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Localization of Semiconductor Supply Chains—Driving Forces and Challenges

In: Supply Chain Localization in the Semiconductor Industry

Author

Listed:
  • Tin-Chih Toly Chen

    (National Yang Ming Chiao Tung University)

Abstract

This chapter first examines the stability of a semiconductor supply chain based on two theories: the triple bottom line and the multi-generational philosophy. The sustainability of a semiconductor supply chain is clearly integral to its stability. To pursue the sustainability of a semiconductor supply chain, localization is considered a tactical strategy for foundries. The current localization trend is then compared to the traditional one to show its uniqueness. Subsequently, various forces driving the localization of semiconductor supply chains were identified as the U.S.-China trade war, geopolitics, the coronavirus disease 2019 (COVID-19) pandemic, the Ukraine-Russia war, environmental awareness, and the need for semiconductor supply chain transparency. The impact of each driving force is then described individually. In addition, several challenges that need to be overcome in the localization of semiconductor supply chains are also listed, including different laws, cultural differences, insufficient local human resources, uncertain local government subsidies, competition from local competitors, and higher wage levels. The procedure for semiconductor supply chain localization is subsequently established as an iterative process consisting of two parallel parts. Finally, possible future developments in semiconductor supply chain localization are discussed, with the impact of generative artificial intelligence (GenAI) and 3D packaging (e.g., chip-on-wafer-on-substrate, CoWoS) being also mentioned.

Suggested Citation

  • Tin-Chih Toly Chen, 2025. "Localization of Semiconductor Supply Chains—Driving Forces and Challenges," Springer Books, in: Supply Chain Localization in the Semiconductor Industry, chapter 0, pages 23-44, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-81280-4_2
    DOI: 10.1007/978-3-031-81280-4_2
    as

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