Insights
$12 Billion Deal Authorized In Arizona With Taiwanese Semiconductor Manufacturer
American lawmakers in June proposed billions of dollars in subsides to help bolster advanced semiconductor manufacturing in the United States. Most of the world’s advanced semiconductors are manufactured in Taiwan and Taiwan Semiconductor Manufacturing Co (TSMC) is the world’s largest contract manufacturer of semiconductors. It’s customers include Apple, Qualcomm and a range of other high tech companies. City officials in Phoenix, Arizona have unanimously voted to authorize a development agreement with TSMC to help support a $12 billion TSMC factory to be built in Phoenix. This deal may lead to other international semiconductor companies establishing facilities in the US.
Reshoring of the Rare Earth Minerals Industry is Imminent
Smart policy that prioritizes reshoring of rare earth minerals to North America, consistent with leading environmental regulations is highly important to the high technology, renewable energy and electric transportation industries. Despite vast mineral resources, the U.S. currently imports nearly 50 critical minerals and its reliance on imports of rare minerals has nearly doubled in the past two decades. Too many of these essential minerals are now coming from risky regions of the world or from geopolitical rivals. Anticipated changes in North American mining policy will stimulate reshoring of the critical minerals industry and it will also strengthen national security.
Why We’re Reshoring Our Manufacturing: A CEO’s View
In 2015, Daniel Burrows founded XStream Trucking, a high-tech trucking panel company. XStream offshored it’s manufacturing and supply chain to China to lower costs. Because of the trade war, pandemic-related issues, increased costs in China, and other risks, XStream has moved about 60% of its manufacturing and supply chain back to North America. Reshoring has brought significant benefits to the company. For instance, the costs of aluminium mount systems were reduced by about 20% and lead time was shortened from 8 weeks to 4 weeks. For the company’s panelling system, there was a 10% reduction in costs and lead time was reduced from 8 weeks to 5 weeks. CEO Burrows indicates that the simplification of their supply chain and logistics and cost savings resulting from reshoring from China to North America, cannot be overestimated.
China’s Factories Recover as a Result of Demand from Within China, but Exports May Never Recover Due to COVID-19 Issues and Reshoring of Manufacturing and Supply Chains
China’s factory activity rose in October, recovering from the deep slump brought on by the coronavirus pandemic earlier in the year. The boost in demand was led by a rebound in Chinese consumer demand as people spent on travel, leisure, and shopped for goods during October. However, ongoing COVID-19 issues in Europe and the US, and a clear trend toward reshoring manufacturing and supply chains to North America may not bode well for future exports.
Leaders Are Very Bullish on Reshoring Jobs from Overseas
Border industry is poised for explosive growth in the next few years, as companies take heed of lessons learned in the COVID-19 pandemic and relocate more production to North America, trade experts say. “We have a huge number of U.S. companies doing business with China. […] Any number of consumer goods come from China but all those companies are coming under the realization that there is trade tensions that are going to continue regardless of who wins the (U.S. presidential) election,” said Alan Russell, CEO and co-founder of Tecma Group, which runs 50 manufacturing facilities in Mexico and the U.S.
“So, if you are going to supply North America with a product, you need to have a significant portion of your production in North America,” Russell said. “And where are you going to go? You are going to go to a border city. So, for the next three to five years, I unconditionally see an unprecedented growth in opportunity at these border zones.
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