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Dec 2022

Semiconductor industry supply chain risks

Source: Middle East Insurance Review | Sep 2022

A recent survey has found that the ramifications of the semiconductor industry supply chain crisis have been exacerbated by the conflict in Ukraine. The semiconductor industry serves as a major driver in the global economy.
 
The Global Semiconductor Industry Survey conducted by WTW surveyed 250 senior decision makers in leading semiconductor companies to ascertain how the industry is responding to global trends and challenges and to detail the biggest opportunities and risks for business over the coming years.
 
Major findings of the survey include the following issues:
Focus on recovery: It is predicted that the semiconductor industry will grow: 70% of those surveyed anticipate higher than expected profitability over the next two years. (APAC 78%, EMEA 65%, NA 64%).
 
ESG in the mainstream: Overall, a third (32%) ranked ESG pressures in the top five losses to the business in the past two years, with 34% recognising that ESG pressures is a risk to their future success. However, only 44% have a formal process in place for managing ESG risk.
 
Post-pandemic outlook: The semiconductor industry was hit by the new ways of working and changes in demand trends, which saw the need to innovate quickly (29%); increased digitalisation (26%) and transformation; growth of niche areas (26%); and responding to rapidly changing consumer demands (24%).
 
Emerging technologies: Participants in the survey see the greatest opportunities in increased production for emerging technologies (50%); a refocus on production, towards more higher demand type semiconductors, driving transformative technologies (50%); and the role of semiconductors in helping to solve climate change challenges (44%).
 
Predictions of risk: The pandemic meant businesses were exposed, and had to adjust quickly, to different supply chain risks and changing demands. Internally, complex changing technology end-product requirements (43%), intellectual property infringement (42%) and supply chain and infrastructure (40%) were the biggest loss areas.
 
Risk management: Only 29% said that supply chain risk management is embedded in strategic planning, capital allocation and other business processes.
 
Sufficient insurance cover: More than half (51%) indicated that they have some insurance cover but are unsure if it is sufficient. In APAC where extreme weather has historically impacted semiconductor manufacturers, 67% admit they are unsure if the cover the business has is sufficient. M 
 
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