Even though dozens of the tariffs are on pause now, China is hit even harder than before. This is how these escalations will affect the semiconductor and high-tech industry in an unexpected way.
As the new trade regulations reshape the world, the focus has been on the costs and reciprocating measures. However, there is an overlooked side to these changes in the semiconductor market: The potential for a few countries to monopolize raw materials crucial to chip production.
But how can such a monopoly exist when semiconductors and high-tech devices are passed through multiple supply chain stages when being manufactured, tested, and packaged?
The answer is simple but not widely discussed. All the mentioned processes rely heavily on precious metals and rare earth minerals. These materials are the building blocks for this industry and the batteries that are fundamental for everything electronic, from our mobile phones to our cars.
Currently, one country controls the majority of these essential reserves. This dominance allows it not only to impose tariffs on these items but also to strategically stranglehold the supply of said goods.
So, what is the solution?
The first solution is to store and control the valuable semiconductor materials. This calls for a reliable and well-structured supply chain that can move large amounts of these components when they become available on the market.
The second is to find local sources. These “local” sources are not always at the back door and will need to be mined. This supply chain is a very hazardous and complex process encompassing large industrial plants capable of processing raw substances and converting them into the correct purity and useable formation.
Successfully navigating tariffs and other global trade challenges requires a well-designed supply chain and partners who understand the intricacies of the manufacturing process. With disruptions, tariff surcharges, and natural disasters now common, it’s essential to work with a logistics provider that uses advanced technology and real-time data to minimise risks before cargo begins its journey.
Discover how to build a proactive and resilient supply chain, or contact a semicon logistics here.
