China is more exposed to semiconductor supply-chain disruptions than the US

Semiconductor production is extremely concentrated. Most advanced logic chips, including those that power AI, are fabricated in Taiwan, and a large share of memory is produced in South Korea, so disruptions to semiconductor supply chains are a serious concern. However, standard international input-output data groups chips with broader electronics data, making it hard to understand which countries would be most affected by disruptions. We disaggregate semiconductors in international input-output data to better measure each country’s exposure and to simulate the impact of a Taiwan supply shock and a China–West decoupling. China is more exposed than the US to semiconductor supply disruptions, because semiconductors account for a larger share of the cost of the goods it buys. In 2022, every $1,000 of Chinese final demand generated $15.2 in revenue for semiconductor producers, 2.7× the $5.7 generated by the same American spending. A disruption in Taiwan combined with a China–West trade decoupling would hit China several times harder than the US. In our model’s combined shock scenario, which estimates impacts two to three years after shocks occur, Chinese advanced processor prices rise 17-fold and Chinese real gross national expenditure falls by 3%, against a roughly 20% price rise and a 0.6% fall…