Dive Brief:
- Leaders in the semiconductor manufacturing industry have a new chief concern: Tariffs and trade policy now rank as their top issue, surpassing talent and labor, according to the 21st annual Global Semiconductor Outlook by advisory firm KPMG.
- About 54% of leaders are focused on geographically diversifying their supply chains, per initial results from the survey, which was conducted with 151 executives during Q4 2025. In addition, 45% of leaders said making supply chains more flexible and adaptable to geopolitical risks is their No. 1 strategic priority.
- Despite supply chain concerns, 93% of leaders anticipate their company’s revenue will grow in 2026, largely thanks to booming demand for AI and data centers.
Dive Insight:
Through both a carrot and stick approach, the U.S. government is aiming to shore up domestic manufacturing in the semiconductor industry.
On the “carrot” side, incentives, such as tax credits and Chips for America funding, via the CHIPS and Science Act, have spurred new semiconductor manufacturing investments in the United States. The act became law in 2022 under the Biden administration and has continued to dole out investments during the current Trump administration.
Texas Instruments said in June it planned to spend more than $60 billion across seven fabrication facilities. The U.S. Department of Commerce awarded the company up to $1.6 billion in funding through the CHIPS and Science Act for its new fabs.
Amkor Technology broke ground on a new semiconductor packaging and testing campus in Peoria, Arizona, in October. The move expanded Amkor’s total investment to $7 billion across two phases, and the company said its Arizona project would receive $407 million in funding from the CHIPS and Science Act.
A little more than half of respondents in KPMG’s survey said it’s necessary to build advanced fabrication facilities domestically, although the same percentage said accepting government funding would limit market agility and hinder their company’s ability to innovate.
Meanwhile, the “stick” side of the approach has largely focused on tariffs. The Trump administration proposed 100% tariffs on semiconductor imports in August, with an exemption for companies doing business or building capacity in the U.S. The Semiconductor Industry Association, a D.C.-based trade and lobbying group, expressed support for the 100% duty. In November, however, U.S. officials reportedly said the tariffs would be delayed.
Building domestic capacity and supply chains is an intensive task in the semiconductor industry. Among the KPMG survey respondents, 34% were concerned about the ability to procure enough energy to power their facilities over the next three years. Access to labor and talent were also concerns.
Plus, the sector relies heavily on imports. Last year, the U.S. imported $22.6 billion of semiconductors, with more than $5.6 billion coming from Vietnam and more than $3 billion each imported from Thailand and Malaysia. Given the global nature of semiconductor manufacturing, leaders are prioritizing diversification of their supply chains. They see it as a necessary strategy to secure supply as semiconductor demand grows.
“We're seeing a fundamental surge in semiconductor demand that spans the entire economy — from AI and data centers to electric vehicles,” said Chad Seiler, line of business leader for technology, media and telecom at KPMG US, in a statement.
In the survey, 73% of leaders identified artificial intelligence as the top application driving revenue, followed by cloud and data centers at 61%, wireless communications at 57% and automotive at 56%.
Rising AI demand has already boosted revenue for some of the largest players in the semiconductor industry. Taiwan Semiconductor Manufacturing Co. reported a 40.8% year-over-year uptick in Q3 revenue, to more than $33 billion, which executives credited to booming AI demand.
Despite lingering challenges, this bullishness around AI demand has boosted industry confidence. The KPMG Semiconductor Industry Confidence Index rose to 63, the third-highest score in two decades.
