Semiconductors, highly advanced chips that are essential for everything from hospital scanners to traffic lights, are facing unprecedented vulnerability today. Taiwan produces 90% of the world’s most advanced semiconductors, creating a dangerous single point of failure for critical infrastructure worldwide. Geopolitical tensions, potential conflict, and a complex production process mean public services reliant on these chips could face catastrophic disruption with little warning. 

What’s Related

The impact of component scarcity on the public sector would be particularly high as public institutions, unlike private companies, struggle to compete on price. In fact, the public sector typically operates under rigid budgets and procurement rules optimised for efficiency, not crisis. Public sector procurement teams should therefore begin laying the groundwork for resilience in the event of semiconductor scarcity now. There are six critical actions that can help procurement teams prepare.

1. Map hidden dependencies across all supply chain tiers

Most procurement teams have no idea where semiconductors sit in their supply chains because chips are embedded several layers deep within complex, interdependent supply systems. It is therefore essential to conduct deep dependency mapping that traces semiconductor reliance across all supplier tiers, not just direct contractors, and identify which critical services rely on which specific components, where those components originate, and which manufacturers produce them. This analysis allows the creation of a comprehensive register documenting every critical system’s semiconductor requirement, enhancing visibility and transforming abstract risk into a concrete understanding.

2. Assess criticality and build a prioritisation framework

Hard decisions about resource allocation cannot be made under pressure; they require careful planning with clear ethical and operational frameworks. To develop a prioritisation framework, public institutions should assess criticality to determine which systems can tolerate temporary degradation and which cannot. Categorising services into, for example, those essential to life safety and emergency response, those critical to basic public welfare, those important but not immediately essential, and those that can be temporarily suspended gives clarity in times of emergency.

3. Establish early warning systems and supply chain intelligence

Semiconductor shortages don’t appear overnight. Geopolitical tensions, production disruptions, export controls, and market signals can provide advance warning if the right indicators are being monitored. To avoid being caught off guard, it’s critical to implement early warning systems that monitor broad supply chain indicators relevant to semiconductor availability, such as events affecting key production regions, industrial conditions, and production capacity at major manufacturers, export controls and trade restrictions, insurance market signals, and commodity price movements for key semiconductor materials.

These alerts can then be integrated into a procurement dashboard so that intelligence reaches decision-makers in time, transforming procurement from reactive purchasing to strategic anticipation.

4. Validate alternative suppliers and components

Waiting until a crisis to identify alternatives is not feasible, as switching suppliers or components is constrained by complex regulatory, technical, and timing requirements that cannot be navigated under pressure. Instead, alternative suppliers and components for all critical systems should be systematically validated, taking into consideration technical compatibility, certification requirements, regulatory approval processes and timeline, integration challenges, and resource needs. Where possible, dual-sourcing components, though more expensive, may provide an additional layer of resilience during shortages.

5. Determine strategic stockpiling levels for critical components

Stockpiling carries costs and risks: components can become obsolete, storage requires resources, and capital gets tied up. However, for components with long lead times that support mission-critical services, strategic reserves can be essential. Procurement teams should determine appropriate stockpiling levels for critical components, considering factors such as storage limitations, environmental requirements, obsolescence risk, component shelf life, lead times, and typical procurement cycles, prioritising components with lead times exceeding 12 months, those with single-source or geographically concentrated production, those supporting life-safety or emergency-critical systems, and those with proven supply volatility.

6. Assign senior accountability and integrate with emergency planning

Supply chain resilience cannot remain a technical concern buried in procurement departments. To avoid this, it’s essential to assign explicit senior responsibility for semiconductor supply chain resilience to someone with authority to allocate resources and encourage cross-departmental cooperation. This role will be responsible for formal resilience plans documenting dependencies, prioritisation frameworks, alternative sourcing strategies, stockpiling decisions, and response procedures. These plans should be reviewed annually and updated as systems change, new dependencies emerge, and geopolitical situations evolve.

Mark Roberts is a Global Public Sector Lead at JAGGAER.