From Efficiency to Resilience
For more than three decades, globalization has built the backbone of modern manufacturing. A finely tuned network of fabs, back-end assembly houses, and logistics hubs, mainly concentrated in Asia, fueled the flourishing of the electronics ecosystem.. But today’s world is shifting from a focus on efficiency to one on resilience. The trend often summarized as “China + 1”—diversifying operations beyond the Chinese mainland—has accelerated under tariff regimes, export controls, and shifting geopolitical alliances.
Yet this deglobalization is not a linear exit; it’s a complex re-engineering of the global supply web. The recent Nexperia export ban, which is rippling through the automotive and semiconductor sectors, is exposing just how intertwined and fragile those webs remain.
At Rand Technology, we see this moment not simply as a disruption but as an inflection point, a chance for OEMs, EMS providers, and component distributors to design supply chains that are predictive, diversified, and defensible.
The Roots of Deglobalization: A Necessary Reset
Global supply chains once optimized for cost and scale now face a radically different calculus. The catalysts for near-shoring and diversification include:
- Trade and tariff volatility. Successive rounds of US–China tariffs and export-control actions—covering semiconductors, telecom, and advanced materials—have turned procurement into a geopolitical exercise.
- Pandemic-era lessons. COVID-19 revealed that over-centralization in any geography invites systemic failure. Container shortages and factory lockdowns became global lessons in risk.
- Policy-driven localization. The US CHIPS Act, the EU Chips Act, and Mexico’s near-shoring incentives all aim to build regional capacity to reduce foreign dependency.
- Corporate risk management. OEMs now weigh time-to-recover alongside cost-to-produce when making site decisions.
This new environment demands redundancy—not in inefficiency, but in strategic optionality.
The Practical Barriers to “China + 1”
The concept of moving production out of China appears straightforward. The execution, however, exposes structural friction across cost, capability, and culture.
Higher Structural Costs
Relocating to India, Vietnam, or Mexico often doubles labor and logistics overhead in early phases. Facilities must duplicate management, training, and quality infrastructure. For EMS providers, each new geography means replicating ESD-safe labs, test fixtures, and ISO/AS-certified processes—an expensive form of insurance.
Ecosystem Gaps
China’s strength lies not merely in factories but in clusters. Component vendors, raw-material suppliers, and equipment maintenance firms exist within a few miles of one another. Emerging hubs lack that density, forcing many manufacturers to import sub-assemblies from China, re-creating dependency under a new flag.
Hidden Interdependencies
Many companies discover that manufacturers still perform critical back-end steps—sawing, singulation, encapsulation, and testing—in China, even when they produce front-end wafers or PCBs elsewhere. The Nexperia disruption is proving this painfully true.
Dual-Network Complexity
Running parallel supply chains (China + Mexico + Vietnam) can dilute economies of scale and introduce mismatched lead times. Inventory buffers and working-capital requirements increase just as global interest rates remain high.
The Nexperia Export Ban: Anatomy of a Systemic Shock
According to Edgewater Research, the Nexperia export restriction swiftly evolved into a systemic supply-chain crisis across automotive, industrial, and datacenter electronics. Feedback from Tier-1 suppliers and OEMs revealed several layers of exposure:
- Breadth of impact. Analysts found Nexperia components embedded in virtually every automotive electronics program, extending beyond diodes and MOSFETs into logic ICs, SiC devices, and IGBTs.
- Limited buffers. Tier-1s averaged two weeks of inventory and faced uncertainty over distribution replenishment. Some OEMs, including VW Europe, were rumored to face imminent line-downs.
- Back-end concentration. Roughly 70–80 percent of Nexperia’s back-end capacity sat in China, even when front-end wafer starts occurred in Europe or Malaysia. Guangdong facilities handled wafer singulation for parts later assembled elsewhere, creating a single choke point.
- Uncertain timelines. Even if diplomatic negotiations succeeded, analysts expected it would take 6–10 weeks for shipments to normalize. Nexperia’s own estimate of 3–6 months was deemed “overly optimistic”.
The Data Behind the Disruption
- 15,000+ active SKUs, of which 7,000–9,000 are automotive AEC-Q rated
- Reviewers later discovered that the “whitelist” of roughly 6,000 SKUs capable of non-China production was inflated by duplicate entries, with some single parts listed under multiple customer codes.
- A pending “blacklist” (undisclosed quantity) covered SKUs solely produced in China.
- 60–80 percent of BOM items have comparable drop-in replacements; 20–40 percent are sole-sourced or uniquely packaged (notably DFN leadless types).
The result: immediate substitution for non-safety functions via “paper qualifications,” but months-long requalification for safety-critical powertrain applications
Downstream Effects Across the Ecosystem
Automotive
Tier-1s prioritized high-margin platforms, echoing the COVID-era “build-complete-kits-first” tactic. Volkswagen, Stellantis, and BYD all faced temporary board redesigns or selective output pauses.
Industrial and Datacenter
Industrial suppliers initially adopted a wait-and-see approach, assuming resolution within weeks—a gamble analysts labeled “high risk”. Even Nvidia reportedly sought over a million affected parts for its Mellanox networking systems, showing how cross-sector the dependency runs.
Distribution
Distributors entered triage mode, rationing allocation to legacy automotive customers first. With two weeks of buffer at best, once distribution inventory dried up, production rations began.
Industry Response: Substitution and Strategy
Channel checks reveal how various stakeholders reacted:
- EMS and OEMs analyzed BOMs to segment exposure. One Industrial/Mil-Aero EMS identified 60 percent of SKUs with viable cross-supplier alternatives (onsemi, Vishay, MCC, Diodes) and 40 percent without.
