April 2024

Semiconductors are an integral part of every device in the digital age, with the sector set to become a $1 trillion industry by the end of the decade.

During the COVID-crisis, it became clear that disruptions to the global supply of semiconductors were impacting multiple industries, including electronics, automotive, manufacturing and defense.

Chip shortages shaved an estimated $240 billion off the US gross domestic product (GDP) in 2021, equivalent to 1% of total US GDP that year. The auto industry produced nearly eight million fewer vehicles as a result.

Common sources of bottlenecks include natural disasters, geopolitical conflict and fluctuations in demand.

The dominance of Taiwanese semiconductor producers is a significant source of vulnerability in a world of shifting geopolitics.


  • A wide range of industries relies on semiconductors, including electronics, manufacturing and the military.
  • Taiwan produces more than 90% of the most advanced semiconductors, with the M7.4 Hualien earthquake a reminder of the region's exposures and risk concentrations.
  • The semiconductor industry experienced an acute shortage of supply during the pandemic. As a result, manufacturers are actively diversifying suppliers, recycling and reusing goods.
  • From the drought impacting water levels in the Panama Canal to ongoing attacks in the Red Sea, a number of ongoing shipping chokepoints affect supply chains.
  • Industries dependent upon semiconductors should prepare for further volatility, including planning for worst-case scenarios, such as disruption to the flow of goods out of Taiwan.
In terms of the position of Taiwan in the global supply chain, it's so deeply embedded that it's almost impossible for anyone to know just how impactful it would be if you had a scenario, such as a blockade in the Taiwan Straits.
Jake Hernandez, Chief Executive Officer at AnotherDay*

*AnotherDay, a Gallagher Company, is a specialist consultancy firm working with insurers on strategic risk advisory, encompassing cyber threats, geopolitical intricacies and climate change implications.


CONDITIONS AND LIMITATIONS Gallagher's global operations, including a network of correspondent brokers and consultants, offers client-service capabilities in more than 130 countries around the world. This report and supporting information is not intended to provide legal or financial advice and reflects our understanding as of April 2024. It should not be regarded as a comprehensive statement of the law and/or market practice in the regions covered. You should not act upon information in this publication nor determine not to act, without first seeking specific legal and/or specialist insurance and risk management expertise. Should you require advice about your specific insurance arrangements or claim circumstances, please contact your Gallagher account representative.

© 2024 Arthur J. Gallagher & Co.