**Washington**: The Biden administration launches an investigation into the semiconductor supply chain, aiming to address vulnerabilities affecting national security and economic stability, amid concerns over the U.S.’s declining manufacturing capacity and increased competition from foreign markets, particularly in East Asia.
The Biden administration is set to launch an investigation into the semiconductor supply chain, a move announced by President Donald Trump on April 11, 2025, as part of a broader national security assessment. This initiative aims to identify vulnerabilities within critical technology sectors that are essential to national defence and economic stability.
Historically, U.S. government intervention in the semiconductor space traces back several decades, particularly during the 1970s and 1980s, when American companies faced increasing competition from foreign markets. The establishment of the U.S.-Japan Semiconductor Agreement in 1986 was a response to significant concerns following a decline in the U.S. market share, which fell from 60% in the early 1970s to just 35% by 1989. Furthermore, the creation of SEMATECH in the late 1980s was another strategic government initiative aimed at reinforcing U.S. competitiveness against Japan’s semiconductor industry.
Today, concerns about the semiconductor supply chain are recurrent, albeit with new competitors on the horizon. The U.S. domestic manufacturing capacity has seen a drastic decrease from 37% of global production in 1990 to a mere 12% currently, stirring apprehension among policymakers about the long-term implications for national security.
A critical focus of the investigation is the geographic concentration of advanced semiconductor manufacturing, particularly in East Asia, which poses risks to the U.S. Within this context, Taiwan emerges as a significant player, accounting for 44.2% of U.S. imports of sophisticated logic chips and producing 94% of the world’s most advanced logic chips. Such concentration, in light of prevailing geopolitical tensions, raises alarm about potential vulnerabilities in the supply chain.
The global semiconductor supply chain comprises over 500 manufacturing stages that cross more than 70 international borders, amplifying the susceptibility to disruptions. Historical occurrences, such as the 1999 earthquake in Taiwan which caused an immediate spike in semiconductor prices, and the COVID-19 pandemic, which unveiled the fragility of global supply chains, further underscore these vulnerabilities. The pandemic led to substantial economic losses across various sectors reliant on semiconductor availability, including both civilian and defence industries.
However, reshoring semiconductor production to bolster domestic capacity presents significant economic challenges. Experts warn that onshoring could increase production costs by approximately 50% compared to chips manufactured in Taiwan, potentially diminishing the U.S. industry’s competitiveness on a global scale. The benefits of a specialised global supply chain, which has historically driven innovation and reduced costs, might be compromised if production is nationalised and fragmented.
Despite these hurdles, projections indicate that the U.S. could grow its share of global semiconductor fabrication capacity from 10% to 14% by 2032 and capture 28% of global capital expenditures between 2024 and 2032. Achieving these goals requires overcoming a projected shortfall of 67,000 skilled semiconductor workers by 2030, highlighting the crucial interplay between workforce development and manufacturing investment within the broader context of the semiconductor industry.
Source: Noah Wire Services
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