The global semiconductor supply chain is caught in a high-stakes game of musical chairs, with potentially surging tariffs setting the tempo and companies (and nations) scrambling to secure their spots.
Start with China, where U.S. tariffs (still under negotiation) may reach as high as 145% on Chinese goods. Those steep levies are accelerating China’s push for semiconductor self-reliance and positioning low-cost hubs like India as potential beneficiaries of the supply chain realignment. Meanwhile, the U.S. is looking to fortify its own chipmaking capacity—a likely boost to Asia’s Golden Triangle (Taiwan, Japan, and South Korea), which stands ready to offer critical equipment and expertise. While these players already play a pivotal role in supplying advanced semiconductor technology, we believe U.S. localization efforts create significant incremental opportunity for firms with a manufacturing presence in the U.S.
China, which consumes 25% of the world’s semiconductors while contributing only 9% to global output, has already made remarkable strides in localizing production and helping develop a broader Asian semiconductor supply chain. After China’s government introduced its domestic-substitution policy in 2014-15, local producers such as Silergy and SG Micro, which make chips for power management and signal transmission, have capitalized on government subsidies and lower labor costs to steadily capture market share from U.S. players. From 2014 to 2024, revenues at Silergy and SG Micro grew at 23% and 46% per year, respectively;1 in contrast, U.S. semiconductor giant Texas Instruments saw a 6% decline in sales to China.2
Similarly, Taiwan’s MediaTek has been gaining market share from U.S.-based Qualcomm in the Chinese smartphone market, a trend we believe may accelerate as MediaTek collaborates with Nvidia to launch new AI ASIC chips amid U.S. export restrictions on Nvidia H20 chips to China. MediaTek is now the world’s largest smartphone chipset supplier, with a market share of 34% versus Qualcomm’s 21%.3
Meanwhile, India is emerging as a key, low-cost manufacturing hub and a viable alternative to China in various consumer electronics markets. India now boasts nearly 20% of total global iPhone assembly,4 and the country’s broader Electronics Manufacturing Services sector appears poised for significant expansion, with key players such as Dixon Technologies and Kaynes Technology expecting to maintain 35% to 50% annualized sales growth over the next three to five years.5 Prime Minister Narendra Modi recently held talks with U.S. Vice President JD Vance as New Delhi looks to avoid American tariffs, negotiate a bilateral trade deal, and strengthen ties with the Trump administration.6 With its large population and increasingly skilled workforce, India looks well positioned to benefit from increasing demand for lower-cost manufacturing, and to continue expanding its own consumer market, in our view.
Across the Pacific, we believe the U.S. push to revitalize its domestic chip fabs is opening significant opportunities for companies in Taiwan, Japan, and South Korea, which provide advanced semiconductor technology and materials. In our view, Golden Triangle companies that have a manufacturing presence and strategic partnerships in the U.S. may benefit from those reshoring efforts while bypassing new tariffs.
For example, Chipmaker TSMC is adding capacity in Arizona to supply wafer-foundry and advanced-packaging services for Nvidia, which recently committed to investing $500 billion to expand production in the U.S. Similarly, Taiwanese firms Hon Hai and Wistron, which are expanding their electronics manufacturing services in the U.S., are expected to be able to serve local customers and avoid tariffs. And Japan’s Fujikura, which makes high-speed networking cables in South Carolina, is supporting U.S. infrastructure upgrades in collaboration with Corning.
We believe we are in the early stages of a fundamental reconfiguration of the global semiconductor supply chain, with some players capitalizing on lower cost structures (as in China and India) and others adapting to avoid surging tariffs (as in Asia’s Golden Triangle). While seismic shifts can create winners that generate meaningful alpha, we often find there are only so many chairs to go around.
