{"id":6464,"date":"2023-09-18T21:34:46","date_gmt":"2023-09-18T20:34:46","guid":{"rendered":"https:\/\/supplyframe.com\/supply-chain-decoupling-china\/"},"modified":"2023-09-22T07:17:26","modified_gmt":"2023-09-22T06:17:26","slug":"supply-chain-decoupling-china","status":"publish","type":"post","link":"https:\/\/intelligence.supplyframe.com\/it\/supply-chain-decoupling-china\/","title":{"rendered":"Conscious Decoupling: Why It\u2019s So Difficult for Supply Chains to Divorce China"},"content":{"rendered":"<p>The global drive to decouple from Chinese supply chains and re-shore electronics production is fraught with challenges that may render the process impossible for many \u2013 and may even boomerang. <\/p>\n\n\n\n<p>After 40 years of developing its manufacturing capabilities, China now holds dominant positions in multiple critical electronic products and raw materials. For many of these areas, it will be difficult or impossible to find alternative sources, including: <\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Printed circuit boards (PCBs), with mainland China playing host to more than half of global manufacturing, according to the IPC, although some sources indicate that China commands more than an 80% share. <\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Mature microprocessors (MPUs) and DRAM products, with China and Taiwan accounting for two-thirds of the worldwide MPU supply and as much as half of all DRAM. <\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>EV batteries, as Chinese companies produce for 68% of global supply. <\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Cobalt used in EV batteries, with China responsible for 70% of the worldwide supply due to the country\u2019s operations in the Democratic Republic of the Congo.  <\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Natural flake graphite is employed in lithium-ion batteries, with most of the material mined in China and Mozambique. <\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-china-continues-to-grow-in-the-face-of-ongoing-challenges\">China Continues to Grow in The Face of Ongoing Challenges <\/h4>\n\n\n\n<p>In parallel with its rise to dominance in key technology segments, China has worked assiduously to cultivate an international supply chain. The country has established trade lanes throughout Southeast Asia, promoting easier access to raw materials and front-end semiconductor production. Moreover, China has implemented highly efficient logistical processes that will be difficult to match in locations that are developing or expanding their own electronics supply chains.<\/p>\n\n\n\n<p>Meanwhile, China-based players continue to expand their presence in key raw-material markets. Beyond the obstacles associated with challenging China\u2019s hegemony in tech manufacturing, the global decoupling effort plus U.S. restrictions on exports of advanced equipment may bring unintended consequences that actually strengthen China\u2019s position in some key markets. <\/p>\n\n\n\n<p>Although manufacturing semiconductors at nodes of 10nm or lower has long been challenging for Chinese chipmakers, Chinese foundry SMIC recently announced a 7nm system-on-chip for smartphones. The news was viewed as a triumph of Chinese engineering and resourcefulness that demonstrated how the country could develop advanced semiconductors despite export restrictions and reshoring efforts. <\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-rising-demand-from-major-markets\">Rising Demand From Major Markets <\/h4>\n\n\n\n<p>The nation also has doubled down on more mature semiconductor geometrics (\u2265 28nm), not only stemming from export controls, but also because the country is experiencing heightened demand from markets like medical, industrial, automotive, and aerospace and defense. The automotive area is particularly critical as some 90% of auto-grade ICs are produced on 40nm or larger nodes and such parts are currently in short supply. <\/p>\n\n\n\n<p>Despite sanctions on EUV equipment and the fact that the country is several process nodes behind its international counterparts,&nbsp;China is determined to domestically produce high-bandwidth memory (HBM) DRAM for GPU-based AI servers, with ChangXin Memory Technologies (CXMT) poised to take the lead. <\/p>\n\n\n\n<p>China is also offering $143 billion worth of subsidies and tax credits to domestic chipmakers for the purchase of manufacturing equipment made in the country, with the goal of becoming self-reliant. <\/p>\n\n\n\n<p>China\u2019s moves to adjust to the global supply-chain realignment are stimulating its companies to increase sourcing from domestic suppliers. Supplyframe is encountering more supply chain and procurement professionals at China-based OEMs who are willing to evaluate and even employ ICs produced by mainland Chinese manufacturers, with the benefits of lower prices and local sourcing often overcoming their concerns about quality.<\/p>\n\n\n\n<p>Companies and nations that hope to re-shore or nearshore electronics production are engaged in wishful thinking regarding the practicality of completely decoupling their supply chains from China. Just as importantly, China\u2019s government and tech industry are finding ways to overcome decoupling efforts and export restrictions, playing to their strengths to leverage local supply chains and find new competitive advantages. <\/p>\n\n\n\n<p>With China turning inward for electronic component supply, global supply-chain participants may learn that turnabout is fair play as the country focuses on its internal needs \u2013 and locks out foreign buyers.&nbsp;<\/p>","protected":false},"excerpt":{"rendered":"<p>The global drive to decouple from Chinese supply chains and re-shore electronics production is fraught with challenges that may render the process impossible for many \u2013 and may even boomerang. After 40 years of developing its manufacturing capabilities, China now holds dominant positions in multiple critical electronic products and raw materials. For many of these [&hellip;]<\/p>","protected":false},"author":37,"featured_media":6465,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[220,11,102],"tags":[],"class_list":["post-6464","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commodity-iq","category-featured","category-resources"],"blocksy_meta":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v25.3 (Yoast SEO v25.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Conscious Decoupling: Why It\u2019s So Difficult for Supply Chains to Divorce China - Supplyframe<\/title>\n<meta name=\"description\" content=\"Learn how reshoring efforts are are making it harder than ever to separate supply chains from their independence on China.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, 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