US study finds global chip supply chain vulnerable to massive disruption

The Semiconductor Industry Association, a US industry group, says that the global semiconductor supply chain has become increasingly vulnerable to geopolitical disruptions and natural disasters as suppliers become more concentrated in distinct regions.

According to the group, it found more than 50 places in the supply chain where a single region has more than 65 percent market share.

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

The group's report comes amid a global chip shortage that started with overbooked factories in Taiwan late last year. The shortage has since been exacerbated by a fire at the Renesas plant in Japan, a Texasfreeze that knocked out electricity, and a worsening drought in Taiwan.

The shortage has idled some production lines at automobile factories in the US, Europe, and Asia.

According to the report, if Taiwan were unable to make chips for a year, it would put the global electronics supply chain would to a halt and cost the global electronics industry almost half a trillion dollars in revenue.

Thus, it called for incentives to create “minimum viable capacity” in regions that lack any part of the supply chain.

The US and Europe should balance the concentration in Taiwan and South Korea by putting up new advanced chip factories.

John Neuffer, the association's CEO, urged the US government to assist in increasing the semiconductor manufacturing capabilities in the US.