Semiconductors are one of the foundations of any modern economy. They’re used in everything from home appliances to automobiles to weapon systems. During the Covid-19 pandemic, however, they suddenly became very hard to acquire. Production of semiconductor chips is concentrated in Taiwan and South Korea, and disruptions to global supply chains meant U.S. companies faced year-long waits for chips. This past summer, Commerce Secretary Gina Raimondo warned that an inability to access Taiwan’s semiconductors would lead the U.S. to a “deep and immediate recession.” In other words, dependency on foreign production is a national security risk for the United States.
How Companies Can Navigate Today’s Geopolitical Risks
The rules of international business have changed.
November 28, 2022
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Summary.
The rules of international business have changed. To navigate this new paradigm, companies need to understand four important trends: 1) Interdependence between countries has grown and has created new risks, 2) geopolitical competition between the West and China is growing, 3) this geopolitical competition is playing out in advanced technologies, such as AI and semiconductors, and 4) the private sector can’t escape this tension. To mitigate risk, companies need to 1) increase their geopolitical expertise, 2) ask the right questions, 3) accept that politics are inescapable, and 4) consider reputational risk holistically.