With China menacing Taiwan security of supply issues are arising.

World faces chips supply chain glut as states splash cash on tech – POLITICO

BRUSSELS — For all the supply shortages the global chips industry has faced in the past few years, there’s no shortage of government strategies to fix them.
For the industry, the multitude of plans opens up new funding opportunities across the world. But the plans also raise concerns that they conflict — and could risk toppling a complex, fickle and fiercely specialized supply chain.
The United Kingdom was the latest to present a semiconductor strategy in May, unveiling a program worth £1 billion. It joins the European Union, United States, Japan, South Korea and others in pitching plans worth billions to secure the supply of microchips that power everything from cars to smartphones.
The plans were initiated to deal with supply chain disruptions during the pandemic, but grew into massive industrial policy programs to reshore manufacturing and protect, or establish, regions' control over this key technology sector. For Washington, microchips have turned into its most powerful tool to choke off China from global technology advancement. Other regions are equally keen to become less reliant on Taiwanese manufacturing as the island increasingly faces the threat of a Chinese power grab.
All regions have freed up large public funds to stay ahead when it comes to the latest innovations in chip technology. Many, including the EU and U.S., have lined up subsidies to lure in investments by leading manufacturers including Taiwanese giant TSMC, South Korea's Samsung and the U.S.'s Intel.
TSMC, Samsung and Intel have so far committed to building new "mega fabs" in the U.S., whose plan has an overall headline figure of $52 billion. In Europe, with a €43 billion total headline figure budget, only Intel has promised a €17 billion investment for Germany, while there have been persistent rumors about a TSMC investment in Germany.
The race is global, as Taiwan doesn't want to let go of its market-leading position, China tries to counter U.S. sanctions by building out its own industry, and Japan equally emerges as a contender. Just last week the Japanese Prime Minister Fumio Kishida met with executives from TSMC and Intel to discuss new investments.
As the semiconductor industry is expected to grow from nearly $600 billion to over $1 trillion by 2030, some analysts flag that all regions are set to gain, but few are set to gain on each other: "The global share of cutting-edge manufacturing capacity will not significantly change, in terms of geographical share," said Jan Peter-Kleinhans, chips expert at Berlin-based research group Stiftung Neue Verantwortung.
Risk of 'global glut'

The microchips industry evolved over decades into a global, highly interlinked value chain in which companies from different regions of the world excel in different parts of the process.
Most manufacturing happens in the U.S., China, South Korea and — predominantly — Taiwan. Europe has some top-notch research institutes, like Belgian Imec, and a world-leading supplier of crucial manufacturing equipment, Dutch ASML. The U.K. has an edge in chip design, with world leader ARM.
The industry's fear is that the different regional blocs will try to do all parts of the process by themselves, which could lead to costly duplication.
"Each region clearly has unique strengths," Imec CEO Luc Van den Hove stressed at an industry event last Wednesday. "However, if the Chips Acts would be set up such that each region would try to do it all, try to become fully self-sufficient, it would result in a significant setback."
The industry's fear is that the different regional blocs will try to do all parts of the process by themselves, which could lead to costly duplication | Ritchie B. Tongo/EPA-EFEThe subsidy programs could "end up spent on white elephant chip-manufacturing facilities, producing a global glut," Christopher Cytera, a senior fellow at the Center for European Policy Analysis (CEPA), recently wrote.
Disturbing the global value chain could also be the consequence of a U.S.-led push to cut China out of the supply chain, executives warned.
The Biden administration last year introduced export restrictions on chip equipment in an effort to choke off China's access to advanced chips. Late last year it got the Netherlands and Japan on board, who are rolling out matching export controls stopping their advanced technology from reaching China.
The industry has warned that such a move is not without risks. The CEO of Dutch equipment supplier ASML — a prime target of the U.S. export controls campaign — warned in January that a "bifurcation" of the world into two socio-economic blocs could impact the world's chips supply and have "far-reaching consequences worldwide".
Another concern is that governments, in their eagerness to catch up in the race, will distort already competitive markets.
Tom Caulfield, chief executive officer of the U.S.-based chips manufacturer GlobalFoundries (which has a factory in Dresden), recently slammed possible German state aid for a TSMC investment in the same town. Incentivizing "the dominant player, an extremely dominant player in the industry, to come and produce similar types of technology in the same town that a competitor sits ... It doesn't check the boxes of being very pragmatic or balanced," Caulfield told POLITICO.
Others are less concerned.
The efforts are "complementary," Jimmy Goodrich, vice president of global policy at the U.S-based Semiconductor Industry Association (SIA), told reporters in the U.S. this week.
When unveiling its own strategy, the U.K. showed it kind of got the message already. The £1 billion budget is relatively low, but the plan deliberately focuses on chip design and compound semiconductors, the country's strengths, while betting on a partnership in Japan for manufacturing