By : Basel Khaled - Mohamed ElKholy
The global semiconductor industry is set to face a challenging period of heightened volatility and significant headwinds due to a global deterioration of the macroeconomic environment and a period of growing global political risk.
We at Fitch Solutions expect geopolitical risk to become the largest risk to the semiconductor industry in 2023, both from a supply-side and demand-side perspective. Growing US-China tensions are placing semiconductors as a major geopolitical risk flashpoint, due to the industry's essential role to fuel Mainland China's technological ambitions and also due to the global reliance on Taiwan, China for semiconductor manufacturing.
The supply disruptions that the industry experienced over the 2020-2021 period are expected to substantially improve over 2023 on the back of expanded fab capacity and inventory corrections, which will add downwards pressure on demand, yet some legacy nodes, particularly in the autos industry, are expected to continue seeing disruptions.
In our special report Semiconductor Chip Outlook: 2023 And Beyond, we provide our global outlook for semiconductors in 2023 and beyond, providing our views on:How chip shortage risks will be compounded by EV adoption
Why global political competition over semiconductors will intensify through the 2020s
The impact of global water risks on operational costs
How skilled worker shortages will complicate global semiconductor investment plans
The importance of energy security and renewables for advanced chip production
