Global Chip Boom Could Impact Technology Supply Chains

Both US and European efforts in advanced chip capacity are growing and could lift market shares as high as 45% by 2032.

A recent report by Bloomberg Intelligence finds that both regions could be positioned close to Taiwan, the country that is currently the world’s supplier of leading-edge nodes. The report notes that these expansion efforts could lift their combined market share from 19% in less than 10 years.

The report also finds that global technology supply chains are primed for ‘geographical diversification’, with priorities shifting from profitability and efficiency towards supply chain independence. However, for semiconductor sectors, this could pose more challenges than opportunities.

Widening global footprints could lead to ESG challenges

The US, like the rest of the world, is seeking to combat ongoing chip shortages as global demand for AI continues to rise. In fact, the country invested more than US$5bn in semiconductor-related research, development and workforce to cut down on the time and cost of commercialising new technologies amid the shortage.

As technology supply chain shifts widen the global footprint of the industry, new ESG challenges could be introduced and prevent companies from achieving Net Zero progress.

The report identifies how diversifying supply chains could contribute to greater ESG concerns over the next decade. With more electronics manufacturers moving to India and Southeast Asia, Bloomberg Intelligence argues that renewable energy may become less accessible and hinder the energy transition as a result.

Leading foundries such as TSMC are helping to drive advances in chipmaking technology, as increased costs for nodes has contributed further to outsourcing. However, this could lead to ever-increasing costs as they expand further into the US and Europe.

The People’s Republic of China also continues to advance chip efforts

Significantly, China also seeks to pivot towards mature nodes could result in the country becoming the world’s largest chip manufacturer by 2032. 

This move is in response to the recent US restrictions on cutting-edge Chinese chips and nodes, which - according to Bloomberg Intelligence - could allow the country to command more than 34% of the world’s mature node capacity by 2032.

“We’re poised to witness a significant geographical shakeup in the advanced chip market as more and more countries work to decouple their tech supply chains from China,” says Steven Tseng, Senior Technology Analyst at Bloomberg Intelligence, and the lead author of the report.

“Even amidst this shift, China is still positioned for potential global leadership as the country could command 34% or more of the world’s mature node capacity, which has applications in electric vehicles and industrial automation.”

It was also reported this week (February 2024) by Reuters that US President Biden will continue to crack down on US data flows into China and Russia. The new executive order has been proposed to protect American personal data by restricting its transfer to countries that include China and Russia, says the US government.

******

Make sure you check out the latest edition of Technology Magazine and also sign up to our global conference series - Tech & AI LIVE 2024

******

Technology Magazine is a BizClik brand