KPMG Survey Finds That Semiconductor Industry is Most Concerned About Supply Chains

According to the preliminary results from a survey that was undertaken by consultancy firm KPMG, players in the U.S. semiconductor industry are most concerned about how trade policy and tariffs will impact their operations. This is the first time that talent hasn’t topped their list of concerns.

The yearly Global Semiconductor Outlook, a survey routinely conducted by the consultancy company, revealed that 54% of industry leaders are doubling down on geographically diversifying the supply chains they depend on. This is a big fraction of the 151 executives that the advisory firm polled in the fourth quarter of this year. The executives see diversifying their sources of inputs as a top strategic priority in enabling them to be adaptable and flexible in the face of increasing geopolitical risks.

On a positive note, an overwhelming 93% of the executives who took part in the survey foresee the revenues of their firms growing in 2026. They attribute this forecast to the surging demand for their products by data centers and the growing AI industry.

The U.S. has used a carrot and stick approach in its bid to onshore semiconductor manufacturing on U.S. soil. On the carrot side of this strategy, funding and tax credits have been availed through mechanisms in laws like the CHIPS Act. This law took effect in 2022 under Biden’s administration and through it many companies have received support to establish manufacturing facilities in the U.S.

For example, Texas Instruments received about $1.6bn in federal funding to concretize its plans to establish seven semiconductor fabrication facilities. Amkor Technology commenced construction work on its production plant in Arizona supported by $407 million in funding through the CHIPS Act. In total, the company plans on injecting $7 billion into its investments. Many other companies have similarly benefited from this carrot dangled by the federal government.

The stick side of the U.S. onshoring strategy has hinged on import tariffs. In August, the administration announced that it plans to levy 100% tariffs on semiconductor products imported into the country. The exception to this rule would be for companies that are planning or already have manufacturing facilities on U.S. soil.

While the implementation of these tariffs has reportedly been delayed, the prospect of such a stiff levy has the semiconductor industry hugely concerned.

The sector heavily depends on imported inputs and those tariffs would result in cost overruns in their operations. For example, semiconductor imports worth $22.6 billion entered the country last year. Of this amount, $5.6 billion went to Vietnam, while Malaysia and Thailand each received $3 billion in revenue from their semiconductor exports to the U.S.

Diversification of import sources is seen as a way to mitigate some of these geopolitical risks in case the country’s trade policy targets some of the countries from which semiconductor manufacturers source their imports.

Semiconductor software giants like Broadcom Inc. (NASDAQ: AVGO) may be pondering how their large clients will be impacted in the coming year by geopolitical risks since this could have a bearing on their own forecasts for the year.

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