Semiconductor Shortages Fuel Nations' Race to Self-Sufficiency

The semiconductor shortage has triggered a new wave of massive investments by countries in a bid to achieve self-sufficiency, according to Strategy Analytics. A confluence of factors including earlier than anticipated demand recovery in segments such as automotive, pandemic-driven demand, a lack of enough foundry capacity investments, stockpiling, double-ordering and natural disasters all precipitated a semiconductor shortage that has driven many countries into a massive investment race to secure their supplies.

"Semiconductor shortage has pushed nations including the U.S., China, Europe, Taiwan and S. Korea to provide government incentives and direct investment in semiconductors manufacturing. Semiconductors play a critical role in consumer electronics, communications, aerospace and defense systems, automobiles, financial services, and the manufacturing and delivery of just about everything. It is in each country's interest to foster its own semiconductor ecosystem to secure supplies against unanticipated disruptions in trade. Strategy Analytics also urges the governments of China and the U.S. in particular to engage in good-faith negotiations to resolve differences and minimize disruption to the global semiconductor supply chain," said Christopher Taylor, author of the report and director of the RF & wireless components service at Strategy Analytics.

"While it is important to address the lack of geographic diversity in semiconductor manufacturing, nations must rationalize their investments to cater to domestic semiconductor industry needs. Strategy Analytics makes some specific recommendations in the report, but in general, nations need to figure out how best to target government investment and incentives in semiconductors in terms of cost-effective and realistic outcomes rather than going for unrealistic goals," added Sravan Kundojjala, co-author of the report and associate director of the handset component technologies service at Strategy Analytics.