Geopolitical Semiconductor Risk and Strategic Diversification: Assessing the Investment Viability of Non-China/Taiwan Supply-Chain Participants

The global semiconductor industry, a linchpin of modern technological civilization, now stands at a crossroads defined by geopolitical fragility and the urgent need for diversification. As the United States imposes 100% tariffs on semiconductors manufactured outside its borders, the sector faces a paradox: the imperative to protect national security and intellectual property clashes with the economic costs of fragmented supply chains, as noted in a Building Resilient Semiconductor Supply Chains Amid Global Tensions report. This tension is compounded by the critical role of Taiwan's TSMC, which produces 90% of the world's most advanced logic chips, leaving the industry exposed to risks ranging from natural disasters to geopolitical conflict, as the same report highlights. For investors, the challenge is clear: how to navigate this volatile landscape while identifying resilient, non-China/Taiwan participants poised to thrive in a restructured ecosystem.

The Geopolitical Fault Lines

The U.S.-China rivalry has reshaped semiconductor dynamics. Washington's export controls on advanced manufacturing equipment for Chinese firms like SMIC have accelerated Beijing's push for self-sufficiency, while the U.S. pours $100 billion into domestic production through Intel's "IDM 2.0" strategy, according to a Geopolitical Risk Mitigation in Semiconductor Supply Chains analysis. Meanwhile, the European Union's Chips Act aims to boost its global production share to 20% by 2030, and India's government incentives are attracting global players to its shores, as noted in a The Geopolitics of Semiconductor Supply Chains analysis. These initiatives reflect a broader trend: the semiconductor supply chain is no longer a single, interconnected web but a mosaic of regional blocs, each with its own priorities and vulnerabilities.

The risks are not merely political. TSMC's dominance in advanced-node manufacturing-critical for AI data centers and smartphones-means any disruption in Taiwan could ripple across the global economy. This has spurred a "reshoring" frenzy, with Intel and TSMC expanding in the U.S., and TSMC investing $14 billion in a Japanese facility to hedge against overreliance on any single region, as reported in a 1,008 Shares in Taiwan Semiconductor Manufacturing Company Ltd. $TSM Bought by Tiemann Investment Advisors LLC filing. Yet, as one analyst notes, "reshoring is a double-edged sword: it enhances resilience but inflates costs and operational complexity," as the Geopolitical Risk Mitigation in Semiconductor Supply Chains analysis points out.

Diversification in Action: Key Players and Strategies

Among non-China/Taiwan participants, a few firms stand out for their strategic agility and financial strength. Intel Corporation has emerged as a poster child for U.S. semiconductor nationalism, leveraging the CHIPS and Science Act to fund a $100 billion expansion in Arizona, as the Geopolitical Risk Mitigation in Semiconductor Supply Chains analysis notes. This not only bolsters its foundry services but also positions it to compete with TSMC in advanced packaging technologies, a sector expected to represent 35% of semiconductor value by 2027, as the same analysis states. Similarly, Advanced Micro Devices (AMD) is challenging Nvidia's AI dominance with its MI300 series, capturing a growing share of the AI chip market, as noted in a Navigating the AI Chip Storm: SoftBank's Nvidia Sell-Off and the Shifting Sands of Semiconductor Investment article.

In the materials and equipment sector, Qnity Electronics, spun off from DuPont, has carved a niche in high-value semiconductor materials. With over two-thirds of its revenue tied to AI and advanced nodes, Qnity's focus on lithography materials and thermal management solutions aligns it with the industry's most lucrative growth areas, as the Qnity Electronics' Unexplained Surge: A Deep Dive into Semiconductor Valuation and the AI Boom article highlights. Meanwhile, MKS Instruments has demonstrated robust financial performance, reporting $988 million in Q3 2025 revenue and a non-GAAP net income of $1.93 per share, driven by its critical role in advanced logic and memory node manufacturing, as noted in a MKS Inc. Reports Third Quarter 2025 Financial Results filing.

Emerging players like Indie Semiconductor Inc. (INDI) are also gaining traction. Despite a Q3 2025 loss of 8 cents per share, the company's strategic backlog grew to $7.4 billion, fueled by design wins in LiDAR optical engines and EV vision processors, as noted in a Indie Semiconductor Inc (INDI) Q3 2025 Earnings Call Highlights: Strategic Backlog Growth and ... earnings call. While its quantum computing and robotics ambitions remain opaque, Indie's automotive-focused diversification-particularly in China's EV market-positions it to benefit from the $1.85 billion global semiconductor ceramic packaging materials market, projected to grow at 8.5% annually through 2030, as the Semiconductor Ceramic Packaging Materials Market Analysis Report: By Region, Players, Material, Technology 2025 - 2030 report states.

Financial Resilience and Geopolitical Hedging

Investors must weigh not just a company's market position but also its ability to mitigate geopolitical risks. Teradyne, Inc., a leader in semiconductor testing, has attracted significant institutional interest, with Acadian Asset Management and Vanguard Group increasing stakes in the firm, as noted in a Acadian Asset Management LLC Grows Position in Teradyne, Inc. $TER filing. Its role in ensuring the reliability of advanced manufacturing processes makes it indispensable in an era where quality control is paramount. Similarly, Entegris, Inc., despite a decline in gross margins to 43.5% in Q3 2025, remains a key supplier of purification and filtration systems for semiconductor fabrication, as noted in a Entegris Inc (ENTG) Q3 Earnings: GAAP EPS of $0.46 Beats Estimate, Revenue Hits $807 Million Surpassing Expectations report.

The financials tell a nuanced story. TSMC's 40.1% year-over-year revenue growth and 43.72% net margin underscore its dominance, yet its geographic concentration in Taiwan remains a vulnerability, as noted in the 1,008 Shares in Taiwan Semiconductor Manufacturing Company Ltd. $TSM Bought by Tiemann Investment Advisors LLC filing. In contrast, companies like Qnity and Teradyne are leveraging their specialized product portfolios to reduce exposure to regional shocks. As one report notes, "pure-play suppliers with high-value, hard-to-replicate materials are better positioned to navigate geopolitical turbulence," as the Qnity Electronics' Unexplained Surge: A Deep Dive into Semiconductor Valuation and the AI Boom article notes.

The Road Ahead: Investment Implications

The semiconductor industry's $900 billion investment pipeline from 2024 to 2028 will likely reduce geographic concentration risks, but success hinges on execution. For investors, the key is to identify firms that balance innovation with geopolitical agility. Intel and AMD's U.S.-centric strategies, Qnity's materials expertise, and Indie's automotive design wins all point to companies that are not merely surviving but thriving in a fragmented world.

However, caution is warranted. The U.S. tariffs, while intended to bolster domestic production, have already caused supply chain delays and higher costs, as the Building Resilient Semiconductor Supply Chains Amid Global Tensions report notes. Moreover, sustainability challenges-such as the energy-intensive nature of semiconductor manufacturing-will require further investment in green technologies, as the The Geopolitics of Semiconductor Supply Chains analysis observes.

Conclusion

The semiconductor supply chain is undergoing a tectonic shift, driven by geopolitics, technology, and capital. For investors, the path forward lies in supporting firms that are both technologically advanced and strategically diversified. While TSMC and its peers in China/Taiwan remain critical, the non-China/Taiwan participants profiled here-Intel, AMD, Qnity, Indie, and others-offer compelling opportunities for those willing to navigate the complexities of a restructured global order.