Arrow Electronics’ director of global product management-semiconductor, Olaf Korn, explains how 2026’s chip supply chain is being redrawn by geopolitics, AI-driven demand and capacity constraints
Mapping the 2026 semiconductor supply chain
Semiconductors underpin nearly every modern product, from phones and cars to industrial automation and home appliances. But in 2026, global reliance on chips is colliding with rising geopolitical tension, trade barriers and manufacturing complexity, reshaping how companies think about supply chain risk.
When production capacities fluctuate due to technology trends, economic circumstances and geopolitical environments, and as semiconductor manufacturers compete for production capacity, it all amounts to changes in demand and available supply. A surge in demand for AI-related products can cause wafer shortages for other products that require those same advanced nodes, which can significantly impact pricing.
The historic norm has been for a constant decline in semiconductor prices. However, in recent cycles the industry has experienced an environment where increases are more common. Shortages, export controls and capacity constraints have made risk a major financial variable. In some cases, buyers are beginning to explore simpler price-based models (PPV) versus total cost of ownership (TCO) models, and many have started to see supply chain risk as a primary issue they must navigate alongside pricing volatility.
Before, chip buyers did not pay as close attention to the upstream supply chain supporting semiconductor manufacturers, but this dynamic has changed. Semiconductor manufacturing companies now generally operate under two main models: integrated device manufacturers (IDMs) manage production fully in house, whereas fabless manufacturers outsource production and rely on third parties such as foundries for wafer fabrication as well as providers of outsourced semiconductor assembly and testing (OSATs).
By way of illustration, most industrial and automotive applications rely on older technology nodes. These older nodes (> 28nm) have a higher mix geared toward internal manufacturing/IDMs and, therefore, require less ongoing investment from foundries. In many cases, a single semiconductor maker now relies on a hybrid model that pulls in multiple manufacturing modes based on technology and product.
The net effect is that semiconductor purchasing professionals are working with semiconductor manufacturers who often do not have direct control over their upstream supply chains. The global race to secure rare earths and other materials such as resins and lead-frames—foundational elements in semiconductor manufacturing—has added another layer of complexity and supply chain risk.
Buyers can help their organizations mitigate such risk through strategies that include securing long-term agreements and supply well ahead of projected consumption. But this requires them to do much more than just find parts at a good price. They need to:
Understand a part’s supply chain dependencies
Grasp the technology nodes involved in production by technology and industry
Diversify suppliers to avoid relying too heavily on one manufacturer or region
As technologies and supply chains advance, the role of highly qualified, well-informed purchasing professionals will become more complicated but also more essential. Risk management and business continuity, along with trade compliance, are areas of increasing responsibility they must help steward toward organizational success. The procurement practice is becoming increasingly strategic, not merely transactional.
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