US semiconductor supply chain relies on vulnerable, hidden inputs

Dive Brief

To guard against disruptions, the Semiconductor Industry Association called for closer government-industry collaboration to address targets for onshoring and stockpiling.

Published Oct. 20, 2026

First published on

Dive Brief:

• The equipment and materials needed to produce U.S. semiconductors rely on “vulnerable inputs hidden deep in upstream global supply chains” that are at high risk of supply disruptions, according to a new report by the Semiconductor Industry Association.
• Vulnerabilities include geopolitical unrest, dependance on unfriendly nations for vital materials and other issues that can cause disruptions almost anywhere, SIA said.
• To strengthen the U.S. semiconductor supply chain, SIA called for expanded domestic production, protection of supply chains in allied nations that feed into the United States, reduced dependence on rare earths and critical minerals, and additional research and development support for next-generation semiconductor materials.

Dive Insight:

Semiconductors are critical for a variety of U.S. industries, but producing them “takes months on end, several journeys around the globe, and a well-choreographed, multi-tiered supply chain of highly specialized materials and equipment,” the report said.

“It is the right formulations of these supply categories, delivered on time and in full, that are the critical ingredients for an industry on track to exceed $1.5 [trillion] in global sales in 2026,” SIA said.

Several companies have been investing heavily in the U.S. semiconductor supply chain, including Micron, GlobalFoundries, TSMC and Apple. Industry also has been calling for the U.S. government to invest in more domestic capacity in all phases of the semiconductor supply chain, in part to compete with China in the race to develop cutting-edge chips needed for artificial intelligence and other key technologies.

According to the report, investments in new U.S. semiconductor manufacturing capacity face threats from a variety of “critical vulnerabilities in upstream supply chains.” A primary concern is the production of rare earths, which currently is dominated by “high-risk countries” like China and Russia.

Other threats to the semiconductor supply chain are more hidden, the report said. To evaluate supply chain dependencies, SIA developed a “vulnerability index” based on a number of factors such as geographic concentration of production, exposure to higher-risk countries, concentration of suppliers for a given input and ownership structures for key suppliers. 

Using this framework, the report identified a list of 200 “Tier 1” equipment and materials inputs critical for both “front end” and “back end” semiconductor manufacturing processes. It also identified “sub-tier” inputs across 100 material and equipment categories.

According to SIA, the U.S. semiconductor industry relies on domestic suppliers and those headquartered in Europe or Japan for about 95% of Tier 1 equipment and materials. However, Tier 1 suppliers often rely on other networks of intermediate goods and raw material suppliers located overseas, all of which have their own set of vulnerabilities, including geopolitical disruptions.

The report concluded that about half of semiconductor supply categories it analyzed have “high” or “medium” vulnerability overall. “Given the complexity and multitiered nature of semiconductor supply chains, disruption risks compound as they move upstream,” the report said. 

The report offered several strategies to mitigate these risks, including:

• Expand domestic supply and stockpiling: SIA noted that ramping up U.S. domestic manufacturing capacity to adequate levels could take a decade or longer for some parts of the semiconductor supply chain. However, U.S.-based capacity to support domestic wafer and chip manufacturing can and should be built faster, the report said.
• Consider targeted incentives: Governments should consider targeted incentives for equipment and materials companies to invest in building domestic capacity for high-priority inputs, the report said. For example, the federal government could work with state governments and industry to create special economic zones that encourage local suppliers to locate close to semiconductor manufacturing sites.
• Cut unhelpful regulations: The report said that some regulatory restrictions limit semiconductor companies’ ability to stockpile critical raw materials, such as environmental regulations that prevent building and purchasing multiyear supplies of fluorinated gases.
• Protect trusted allies: Because the U.S. cannot onshore production of everything needed to produce semiconductors, the report called for maintaining relationships with allies and partners to help diversify supply chains and develop new technologies.
• Invest in materials and recycling research and development: The report cited programs such as the Department of Energy-funded Minerals to Materials Supply Chain Facility and Department of Commerce CHIPS and Science Act awards as examples of needed government funding for advanced materials research. It also called for the federal government to fund research in recycling technologies to help recover useful materials.