Two decades ago, capital flowed to locations where it could be deployed in the least costly, most efficient way. In the semiconductor industry, this logic led it to concentrate around Taiwan, which continues to be the world’s top producer of chips.
Nowadays, priorities have shifted. Taiwan is still the heartbeat of the industry, but geopolitical uncertainty, a rise in conflict and national security concerns have changed the way companies understand their own supply chains.
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“Our industry grew over the past decades over a trend and a need for efficiency. Increasingly, it is valuing resilience over efficiency,” Matt Krupnick, vice-president of global government affairs at semiconductor manufacturer GlobalFoundries, tells Investment Monitor.
Fragility of global supply chains is ‘unacceptable’
GlobalFoundries is the largest foundry headquartered in the US, making it a strategic player in US efforts to reshore chip manufacturing. It has a presence across Singapore, the US and Germany, and has announced major expansion drives in recent years.
“Our global-by-design structure, footprint and strategy are to help our customers address the downstream supply chain risks […] that stem from having a high concentration in one specific region that has a multitude of risks,” Krupnick says. “The idea that our global economy is subject to the potential for any of those risks to materialise really should be unacceptable.”
The industry got a taste of what happens when a critical chokepoint gets cut off earlier this year, when the US imposed a blockade on the Strait of Hormuz. A third of the world’s supply of helium – an essential input in the manufacturing process – was cut off, sending computing companies into a scramble to adjust reserves and look for alternative supplies.
Access to essential critical minerals and rare earths also poses an important supply chain risk, as 60% of the world’s critical mineral extraction takes place in China, as well as nearly 90% of processing and refining.
“We have other critical minerals that are highly dependent on a specific country, so we are also subject to geopolitical tensions that might challenge those supplies,” Krupnick explains.
In April 2025, China announced various export restrictions on rare earth elements and magnets amid a tit-for-tat with Washington over its imposition of tariffs. Eventually, a truce was negotiated, but China’s show of force injected urgency into the industry’s search for alternative suppliers.
“What we are really doing is looking across those inputs, identifying any of those that have single points of failure, and diversifying our supply of those,” says Krupnick. “There is certainly a list of priority inputs that have limited origin, so that is where we would focus to start.”
Supply side incentives are not enough
GlobalFoundries has benefitted from the world’s renewed interest in industrial policy. The company announced it would receive $1.5bn from the 2022 CHIPS Act in the US to fund the expansion of manufacturing facilities in New York and Vermont. In the EU, the company received €496m ($567m) in incentives from Germany under the EU Chips Act to support manufacturing in Dresden.
In the past year, US President Donald Trump’s administration has also taken equity stakes in an array of companies in strategic industries, from chips to critical minerals. Earlier this year, the US announced it would take a minority, non-controlling equity stake in GlobalFoundries as a precondition for the company receiving a separate $375m of funding to build a manufacturing facility for quantum computing components.
It is a markedly different approach for the US, whose support for industry has usually come in the form of incentives and subsidies. What has changed in the past few years?
Conceptually, Krupnick says, there are similarities with the CHIPS Act with its upside-sharing concepts, mainly through having companies reinvest profits back into the US.
“When you talk about the change in policy from the CHIPS Act to now, I think the big change we have seen is the recognition that policies to expand domestic supply can’t just focus on the supply side,” he adds. “Where supply side incentives sort of equalise or improve the financial comparison for expanding across different regions […] they don’t ultimately solve the problem of the need to have demand for output in that region.”
He adds that there are steps being taken in this direction in other locations as well, such as the EU changing its procurement rules to favour domestically produced goods.
Talent is not a bottleneck, but energy reliability can be a challenge
In the past few years, there has been a spotlight on the talent bottleneck that exists in some locations. How do GlobalFoundries’ hubs in Singapore, Germany and the US compare in terms of developing and attracting talent?
“I wouldn’t compare or contrast the different sites against each other. I think that the learnings we have across our sites allow us to develop that talent in each of our locations,” Krupnick says. “We do hear about industry shortages […] in these debates about onshoring, but talent is not the bottleneck. We have the talent, and we can develop the talent.”
Energy, however, is a different story.
“Energy challenges are not just the capacity, which largely can be met. It is reliability. It is important that infrastructure is reliable and strengthened and built in a way that there is no interruption,” Krupnick explains.
GlobalFoundries works with governments across its locations to ensure access to cost-efficient energy, he adds. “It is working with those partnerships to ensure that our energy supply is uninterrupted and is built on resilient infrastructure that doesn’t go down, causing a fab to go down for minutes, which could affect months of work.”
In an industry where it only takes one supply shock or power outage to cause major disruption, it is no wonder that resiliency has become the law of the land.
