New countries will enter the global arena of semiconductor manufacturing.

In 2023, semiconductor component manufacturers and distributors, as well as equipment manufacturers, will face a delicate supply chain environment. missed production schedules in 2020 due to the epidemic led to a shortage of supply for much of 2021, and just as electronics supply was starting to go well, geopolitical influences led to oversupply in some sectors and severe shortages in others.

Here are five ways in which the electronics supply chain is expected to change in 2023

1. In-depth analysis of costs and risks

As resilient supply becomes a top priority in the new year, companies will need to invest in partnerships with chip suppliers and manufacturers to increase visibility. For example, General Motors has partnered with Qualcomm, while Ford has partnered with GlobalFoundries. Planning for costs and risks with suppliers will become necessary.

The once global supply chain disruption has certainly changed the electronics supply chain. The silver lining now is that this change has exposed shortcomings and gaps in the supply chain. By clarifying these potential problems, companies can take the necessary steps to adopt a more proactive approach when it comes to costs and risks.

2. Chip manufacturing will advance at a national level

After major disruptions and chip shortages in 2022, several governments around the world are beginning to promote domestic chip manufacturing. The US passed the Chip and Science Act to increase domestic chip manufacturing in the US. The bill aims to increase investment in domestic chip manufacturing in the US and commits $280 billion in spending to the industry over the next 10 years. A total of $52.7 billion will be used to support semiconductor manufacturing, workforce development and research and development; an additional $24 billion in tax credits will be used for chip production.

In Europe, a European chip bill is under consideration and is expected to be finalised sometime in early 2023.

US and European government incentives have been used to plan and build new facilities. Funding for the chip industry is expected to accelerate innovation and lead to new manufacturing processes and technologies. Progress is certain as semiconductor companies invest more resources in R&D.

According to the report, 33 new semiconductor fabs will start construction in 2022, with 28 currently expected to begin construction in 2023. While these fabs may take some time to become operational, the supply chain could see the benefits of these fabs in 2023 with new facilities.

3. Chip shortage expected to continue

High global political tensions are expected to continue to affect the electronics supply chain. Geopolitical tensions continue, with Germany blocking several foreign investment deals last year. in November 2022, Silex, the Swedish subsidiary of China‘s Sai Microelectronics, was interested in acquiring Elmos‘ Dortmund facility, but was vetoed by the German government due to security concerns.

The US signed the Inflation Reduction Act in August 2022. The EU is concerned that the Act could cause problems with trusted trading partners and is inclined to rely actively on domestic manufacturing. The bill is the third piece of legislation passed since 2021 that aims to improve the productivity and competitiveness of the US economy.

4. New countries will enter the global arena of semiconductor manufacturing

In addition to the US and EU, other countries are taking action to increase domestic chip production and research. Signs of this are already occurring in Japan. Eight companies have formed a consortium in Japan that is helping to fund and promote chip manufacturing.

This year, it is expected that other countries, such as India, may also pass legislation to encourage domestic chip production. India is expected to invest at least US$25 billion to stimulate domestic chip manufacturing in the country. Prime Minister Narendra Modi‘s government aims to make India a key player in the global supply chain by agreeing to pay 30 to 50 per cent of the cost to set up new display and chip factories. The current top semiconductor manufacturers are South Korea, Japan, China and the US, but this could change by 2023.

5. Supply chain challenges are to be expected, not ignored

Supply chains are dynamic; they change and fluctuate with the economy and are affected by a variety of factors and unforeseen circumstances. By 2023, companies are expected to take a long-term approach to their supply chain management. These new perspectives are expected to balance innovation and risk.

The electronics industry is clearly affected by supply chain shortages. Car production has been halted and release dates for consumer electronics have been delayed. Many electronics companies were unable to hire new employees and some layoffs occurred as a result. Production is expected to increase to make up for lost time and companies will have new opportunities to test the resilience of their supply chains.

Translated with www.DeepL.com/Translator (free version)

2023 presents new opportunities for the US and the rest of the world. Digitalisation is still on the rise and with it the demand for electronics is steadily increasing. The technology industry is not expected to fall into a downturn any time soon. The world did not anticipate the epidemic and the ripples it caused throughout the electronics supply chain. Companies can learn from these shortages and change the way they do business for the better. The new year brings new unforeseen challenges and new opportunities to face them head on.