GLOBAL MICROCHIP MARKET: GEO-ECONOMICS, SECURITY, AND THE NEW INDUSTRIAL POLICY

Abstract

The article examines the global semiconductor market through the lenses of geo-economics and international security, showing how the latest wave of industrial policy and export controls reshapes supply chains, capital allocation, and technology migration. The objective is a decision-focused assessment for open and transition economies: where resilience can be built at the lowest opportunity cost while preserving innovation. Methodologically, the study combines structured industry analysis with qualitative scenario modeling for 2025–2030. We map the value chain from design/EDA through foundry and OSAT, flag single points of failure in lithography and specialty materials, and stress-test three trajectories: Friend-shoring+ (rapid re-routing with higher CAPEX and longer lead times), Strategic Parity (coordinated access rules and gradual easing of concentration at advanced nodes), and Fragmentation 2.0 (tighter restrictions and local shocks that create duplicative technology islands). Results show that institutional discipline is decisive. Conditional incentives tied to measurable localization KPIs, transparent supply documentation, audited multi-sourcing, and coordinated access policies for equipment and EDA cut systemic risk without dismantling global specialization. Across scenarios, operational metrics–time-to-recover, time-to-survive, inventory buffers, fallback logistics, and routine cyber diligence–are more useful than headline capacity figures for policy and management. The practical contribution is an implementation-ready toolkit: for policymakers, incentives with clawback clauses, crisis playbooks anchored in recovery metrics, and baseline mutual-recognition; for firms, enforceable multi-sourcing, flexible node allocations with contingency capacity, and periodic stress tests; for analysts, a minimal monitoring set–bottleneck concentration, access to tools, inventory adequacy, and recovery performance. Overall, the paper argues for a trust-based architecture in which industrial policy is conditional, coordinated, and measurable, allowing resilience and innovation to reinforce each other.