Enhancing Resilience in Global Value Chains: a comprehensive analysis of reshoring and its implementation in the semiconductor industry from a US and European perspective.

Abstract

Reshoring is a concept that has been popular among companies in recent years as a way to address inefficiencies along the whole global value chain. The production element of the business, which was formerly located in developing nations like China, is now involved in the relocation to the home country, known as backshoring, or to third countries, known as nearshoring or friendshoring. Global value chains were significantly disrupted by the financial crisis, COVID-19, and US-China trade war in the macroeconomic and political environment that has characterized the last 20 years, leading to inefficiencies in the corresponding markets and industries. Particularly, the semiconductor industry has been at the center of a number of conflicts and the deterioration of relations among major powers. The purpose of this study is to determine whether reshoring is possible in the current economic and political environment to enhance the performance of global value chains, and to what extend countries are able to implement this practice. To accomplish this, the work begins by outlining globalization and reshoring from a purely theoretical standpoint. After that, the study analyses the decline of globalization with a focus on the global value chain disruptions brought on by the significant events that had an impact in the previous decades. A close focus is then placed on the high-tech sector and the semiconductor industry in the context of the US-China trade war, from the perspectives of the US and Europe. Finally, a consideration on the feasibility of reshored manufacturing process is presented, pointing out the obstacles of this practice that arise in the 21st century, between labour shortages and geopolitical tensions.