Preventing another chip shortage on G7 summit agenda

Group will also look into protecting subsea communications infrastructure

More than three years after the pandemic crippled semiconductor supply chains, it seems G7 nations are getting ready to do something to prevent future disruptions.

According to a draft statement seen by Bloomberg, the Group of Seven plan to establish a group dedicated to semiconductor supply chains when its members meet in Fasano, Italy later this week.

In the wake of the COVID pandemic, shutdown orders and economic uncertainty crippled semiconductor production. The fallout from this shortage wasn't limited to high-end electronics like smartphones, notebooks, and datacenter infrastructure, but forced many other manufacturers to idle their plants.

Automakers were particularly badly hit by the chip shortage, which hobbled production while they waited for the engine control units and other integrated circuits necessary for the vehicles to arrive.

Why it's taken the G7 – which comprises the US, Canada, Germany, France, Italy, Britain, and Japan – until now to address the issue of semiconductor supply chains isn't clear, but it may have less to do with another pandemic and more to do with China.

Over the past several years, the Middle Kingdom has raced to catch up in the semiconductor manufacturing arena. These efforts have met repeated attempts by the US and its allies to cut off access to advanced chip manufacturing technologies – like deep and extreme ultraviolet lithography.

Today, the vast majority of contract semiconductor manufacturing is centered in two nations: South Korea and Taiwan. The latter's proximity to mainland China – and president Xi Jinping's plan to absorb the island nation – have sparked fears that a potential invasion of Taiwan could devastate advanced semiconductor supplies.

Reliance on the Asia Pacific region for essential chips was one of the motivations behind the US and European CHIPS Acts, which unlocked tens of billions of dollars in subsidies to foster domestic manufacturing capacity.

However, the G7 task force's responsibilities won't be limited to semiconductor supply chains. It will also be responsible for overseeing undersea cable connectivity – an issue that's garnered widespread attention in recent years amid a series of high profile outages including those in the Red and the South China seas. ®

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