- Price pressure. Suppliers offered replacements under stringent terms—sole-sourcing, guaranteed volumes, 18-month NCNRs, and up to 2× pricing for $0.10–$0.50 parts.
- Alternative vendors. onsemi, Panjit, Diodes, and TI emerged as the preferred substitutes; Diodes Inc. even published a list of ~5,000 drop-in SKUs.
- onsemi’s positioning. Having built strategic inventory during its fab-transition program, onsemi responded quickly but still faced 4–6 month ramps to meet total demand.
These moves demonstrate both agility and constraint—the ecosystem can flex, but only within the physics of fabrication.
Lessons for Global Supply-Chain Strategy
A. Visibility Beyond Tier 1
The Nexperia case underscores the blind spots hidden in tier-2 and tier-3 nodes. OEMs comfortable with “qualified vendors” discovered that packaging and test often sit with subcontractors never mapped in procurement systems. True resilience demands multi-tier visibility.
B. The Need for Bridge Inventory and Flexible Qualification
Short-term continuity requires strategic buffers on at-risk SKUs, particularly where requalification exceeds 12 weeks. Rand’s view: buffers should be risk-weighted, not blanket—aligning inventory policy with country-of-origin and package uniqueness.
C. Supplier Collaboration Over Substitution
Rather than swapping vendors reactively, proactive qualification programs—jointly developed with multiple foundries and distributors—preserve optionality. We advocate shared AVL management, where alternates are qualified in advance, even if they remain inactive until triggered.
D. Data-Driven Decision Frameworks
Digitized BOM analytics and AI-driven sourcing platforms can model the propagation of risk from policy events to assembly lines. At Rand, we integrate live market data and certification lineage to flag dependencies early—transforming intelligence into mitigation.
The Broader Deglobalization Landscape
Example 1 – Apple’s Indian Expansion
Apple and Foxconn exported $3.2 billion in iPhones from India to the US between March and May 2025, representing 97 percent of Foxconn’s India shipments. The goal: have all U.S.-bound iPhones assembled in India by 2026. The shift reduces tariff exposure but faces customs and ecosystem challenges that still tie back to China for sub-assemblies.
Example 2 – Google Pixel Relocation
Google began migrating Pixel production from Vietnam to India in 2025 to navigate US tariffs. Managing dual emerging markets increased operational complexity and fixed costs, echoing the transitional pain of diversification.
Example 3 – HP’s North-American Rebalance
HP announced that 90 percent of PCs for North America would be produced outside China by October 2025, expanding US and Thailand operations. Analysts warn the initial cost surge may compress margins until local ecosystems mature.
Example 4 – Jabil’s Mexico Expansion
Jabil’s third facility in Chihuahua epitomizes near-shoring’s promise and challenge: proximity to US OEMs, but rising competition for skilled labor and cross-border logistics strain.
Example 5 – Samsung Display in Vietnam
Samsung’s additional US$1.8 billion OLED investment in Vietnam cements the country’s role as an alternative hub. Yet many of the tooling and materials still originate from China, proving that “China + 1” rarely equals “China – 0”.
Each case reinforces the same paradox: diversification enhances resilience but dilutes efficiency. The goal is not to replicate China’s scale elsewhere, but to re-architect the network for controlled redundancy.
How Rand Technology Helps Navigate the New Normal
Rand Technology has operated through every significant supply disruption of the past three decades—from DRAM booms to pandemic shortages. Our framework for customers facing deglobalization and export-ban risk is grounded in four pillars:
1 | Global Intelligence
Through continuous market analysis and direct relationships across five continents, we provide early-warning insights on regulatory, capacity, and logistics shifts. Our monitoring of backlog and alternative vendor positions allows clients to secure substitutes long before public confirmation of constraints.
2 | Certified Quality and Traceability
With AS6081 and AS9120 certifications, Rand’s Rand Certified program ensures that every sourced component meets or exceeds industry authentication standards. During times of diversionary sourcing, this becomes critical: verifying that alternative parts are genuine, traceable, and compliant.
3 | Lifecycle and Engineering Support
Our engineering team assists with BOM analysis, cross-matching, and risk mapping to identify drop-in alternatives and qualification paths. For sole-sourced packages (e.g., Nexperia DFN variants), we help customers model the design impact of migration to TI, Diodes, or onsemi equivalents.
4 | Sustainability and Long-Term Partnership
We view supply-chain resilience as part of a sustainability mandate: reducing waste from obsolete stock, promoting recertification and reuse, and extending component lifecycles through repair and recovery.
The Road Ahead: From Crisis to Catalyst
The Nexperia export ban is not an anomaly—it is a preview. As trade boundaries harden, the next disruption may come from rare-earth restrictions, energy shocks, or cross-strait instability. Companies that treat each episode as an isolated crisis will perpetually play defense.
Leaders who thrive will:
- Map deep. Know every tier of supply, from foundry to freight forwarder.
- Diversify smart. Don’t replicate; orchestrate regional hubs based on core competencies.
- Invest in data. Real-time intelligence turns uncertainty into a competitive advantage.
- Partner with specialists. Independent distributors like Rand bridge the gap between global visibility and local execution.
Deglobalization is neither retreat nor regression—it’s an opportunity to rebuild supply chains on the principles of transparency, flexibility, and trust.
Building the Post-Global Supply Chain
As we close 2025, the lesson is clear: supply chains built for the past cannot withstand the politics of the present. What began as tariff avoidance has evolved into a strategic re-mapping of the world’s production capacity. The Nexperia episode compressed a decade of lessons into a single quarter—reminding every manufacturer that resilience is earned before it’s tested.
At Rand Technology, we stand at the intersection of insight and execution. Our role is to help customers anticipate, adapt, and act—transforming disruptions into design parameters for the next generation of global manufacturing.
