Epoch AI study finds China 2.7× more exposed to semiconductor supply shocks than US

by@EpochAIResearch

Summary

A recent analysis reveals that China is significantly more exposed to potential semiconductor supply shocks compared to the United States, with exposure levels approximately 2.7 times higher. This finding is based on updated international input-output tables that trace supply chains and simulate the impacts of a major disruption, such as a decline in Taiwanese productivity and a full trade decoupling between China and the West. In their model, a combined shock scenario predicts that China's real gross national expenditure (GNE) could decline by about 3%, while the U.S. scenario would see a modest reduction of roughly 0.6%. This disparity is attributed to the fact that semiconductors represent a larger portion of the cost of goods purchased in China than in the U.S., which has heightened concerns within U.S. trade policy around reliance on Chinese manufacturing for electronics components amidst ongoing efforts to decouple economies.

Analysis

China: China is the world's most populous country and a major global economic power with a large manufacturing base across electronics and technology sectors. Its economy relies heavily on imported inputs for final goods production and consumption. In the context of this news, China faces greater vulnerability to semiconductor supply disruptions according to the disaggregated input-output analysis. Dan Carey: Dan Carey is an economist and researcher at Epoch AI focusing on the economics of transformative AI and related supply chain issues. He maintains an active X account as @DanCareyEcon and shares economic research. The provided news links to his write-up on the semiconductor exposure study he contributed to or promoted. United States: The United States is the world's largest economy and a leader in technology, innovation, and semiconductor design, with significant domestic final demand for electronics and related goods. It maintains strategic interests in global supply chains for critical technologies. The study finds the US significantly less exposed than China to the modeled semiconductor shocks and trade decoupling scenarios. Supply Chain: Ongoing policy developments highlight persistent US concerns over reliance on Chinese manufacturing in electronics components amid broader decoupling efforts. Trade Policy: The US administration continues to maintain export controls on advanced semiconductors and related equipment targeting China following bilateral summits.

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macrotechpolitics

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