The global semiconductor industry is the backbone of modern technology, powering everything from smartphones and automobiles to medical devices and critical infrastructure. However, recent events have exposed significant vulnerabilities in the semiconductor supply chain, particularly for the United States.

America invented the semiconductor, and, at one point, produced nearly 40% of the world’s chips¹. Over the past few decades, production has gradually shifted to Asia, particularly Taiwan and South Korea. Today, the U.S. produces only 10% of the global supply. This over-reliance on foreign manufacturing has created a precarious situation, leaving the U.S. vulnerable to disruptions caused by geopolitical tensions, natural disasters, and other unforeseen events.

The COVID-19 pandemic amplified these vulnerabilities. Supply chain disruptions caused by lockdowns and logistical challenges led to severe semiconductor shortages, impacting industries across the board. From automotive production slowdowns to delays in consumer electronics, the ripple effects hit the global economy.

Additionally, escalating geopolitical tensions between the U.S. and China have added another layer of complexity. The concentration of semiconductor manufacturing in East Asia raises concerns about potential disruptions due to trade wars, export controls, and other geopolitical risks.

Recognizing these challenges, the U.S. government has taken steps to bolster domestic semiconductor production. The CHIPS and Science Act of 2022, for example, provides significant funding for research, development, and manufacturing incentives to encourage domestic chip production. This legislation aims to strengthen the U.S. semiconductor industry and reduce reliance on foreign suppliers by investing nearly $53 billion in U.S. semiconductor manufacturing, research and development, and workforce training. Since the act’s introduction, more than $450 billion in semiconductors and electronics investments have been announced by dozens of companies². This boost to the domestic market is expected to allow the U.S. to produce nearly 30% of the global supply of leading-edge chips by 2032³.

Beyond government initiatives, industry players must also play a crucial role. This includes investing in research and development, fostering innovation, and building resilient supply chains that are less susceptible to disruptions. Navigating the challenges of the semiconductor supply chain is a complex and ongoing endeavor. By fostering a robust domestic semiconductor industry, diversifying supply chains, and investing in resilient infrastructure, the U.S. can ensure a secure and sustainable future for this critical technology.