Semiconductor Supply Chain Disruption: Unpacking the US-China Trade Conflict

After decades of being treated as another commodity, semiconductors have moved to the forefront of automotive industry discussions in the past decade.

But an increasing reliance on chip technology has led to a growing trade war between the US and mainland China. The United States is working to restrict mainland China from buying advanced semiconductor technology — particularly equipment for manufacturing, inspecting, and testing cutting-edge chips of 7nm and below —all while bolstering its own domestic chip industry.

Yet, new restrictions by the US have not deterred mainland China's ambitions. The country is said to be capable of producing 5nm chips as early as this year for use in smartphones. Additionally, mainland China has continued to develop most advanced automotive technologies. They are the most advanced country in terms of autonomous driving adoption and Chinese OEMs are leading in the development of cars with central computer and advanced technology, right behind Tesla.

The US' actions, as well as mainland China's response and that of other countries aligned on either side, could have a major impact on the global semiconductor landscape. As a result, companies will need to build diversification and supply chain resilience strategies to deal with the shifting political headwinds.