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Semiconductor Puzzle - Billions of Pieces

A new twist appeared in the tale of semiconductors as China banned US company Micron from supplying to critical industries, including some of its advanced technology projects. This was a surprise move but also a reply to the US which has been restricting semiconductor and related supplies to China.

The positive is that the industry is going through a low demand and such action might not impact the global supply. But given such volatility due to the tussle between the two largest customer countries, the industry will not see peaceful progress anytime soon.

As of today, various countries have announced in total more than $80 Bn in incentives to bring manufacturing to their own country. Recently, Japan's PM met with top executives to pursue local manufacturing. Given Japan is one of the main chemical suppliers to the industry the manufacturers do not have much of a choice.

The main problem in such a multipolar supply chain is that the demand and other factors normalise over the period. Will having such a widespread manufacturing footprint be profitable in a sustained manner? Though the answer will be scrutinised over quarters to come. But given that A.I. Is the next wave of demand generator. The control over the chips will be more critical.


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