How Reshoring and Mineral Security are Shaping the U.S. Semiconductor Supply Chain – April 11th, 2025

Amid rising geopolitical instability, tariffs, and reliance on foreign suppliers, the United States is re-engineering its semiconductor supply chain to prioritize resilience. From wafer fabs to critical minerals and chemicals, transparent and diverse sourcing has become a defining theme.  

Despite significant strides in upping domestic fab capacity and design capabilities, reshoring chip production also requires alignment across sectors and a reliable supply chain for upstream materials. As policy shifts meet industrial momentum, two developments in materials procurement are reshaping the trajectory of the U.S. chip sector.

Reshoring the Semiconductor Supply Chain – The Role of Chemicals and Ecosystem Alignment

Ongoing geopolitical turmoil has made reshoring the semiconductor supply chain a strategic necessity for the United States as it seeks to rebuild industrial self-reliance. While headlines often focus on fabs and chip designers, an equally critical yet often overlooked pillar of this effort is the chemical supply ecosystem that feeds front-end manufacturing.  

As McKinsey’s latest industry analysis underscores, the semiconductor and chemical sectors are deeply interdependent. Roughly 100 chemicals and materials are used during the chip fabrication process. Missing any of them can cause substantial delays and far-reaching disruptions. Today, the vast majority of these inputs are produced in Asia and Europe.  

As such, any U.S. push to localize semiconductor manufacturing without reshoring the chemical sector in tandem is incomplete.  

Of course, building the necessary domestic capacity is not a straightforward endeavor. The U.S. chemical supply base at present is fragmented, with capabilities concentrated in niche markets with limited scalability. McKinsey estimates that roughly 60% of the chemicals and materials needed for chip fabrication lack sufficient domestic supply to support scaling U.S. production.

Regulatory environments—especially around hazardous materials and emissions—further complicate matters, extending timelines and increasing capital costs. Add to that a tight labor market and a persistent cost disadvantage compared to Asian producers, and it’s clear why domestic alignment of the semiconductor and chemical ecosystems lags behind U.S. ambitions.

Accelerating demand for advanced nodes compounds the challenge. As fabs push toward 2nm and beyond, material innovation becomes non-negotiable. Lithography materials, deposition precursors, and ultra-pure process chemicals must not only be available domestically but also continuously co-developed alongside evolving process nodes. This requires close collaboration between material science firms, fab operators, and EDA tool vendors—an ecosystem-level approach that has yet to fully take hold in the U.S.

To achieve true resiliency, the U.S. chip supply chain must be treated as a holistic system. This means synchronizing policy incentives across industries and fostering joint ventures between chemical producers and chipmakers. Closing the existing gap to match the pace of domestic chip manufacturing buildup will require a total investment of $9 billion by 2030, according to McKinsey’s estimates.  

For procurement professionals and supply chain leaders, the immediate imperative is to assess current exposure. Dependencies on specific materials, sole-source suppliers, or high-risk regions—especially in the chemical segment—should be mapped comprehensively to mitigate disruption risk.  

Digital platforms such as Sourcengine and Datalynq offer valuable transparency into availability, regional sourcing alternatives, and supplier health metrics. Integrating these tools into sourcing strategies can help organizations preempt bottlenecks and maintain more resilient supply networks.

Ultimately, reshoring the chip industry isn’t just about fabs, but rebuilding the entire semiconductor value chain. Companies that embrace a holistic approach and invest accordingly in chemical supply alongside chip manufacturing will be better positioned to weather geopolitical shocks and capitalize on emerging demand.

U.S. Critical Mineral Strategy and Executive Action for Supply Chain Security

While fabs and packaging facilities get most of the attention, a strong semiconductor supply chain starts with reliable sourcing of critical minerals. These elemental building blocks essential for manufacturing semiconductors have fallen into the spotlight of a discussion centered on national security.  

In a March executive order (EO), President Trump authorized streamlined permitting for mining projects, financial support for processing facilities, and interagency coordination to bolster U.S. mineral extraction and refinement. The move clearly conveys U.S. intentions to secure its mineral supply chain and decrease reliance on international sources.  

Gallium, lithium, germanium, copper, and other rare earth elements are all indispensable for advanced semiconductor manufacturing. However, data from the U.S. Geological Survey shows that the U.S. is 100% reliant on imports for over a dozen minerals of the 50 on its List of Critical Minerals. China dominates the global supply chain for most of these essential elements.  

This dependency has emerged as a glaring national security vulnerability and a threat to the domestic chip industry. The recent EO is already reshaping upstream dynamics in the semiconductor value chain, impacting availability, pricing, and production timelines for everything from wafers to capacitors and power components.  

For original equipment manufacturers (OEMs), contract manufacturers (CMs), and electronic manufacturing service (EMS) providers, the implications are twofold. First, the transition to regionalized mineral sourcing will be uneven, introducing new risks around cost volatility and disruptions across high-tech sectors. Second, transparency across the supply chain—particularly in identifying which components are tied to high-risk minerals—remains limited.

To stay ahead, organizations should map their exposure to critical materials across their supply chains. This includes understanding not just direct suppliers, but also the sub-tier sources of raw materials embedded in passives, substrates, and packaging components. Working with partners like Sourceability who prioritize traceability, inventory transparency, and regionally diversified sourcing is essential to a secure acquisition pipeline.