Governments are intensifying efforts to secure semiconductor supply chains, reshaping the global technology landscape as they compete to reduce strategic vulnerabilities.
The United States, European Union, Japan and South Korea have all launched multi-billion programmes to expand domestic chip production. The objective is clear: reduce dependence on Taiwan, which currently dominates the most advanced logic manufacturing, and mitigate the risk of disruption from geopolitical conflict.
Industrial strategy and national security
The push reflects a convergence of economic and security priorities. Semiconductors underpin everything from smartphones and vehicles to defence systems and supercomputers. Policymakers view resilient supply chains as essential to competitiveness and strategic autonomy. The US CHIPS Act, Europe’s Chips Joint Undertaking and parallel Japanese and Korean subsidy packages are designed to attract fabrication plants, research hubs and skilled labour.
Duplication and efficiency questions
Yet the global subsidy race raises questions about duplication and overcapacity. Industry leaders warn that scattering investment risks fragmenting an ecosystem that relies on scale and specialisation. Chip production is capital-intensive, requiring not just fabrication facilities but also a web of suppliers, testing firms and logistics. Building parallel capacities across multiple jurisdictions could inflate costs and strain limited pools of skilled engineers.
Winners in the supply chain
One clear beneficiary is the semiconductor equipment and materials sector. Companies supplying lithography machines, wafer substrates, chemicals and testing gear stand to benefit as multiple regions expand capacity simultaneously. For them, diversification of fabs creates new revenue streams, while national governments often shoulder much of the financial risk through grants and tax credits.
What investors and markets should watch
The timeline for subsidy disbursement and the pace of project execution will be decisive. In the US and Europe, permitting delays and environmental reviews could slow delivery. In Asia, governments are focused on accelerating land acquisition and power supply to keep new fabs on track. At the same time, any escalation of tensions in the Taiwan Strait would dramatically amplify the urgency of these efforts, regardless of cost efficiency.
Outlook
Full self-sufficiency is neither realistic nor cost-effective. However, a more diversified production base could reduce the global economy’s exposure to single-point failures and geopolitical flashpoints. Semiconductor sovereignty is therefore emerging not only as an industrial ambition but as a geopolitical necessity—reshaping alliances, investment flows and the competitive balance in technology for decades to come.
REFH – Newshub, 25 August 2025
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