US semiconductor imports grew by 13 per cent in value during the start of 2023. This rise highlights the lasting reliance of the United States on foreign chip production. Although Washington aims to move supply lines closer to home, Asia continues to serve as a primary source for these vital components. Specifically, the country imported $15.4 billion worth of chips in the first few months of the year alone.
The Shift in US Semiconductor Imports Across Asia
The landscape of Asian chip providers is changing rapidly. For instance, Thailand doubled its direct exports to the US during this period. India achieved even more dramatic results by increasing its exports 39 times to reach $497.1 million. Conversely, Malaysia lost nearly 33 per cent of its export volume. Vietnam and Thailand now together account for one fifth of all US semiconductor imports. These nations benefit as American firms seek geographic diversity to offset risks involving China.
The Role of the Chips and Science Act
Washington currently provides subsidies through the Chips and Science Act to encourage domestic fabrication. This legislation invites international specialists to build facilities on American soil. For example, Taiwan Semiconductor Manufacturing Co (TSMC) is currently constructing two major fabs in Arizona. However, these projects will require several years to become fully effective. Therefore, the US must depend on international partners in the interim.
Diversifying Supply Chains and China Relations
Taiwan still holds the second rank for exports by value. Many components exported from other Asian countries actually originate in Taiwan or South Korea. These regions house industry leaders like Samsung and SK Hynix. Meanwhile, semiconductor shipments from China to the United States dropped by nearly 11 per cent. This decline reflects the broader economic contest between the two rivals. Consequently, US lawmakers now focus heavily on securing supply chains for computers, electric vehicles, and data centres.
Courtesy: tradefinanceglobal.com
