What's happened
The US is exploring ways to reduce reliance on Taiwan for semiconductor manufacturing, aiming to bring more supply chain capacity home. Discussions involve Taiwan's investment and security guarantees, amid concerns over China's threats and global chip shortages. South Africa and Africa are also in talks for trade agreements.
What's behind the headline?
The US's push to diversify its semiconductor supply chain reflects strategic concerns over China's ambitions and Taiwan's geopolitical vulnerability. Moving Taiwan's entire supply chain into the US is a herculean task, likely taking over a decade, as experts like Nvidia's Jensen Huang have noted. The US aims to secure critical technology independence, but faces resistance from Taiwan, which benefits economically and strategically from its current dominance. Offering security guarantees and maintaining reliance on Taiwan for the remaining 50% of chips are key tactics to persuade Taipei. This effort could reshape global chip manufacturing, but the transition will be slow and complex, with significant geopolitical implications. Meanwhile, South Africa's trade negotiations and Africa's ongoing lobbying for trade act extensions highlight broader US efforts to diversify global trade partnerships amid shifting geopolitical priorities.
What the papers say
Bloomberg reports that US officials are seeking to bring Taiwan's entire semiconductor supply chain into the US, offering security guarantees to persuade Taiwan to cede some of its market share. The article emphasizes the scale of the challenge, noting that experts believe it could take decades to achieve supply chain independence. Meanwhile, Ars Technica highlights Taiwan's critical role, producing 95% of chips for smartphones, cars, and military tech, and discusses the strategic importance of Taiwan's silicon shield. The article quotes Nvidia CEO Jensen Huang, who estimates that US supply chain independence could take 10-20 years. Additionally, Bloomberg details South Africa's ongoing trade negotiations with the US, with officials needing about two weeks to respond to trade offers, and mentions Africa's efforts to extend the African Growth and Opportunity Act, which provides duty-free access to key exports. These stories collectively illustrate the US's broader strategy to reduce reliance on foreign supply chains and diversify global trade relationships, amid geopolitical tensions and economic security concerns.
How we got here
The US relies heavily on Taiwan's TSMC for advanced chips, producing about 95% of chips used in key sectors. TSMC has committed to investing $100 billion in US manufacturing, but talent shortages and geopolitical tensions complicate efforts. The US aims to increase domestic chip production from 2% to 40%, seeking security guarantees for Taiwan and incentives for Taiwanese firms to relocate supply chains.
Go deeper
Common question
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Why Is the US Trying to Reduce Reliance on Taiwan for Chips?
The US is actively working to shift its semiconductor supply chain away from Taiwan, aiming for greater security and independence. This move raises questions about global tech stability, geopolitical tensions, and the future of chip manufacturing. Below, we explore the reasons behind this shift, the risks involved, and what it means for the global economy.
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Will the Global Chip Shortage End Soon?
The global chip shortage has disrupted industries worldwide, from tech to automotive. With efforts underway to shift supply chains and boost domestic manufacturing, many are wondering: will this crisis be resolved soon? In this page, we explore what caused the shortages, how countries like the US and South Africa are involved, and what the future holds for semiconductor production.
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What Are the US and Africa Discussing in New Trade Deals?
The US is actively exploring new trade agreements with Africa, aiming to boost economic ties and open up opportunities in tech and supply chains. These talks could reshape global trade dynamics, especially as the US seeks to reduce reliance on foreign supply chains like Taiwan's semiconductor industry. Curious about what these deals involve and how they might impact the global economy? Keep reading to find out more about the latest developments and what they mean for you.
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What Is the US Doing to Change Its Tech Supply Chains?
The US is actively working to reduce reliance on foreign countries like Taiwan for critical tech components, especially semiconductors. This shift aims to strengthen national security, boost domestic manufacturing, and reshape global tech markets. But what does this mean for the future of tech supply chains, international relations, and global markets? Below, we explore the key questions and what they could mean for you.
More on these topics
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South Africa, officially the Republic of South Africa, is the southernmost country in Africa. With over 59 million people, it is the world's 24th-most populous nation and covers an area of 1,221,037 square kilometres.
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The United States of America, commonly known as the United States or America, is a country mostly located in central North America, between Canada and Mexico.
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Taiwan, officially the Republic of China, is a country in East Asia. Neighbouring countries include the People's Republic of China to the northwest, Japan to the northeast, and the Philippines to the south.