An analysis of the most pressing concerns based on insights from 1,000 UK business leaders.
Shifting perspectives
Articles
Semiconductors are an integral part of every device in the digital age, with the sector set to become a $1 trillion industry by the end of the decade.
During the COVID-crisis, it became clear that disruptions to the global supply of semiconductors were impacting multiple industries, including electronics, automotive, manufacturing and defense.
Chip shortages shaved an estimated $240 billion off the US gross domestic product (GDP) in 2021, equivalent to 1% of total US GDP that year. The auto industry produced nearly eight million fewer vehicles as a result.
Common sources of bottlenecks include natural disasters, geopolitical conflict and fluctuations in demand.
The dominance of Taiwanese semiconductor producers is a significant source of vulnerability in a world of shifting geopolitics.
Insights
- A wide range of industries relies on semiconductors, including electronics, manufacturing and the military.
- Taiwan produces more than 90% of the most advanced semiconductors, with the M7.4 Hualien earthquake a reminder of the region's exposures and risk concentrations.
- The semiconductor industry experienced an acute shortage of supply during the pandemic. As a result, manufacturers are actively diversifying suppliers, recycling and reusing goods.
- From the drought impacting water levels in the Panama Canal to ongoing attacks in the Red Sea, a number of ongoing shipping chokepoints affect supply chains.
- Industries dependent upon semiconductors should prepare for further volatility, including planning for worst-case scenarios, such as disruption to the flow of goods out of Taiwan.