Opportunities were opening up for other nations to strengthen their positions in the supply chain for this crucial sector of the global economy and a key player in emerging technologies like artificial intelligence and next-generation computing after the United States imposed restrictions on China’s semiconductor manufacturing sector last autumn.
In an effort to slow down China’s domestic industry, the US Department of Commerce prohibited the sale of semiconductors and machinery for fabricating chips to that country. The CHIPS Act, which dedicated $52.7bn to the growth of the US semiconductor chip manufacturing industry, was signed into law by the US two months prior to the presidential order.
It remains to be seen how effectively the new regulations would hinder China’s industry. China declared in December that it would spend $143 billion to develop and acquire semiconductor technology in an effort to counter US sanctions.
In order to catch up, the US too has a long way to go. For example, the new semiconductor fabrication facilities, or fabs, that the Taiwanese company TSMC will be constructing in the US state of Arizona to manufacture cutting-edge chips, will take around three years to complete.
Emerging markets have a strong incentive to secure their semiconductor supply, either by finding alternative suppliers or by constructing manufacturing facilities of their own, given how essential semiconductors are to a country’s ability to produce a wide range of electronics essential to the digital transformation and energy transition.
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