Strengthening supply chains behind US semiconductors

Semiconductors underpin technologies that power the modern economy, from AI infrastructure to smartphones, cars, medical devices, and advanced manufacturing equipment.

Although suppliers domiciled in Europe, Japan, and the United States account for roughly 95 percent of the value of equipment and materials used in US semiconductor production, according to the Semiconductor Industry Association’s (SIA’s) analysis, the physical production and sourcing of those inputs span a complex, global, multitiered network. Critical dependencies often lie deep within this network, hidden several layers upstream; when these subtier networks fail, it threatens the resilience of the whole ecosystem.

This report, developed by the SIA in collaboration with McKinsey, examines the upstream supply chains that support US semiconductor production. It draws on insights from procurement, supply chain, and strategy leaders, mapping critical dependencies and identifying potential disruptions that could threaten production, delay new manufacturing investments, or create strategic exposure for the United States and partner nations.

The report highlights three key findings:

1. Manufacturing a semiconductor relies on a precisely coordinated flow of specialized materials and equipment from Tier 1 and subtier suppliers around the world.
2. Resilience requires visibility beyond direct Tier 1 suppliers, as critical risks are often hidden in subtier networks. Vulnerabilities in critical minerals, rare earths, engineered materials, and equipment subcomponents can compound across the ecosystem.
3. No single intervention is sufficient. This research identifies several approaches to strengthening supply-chain resilience, including domestic capacity expansion, inventory management, secure supply chains, and strong international partnerships. Investing in sustained R&D in materials science, engineering, and recycling technologies may be essential to reduce reliance on vulnerable inputs.

Building resilience takes coordination and long-term commitment. Decisions made now can help protect future investments and reduce the risk of disruptive shortages for decades to come.

Download the full report from SIA to explore in detail the supply chain mapping, priority vulnerabilities, and ways to strengthen resilience.