Supply Chain Matters has often reinforced to our readers that supply network sourcing and procurement strategies can often have a relationship to geo-political dynamics that occur among nations. This has especially been the case over the past 3-4 and trade relationships among the U.S. and China have escalated.

In prior published blogs, we have updated readers on the implications of the now global shortage of semiconductor devices that is now directly impacting multiple industry production output of finished products.

semiconductor manufacturing

This week Bloomberg provides another perspective with the headline: World’s Supply of Chips is in Danger Unless Taiwan Gets Vaccines. (Paid subscription to content or metered view)

The essence of the report is that: “Back in February, as the world was beating a path to Taiwan’s door for help to tackle a shortage of semiconductors, the health minister got into a scrap with China over Covid-19 vaccines.” Reportedly, Taiwan had plans to acquire 5 million doses of vaccine directly from Germany’s BioNTech rather than a Chinese company which held rights to develop and market the Pfizer-BioNTech among four countries and territories including Taiwan.

Now, with only an estimated one percent of this island’s population currently vaccinated, a surge in virus cases threatens to trigger a lockdown, and with that, a production disruption threat of needed semiconductor devices.

The report draws a parallel to what Supply Chain Matters has noted, a growing realization among political and high-tech industry leaders in the Europe, Japan and the United States as to the strategic aspects of semiconductor supply network capabilities being more nearshored. At the same time, China is boosting its efforts to develop inherent advanced semiconductor capability.

Amid growing geo-political tensions and concerns, industry and political leaders are lobbying various viewpoints as to what is the long-term strategy that provides more reliable continuity of supply while added more protections for advanced chip technology intellectual property protections including engineering talent. The byline is an undertone is that global supply chains may be too dependent on Taiwan for critical chip technology. Political tensions over a fundamental need to vaccinate Taiwan’s population becomes entangled in this high-tension environment as is supplier TSMC’s efforts to attempt to appease the major stakeholders.

Our takeaway message remains the same, namely that the global semiconductor shortage has both tactical near-term and strategic supply network resiliency implications. Product design and strategic sourcing teams need to be working in lock step in ensuring that there is multiple sourcing and qualification of semiconductor logic devices over the longer-term horizon. Any long-term supply agreements must address supply network risk mitigation.

In other words, in the new normal, do not assume business as usual since geo-political tensions will likely have more influence in the months to come.


Bob Ferrari

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