Ask where American chipmakers buy their equipment and materials and the tidy answer is 95%: that share of the roughly $27 billion they consume is bought from companies with headquarters in America, Europe or Japan. Ask where those goods are actually made and the answer shrinks to 68%.
That gap is the central finding of a new Semiconductor Industry Association report, “Understanding Dependencies in the U.S. Semiconductor Supply Chain,” published in October 2026. The detail that matters is how the trade group measured it. Most supply-chain maps go by a company’s home address. The SIA looked at the factory floor instead, using supplier websites, financial filings, analyst databases and regional sales data to estimate where each input is physically produced or assembled.
Under the hood
On that basis, the portion tied to China, Israel, Southeast Asia, South Korea and Taiwan jumps from 5% to 32%. The examples are concrete enough. American equipment makers assemble physical vapor deposition tools in Singapore and etch tools in the UK. U.S. materials suppliers make photoresist and gases of extreme purity at chemical plants in Japan, Taiwan and South Korea. Bulk gases, hydrogen and argon among them, run the other way: European firms own them, yet the production happens on air separation units sited next to American fabs.
China’s direct share looks small when sorted by place of manufacture, about 5% of what the industry buys, the South China Morning Post noted in its coverage on October 12. Dig further upstream and it is another story. The SIA mapped nearly 100 raw materials, engineered materials and sub-components, and found that nearly one third of them carry a high vulnerability rating. Rare earths top the list, along with gallium, germanium and graphite, and most output of them is in China, or in Russia and similar high-risk countries. For certain rare earths, the SCMP said, China’s grip exceeds 90%.
Beijing has shown it will use that position. The report traces export restrictions on gallium, germanium and graphite from 2023, escalating to bans the following year; April 2025 export controls covering seven rare-earth elements used in magnets and advanced manufacturing; and a broadening in October 2025. By June 2026, Chinese customs data showed exports of gallium, dysprosium, terbium and yttrium to Japan at zero or negligible levels. Japanese firms supply a lot of the materials and tooling that American fabs rely on, so the squeeze travels.
Four recommendations
The SIA’s answer has four parts, and it admits that none is simple. First, expand domestic production and keep strategic stockpiles. Onshoring everything is neither practical nor economic, the report says, and for some inputs new American capacity needs ten years or more, so government and industry need to pick targets for onshoring and stockpiling together.
Second, build and protect allied supply chains, since the ecosystem is global by nature. Third, reduce dependence on shaky rare earth and critical mineral supply, with new mining and processing in the U.S. and partner countries, backed by long-term offtake agreements to guarantee demand. Fourth, invest in research on materials science, chemistry, engineering and recycling technologies.
The ask is long-term by design. The report calls for sustained coordination among government, industry and international partners.
Sources
- Understanding Dependencies in the U.S. Semiconductor Supply Chain (Semiconductor Industry Association report)
- Mapping US chip supply chain: China accounts for far more than it appears, report says (South China Morning Post)
