AI devours chip supply, tariffs cement global division, low buyer confidence

Global strategy and management consultancy Kearney and the industry association serving the global semiconductor and electronics design and manufacturing supply chain, SEMI, announced the release of their collaborative report State of Semiconductors 2025 -- Braving the Storm: Navigating an Uncertain Future, the partnership's first study on the unique challenges of semiconductor production and supply management.

Based on a survey of 200+ global supply chain leaders and analysis of 60+ products and 5,000+ components, the comprehensive study shows an uncertain, pressured, and at-risk semiconductor supply chain ecosystem, with surging demand driven by AI applications and mature electronics, automotive and industrial uses, alongside likely supply shortages due to tempered capacity investments, AI's voracious chip consumption and trade war disruptions.

Some areas revealed by the report include:
* AI server demand races ahead at 40-50% CAGR, using both advanced and mature nodes.
* Trade barriers are hard-wiring an East-vs.-West supply chain.
* 65% confidence in resilience among semiconductor leaders, down from 82% last year.
* 42% of leaders expect advanced-node shortages.
* Product design is biggest lever to improve supply chain resilience.

"The semiconductor industry stands at the center of global technological progress today," notes Kearney partner, global lead of PERLab and study co-author, Bharat Kapoor. "Yet, unlike oil, semiconductors are far from being a commodity, as they require meticulous coordination of intricate manufacturing processes, deep R&D investment, and highly skilled labor. This State of Semiconductors report points to deep fragmentation and uncertainty across systems, entities, regulation, and leadership at a moment when AI has gained supremacy in the chip supply chain—and it's crowding out everyone else."

The report delves into end-product wafer consumption by node size and industry—including consumer electronics, servers, automotive, industrial, consumer appliances and telecom—and fab capacity by node size and region—including Taiwan, China, Japan, the Americas, Europe and the Middle East, Korea and Southeast Asia. It points out how AI distorts traditional chip allocation, and shows industry share.

Kushal Fernandes, a partner in Kearney PERLab, adds: "Our analysis shows that tariffs have locked in a structural divide between Eastern and Western semiconductor ecosystems. Meanwhile, confidence among semiconductor buyers is impacted—only 65% of the leaders we spoke with feel confident about securing supply, a drop of 17 points from last year—and 42% expect shortages in advanced nodes. As AI demand accelerates, mature nodes remain critical and geopolitical tensions persist, the most prepared buyers will secure not just chips—but, a competitive edge."

Bharat Kapoor concludes: "Supply chain resilience is no longer optional for manufacturers and purchasers of semiconductors. And we believe that the fastest route to supply chain resilience is product design—in particular, at this moment, changing design only where it moves the customer needle. Further, leaders need to be aware of developments in other chip-dependent industries, as they will be competing for the same supply."

Areas covered by the report include:

• How tariffs are reshaping the semiconductor landscape
• Waning buyer confidence in supply chain resilience
• An overview of sectoral trends, including servers, consumer electronics, automotive, industrial, consumer appliances, telecom and medical equipment
• Industry deep dives with analysis of company performance, node size consumption, AI and more
• Charting of globalization and intervention scenarios, with forecasts of how each would play out
• Value chain bottlenecks on fab expansion, including lithography, packaging and talent.