ICT/electronics businesses anticipate that there will not be improvements to business and sales performance from exports in the coming months. To offset additional risk from a significant rise in DSO, businesses will have to request additional payment guarantees from their customers. If multiple countries invest in similar technologies to semiconductor production, this could lead to an inefficient use of resources and oversupply of similar products.

One potential consequence of US-China tensions is the possibility of growth in some of the emerging economies in Asia. The US restrictions will impact the production volume of products and industries that require high-end chips, from smartphones, and AI, to EV. With a lack of the necessary components on the market, production may be shifted to other countries, such as Vietnam and India, where production costs tend to be lower. Asia’s semiconductor producers are also vulnerable to further actions caused by US-China trade tensions. For example, in response to US sanctions, China imposed export controls on gallium and germanium, two critical materials in the chipmaking process. While the Asian producers can source the materials from other countries, it is costly in terms of time and money, as China is a main producer of the materials.

Semiconductor production is a strategic priority for Asia, Europe and the US, with legislation and subsidies used in several countries to support growth and reshoring. This unilateral approach to semiconductor development could lead to duplicated efforts. When chips of a new generation come to the market, the old one will become obsolete. If not managed carefully, there could be a potential oversupply of older generation chips. If advanced markets like the EU and the US expand their semiconductor production, it is likely that the higher labor costs and other overheads will result in higher prices for consumers. This could be called a devolution of the economies of scale.