Editor’s Note
The era of frictionless global supply chains is fading, replaced by a new reality where strategic resilience is paramount. This article examines the structural vulnerabilities in critical industries—from semiconductors to defence—and why geopolitical considerations now shape supply chain decisions.
The age of seamless global supply chains may be coming to an end. Today, some of the world’s most critical industries—from technology and energy to defence and industrials—are dependent on a semiconductor ecosystem that is increasingly fragmented and geopolitically fraught. Bottlenecks are no longer occasional glitches but structural realities.
In today’s environment, where geopolitical tensions threaten the cohesion of the global economy, building more resilient supply chains has become a strategic imperative. Companies must navigate a landscape defined by fluctuating demand, rising policy intervention, and increasingly unpredictable disruptions. Yet for many manufacturers, full disengagement from offshore suppliers remains impractical. For global businesses, resilience is no longer just about contingency—it’s about rebalancing without unravelling.
An obvious example would be U.S. trade restrictions, which have specifically targeted China’s ability to manufacture advanced AI chips. In response, China’s Ministry of Commerce imposed export controls on seven rare earth elements (REEs)—including dysprosium, terbium, and gadolinium—vital to the production of magnets used in high-performance computing, electric vehicles, and power grids. These materials now require special export licenses, heightening supply uncertainty across multiple sectors. Supply chain friction isn’t theoretical—it’s already manifesting in real-world choke points.
Imagine a data centre in Texas—designed to power the next wave of artificial intelligence (AI) computing—sitting idle because it’s waiting on high-voltage transformers stuck at a port in Shenzhen. The U.S. grid can’t expand fast enough, not for lack of ambition, but because the specialised magnets needed for advanced transmission gear rely on rare earth elements almost entirely sourced from China. What good is innovation if the infrastructure can’t catch up?