At the start of 2021, there was a worldwide shortage of semiconductors, which resulted in disruptions in the supply chain for various products globally. This situation highlighted the challenges of maintaining robust supply lines and emphasized the significance of such networks. These chips are not only crucial for the modern global economy but also essential for cutting-edge technologies like artificial intelligence (AI), quantum computing, and electric vehicles (EVs). The complexity of the industry, coupled with geopolitical factors, adds further challenges in efforts to strengthen the supply chain and sustain ongoing innovation.
The Indo-Pacific region has become a crucial center for semiconductor production due to the existence of well-established semiconductor manufacturing facilities, a highly skilled workforce, strong infrastructure, and favorable governmental policies that promote investment in the sector. Major semiconductor manufacturers, such as Taiwan, South Korea, Japan, and increasingly, nations like Vietnam and India, are located within this region.
The Biden administration recognizes the critical role the Indo-Pacific region plays in the semiconductor industry and has enhanced its domestic industrial policy initiatives by incorporating new international economic arrangements, such as the Indo-Pacific Economic Framework for Prosperity (IPEF). With 14 member countries, including the United States, IPEF encompasses four major components, namely trade, supply chains, decarbonization and infrastructure, as well as fair economy matters like anti-corruption and transparency. Within the supply chain component, there are dedicated modules aimed at identifying vital sectors and goods, bolstering resilience and investment in those sectors, fostering better information sharing and transparency, optimizing supply chain logistics, and safeguarding the welfare of workers. This is a first step to hopefully tackle the complex dynamics between economic globalization and national security concerns.
The United States faces a dilemma in reconciling its economic interests, characterized by globalized supply chains, with its national security imperatives. The interdependence and complexity of semiconductor supply chains make it challenging to strike a balance between efficiency and resilience. Moreover, geopolitical tensions and competitive dynamics between countries further complicate the issue.
One approach is to diversify supply sources and develop domestic semiconductor manufacturing capabilities, reducing reliance on a few key suppliers. Here is an opinion piece we found of interest regarding the critical role the Indo-Pacific region plays in the semiconductor supply chain.
Mapping the Semiconductor Supply Chain: The Critical Role of the Indo-Pacific Region
In an opinion piece “Mapping the Semiconductor Supply Chain: The Critical Role of the Indo-Pacific Region” for the Center for Strategic and International Studies, Akhil Thadani, Research Associate, Wadhwani Center for AI and Advanced Technologies and Gregory C. Allen, Director, Wadhwani Center for AI and Advanced Technologies, discusses the significance of the Indo-Pacific region in the global semiconductor supply chain. The authors note that countries like Taiwan, South Korea, Japan, and China are major players in semiconductor production, collectively accounting for a significant portion of the global supply. Taiwan, in particular, is a leader in advanced chip manufacturing and serves as a critical node in the global semiconductor supply chain. Any disruption in the production or availability of semiconductors from these countries can have far-reaching consequences for industries worldwide.
The authors emphasize the need for diversification and resilience in the semiconductor supply chain, adding the concentration of production in a few countries poses risks, as disruptions or geopolitical tensions can have significant global impacts. The global demand for semiconductors has been rapidly increasing, driven by emerging technologies like 5G, AI, and the Internet of Things (IoT). As a result, they say it has become critical to strengthen partnerships, promote innovation, and invest in domestic semiconductor industries as strategies for enhancing supply chain security. Read the full article on the Center for Strategic and International Studies website.
The Fatty Fish Editorial Team includes a diverse group of industry analysts, researchers, and advisors who spend most of their days diving into the most important topics impacting the future of the technology sector. Our team focuses on the potential impact of tech-related IP policy, legislation, regulation, and litigation, along with critical global and geostrategic trends — and delivers content that makes it easier for journalists, lobbyists, and policy makers to understand these issues.
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- The Fatty Fish Editorial Teamhttps://fattyfish.org/author/fattyfish_editorial/
- The Fatty Fish Editorial Teamhttps://fattyfish.org/author/fattyfish_editorial/
