The technological standoff between Washington and Beijing continues, and it is hitting the semiconductor industry hard. The United States, keen to preserve its technological supremacy, push their companies to cut ties with China. This forced restructuring portends undesirable repercussions for us consumers. From 2025, all our electronic devices risk seeing their prices increase.
A forced divorce with global consequences
The American giants Applied Materials and Lam Research, true pillars of electronic chip manufacturing, are now imposing a tough line on their suppliers: ban any components of Chinese origin from their supply chains. Another even more draconian measure: these companies reject any partnership with companies with Chinese investors or shareholders.
In Plainview, the manufacturer Veeco even made this position official in writing, demanding an immediate end to any collaboration with new Chinese suppliers and the end of existing partnerships by the end of 2025.
Semiconductor supply chains are already very complex and interconnected. Eliminating a major player like China from these chains will further complicate them and will necessarily increase costs and production times. Additionally, as China’s economy is largely based on the production of electronic components, its exclusion could, in the worst case, lead to shortages on a global scale.
The semiconductor battle is therefore not about to go away and could cause an escalation of trade tensions: this is the price to pay for technological interdependence.
The perilous quest for new sources of supply
The industry finds itself faced with a thorny paradox. China represents the largest market for American equipment manufacturers, and finding competitively priced alternatives still remains very complicated. The example of Shenyang Fortune Precision Equipment perfectly illustrates this impasse: despite the opening of a factory in Singapore, a stone’s throw from the Applied Materials offices, company is denied delivery authorization due to its Chinese roots.
Some desperate suppliers attempt complex schemes, such as the creation of holding companies in third countries or joint ventures in Malaysia, to maintain their commercial ties with the United States.
This massive reorganization comes in an already very tense political context. The U.S. Commerce Department has already imposed strict restrictions, requiring equipment makers to obtain special licenses to share technical information with their Chinese suppliers. These temporary licenses will expire at the end of 2025, deadline that will precipitate the transformation of the sector.
Europe, Japan and the United States are injecting tens of billions of dollars to reshore semiconductor production. However, this accelerated transition to supply chains excluding China will have direct repercussions on our portfolios and there is almost no doubt that our daily electronic devices are becoming less and less accessible to us.
- The United States is forcing semiconductor companies to cut ties with China, which will increase production costs.
- Complex supply chains and dependence on China risk causing shortages and delays.
- Consumers could see the prices of electronic devices rise as early as 2025.
