Global Chip Shortage Enters Its Fifth Year

Five years after the pandemic exposed the fragility of global semiconductor supply chains, the situation has improved but remains far from resolved. New fabrication plants are under construction in the US, Europe, and Japan, but most will not reach full production capacity until 2028 or later.

Meanwhile, the most advanced chips are still manufactured almost exclusively by TSMC in Taiwan. The geopolitical implications of this concentration have not changed. A disruption to Taiwanese chip production, whether from natural disaster, conflict, or political crisis, would cripple the global economy.

The CHIPS Act and similar programs in Europe and Asia are a start, but they represent a fraction of what is needed to build truly diversified supply chains. The economics of semiconductor manufacturing favor concentration: it is cheaper to build one mega-fab than ten smaller ones.

The uncomfortable truth is that semiconductor independence is a decade-long project at minimum, and the geopolitical risks are not going away on that timeline.