Tech supply chains are relocating fragility — not removing it
The US is spending $650B to move chip manufacturing home — but will only gain 4 percentage points of global output. Meanwhile, supply chains got MORE fragile, not less.
Why it matters
AI's compute demands are straining already-relocated supply chains that prioritized geopolitical security over resilience. Practitioners building AI infrastructure need to understand the cost and fragility baked into the new normal: higher prices, more border crossings, thinner margins.
The key facts
8 to knowUS fab capacity projected to grow 203% by 2032; US share of global chip manufacturing only increases from 10% to 14%
US projected to account for 28% of global chip capex 2024-2032 (~$650B) for 4-point output gain
China's third chip fund (2024) targets $47.5B for domestic high-value components
TSMC warned that fabs outside Taiwan reduce gross margins by 2-3 percentage points, widening to 3-4 points at scale
Final assembly shifted to Vietnam, India, Thailand, Mexico; but these countries import most components from China and East Asia
China's share of US electronics imports fell from 52% (2018) to 37% (2022); ASEAN rose from 17% to 26%
Advanced chip fabrication, packaging, and specialized components remain concentrated in East Asia — not relocated
Post-relocation wafers may travel Arizona → Asia → US, adding steps, borders, and paperwork without reducing chokepoints
Go to the source
CIOcio.com
Publisher excerpt: For decades, the technology industry was built around supply chains that were global, but highly concentrated and fragile. The shifting geopolitical landscape in recent years necessitated an evolution of these supply chains that, on the surface, seem more diversified — but are no less fragile.…