Re-shoring manufacturing jobs to the US – a semiconductor view

Under the Trump administration a US industrial plan has taken shape, with the industries targeted for re-shoring being the ones that drive the largest impact on the balance of trade and employment, according to the latest note from Andrew Zatlin at SouthBay Research. Having already targeted three of the top five US imports – vehicles, petroleum and pharmaceuticals – the US has now turned its attention to high-tech hardware. SouthBay has a deep knowledge of the semiconductor supply chain, and they track it with extraordinary granularity. In their latest piece they assess the sector and what it will take to bring manufacturing home, and more specifically away from China. SouthBay finds that it is not manufacturing costs, but rather regulation and the manufacturing ecosystem that makes China a more attractive manufacturing base than the US. Changing that, says Zatlin, will require a combination of political pressure, regulatory changes and tariffs and subsidies – a process that is already underway with the blocking of critical parts to Huawei and the announcement that TSMC is to build a new semiconductor plant in Arizona. Indeed, explains Zatlin, a new phase in addressing the US balance of trade has started in the tech sector, where the real prize is jobs, such as the one million employees that assemble mobile phones.