistance of the US government,” said John Neuffer, CEOof the association.  — Reported by Stephen Nellis, (c) 2021 Reuters

© 2009 – 2021 NewsCentral Media