Understand dependencies
Map the products, suppliers, fabrication steps and markets that matter to the business. Concentration at a single stage can create exposure even when the wider supplier base appears diverse. The OECD maps a semiconductor value chain that spans specialised stages and regions. A buyer’s exposure may lie several tiers beyond the firm that sends the invoice. Separate chip design, fabrication, assembly and critical materials when mapping supply. The part number alone may hide a concentration that appears only at a particular process or facility.
Read industrial policy carefully
Incentives, export controls and local-content rules can affect where investment is viable. Compare policy direction with underlying skills, infrastructure and customer demand. Not every chip shortage has the same remedy. Qualifying a substitute may require product redesign and certification; building stock can cover a short interruption but not a long structural constraint. Work with engineering, procurement and product teams to identify which components are irreplaceable in the planning horizon and which can be redesigned.
Build choices around use
Some firms need secure access; others may benefit from partnerships or redesign. The response should reflect the business’s actual dependence, time horizon and capacity to influence supply. Industrial policy and export restrictions may change the economics of a planned capacity investment. Monitor decisions that affect market access, equipment, talent and energy supply, while distinguishing announced incentives from available capacity. A realistic scenario includes commissioning time and the availability of the upstream inputs needed to make a new facility productive.
Locate the bottleneck before investing
Prioritise a small set of critical chips and processes, then decide whether diversification, redesign, inventory or a strategic partnership best addresses each exposure. Revisit the map as product designs and policy conditions change. Resilience comes from understanding a dependency precisely enough to choose an effective response.
Reference: OECD Mapping the Semiconductor Value Chain ↗