Semiconductor equipment manufacturers are navigating a fluctuating geopolitical landscape characterized by the potential of destabilized trading relationships, upended global supply and manufacturing chains, and a reshaped market for finished goods. But tariffs and trade wars are just the latest in a long list of challenges that includes persistent talent shortages, accelerating technology innovation and high-stakes competition in the AI era. How can semiconductor equipment manufacturers address these trends and challenges?
The Volatile Geopolitical Stage
Most semiconductor equipment manufacturers have weathered materials scarcity, labor issues, shipping fiascos and global pandemics before, and they have more resilient, battle-hardened processes and supply chains to prove it. Tariffs, too, have long been used by governments to address trade imbalances, influence human rights behaviors, protect vital markets and address a variety of other concerns of the legislative class.
The ongoing back and forth combined with the fact that tariffs are being strongly wielded against some of the US’s closest trading partners — many of whom are implementing or at least contemplating retaliatory tariffs of their own — makes for a quite capricious landscape. The global supply chain, inextricably linked cross-geo manufacturing and a widely dispersed customer base are further exacerbating the uncertainties facing original equipment manufacturers (OEMs) in many industries.
Semiconductor equipment manufacturers that do business on a global scale rely on savvy business partners who understand the tariff, customs, regulatory and political landscape to help them mitigate risk and, when possible, find alternative suppliers, change manufacturing locations and supplement their workforce to keep production and distribution flowing. Quite literally, their business depends on it. Furthermore, when tariffs affect the ability of semiconductor equipment manufacturers to produce their machines, tools and measurement devices, they can have significant fiscal consequences for companies across a broad swath of industries that rely on the semiconductors they make possible.
From a tariff perspective, a partner with supplier relationships and critical operations in several regions can offer options that help semiconductor equipment manufacturers decrease their exposure during trade wars — to a degree. The country of origin is still the country of origin, no matter when a component was procured, where it was warehoused or where it is bound. The same goes for the finished equipment. Manufacturers must deal with tariffs in many ways when they are the importer of record, and so must their customers. While there is no way to avoid tariffs entirely — in the end, someone will have to pay them — savvy materials sourcing, inventory management, foreign trade zones and facility alternatives can help lessen the impact. An outsourced services partner with a global presence, local expertise and strategically located facilities is a great asset to have as part of your team.
The Enduring Need for Sustainability
With the noise around tariffs turned up to the max, it’s easy to lose sight of other regulatory issues that must be addressed as semiconductor equipment manufacturers consider their end-to-end product lifecycles. Mandatory reporting standards are either in place or on the horizon in many countries.
For instance, the US Securities and Exchange Commission approved the first national climate disclosure rules in 2024, requiring publicly held companies to report financially material climate-related risks and, in some cases, greenhouse gas emissions. Many already do so as part of their sustainability reports in response to investor preferences. A similar rule went into effect in the European Union the same year. And California, one of the world’s largest economies, will require publicly listed and privately held companies to fully disclose emissions by 2027 — both their own and those of companies in their supply chains.
As one might imagine, such mandates are of particular interest to large semiconductor equipment manufacturers that source materials and parts from multiple locations and ship finished goods worldwide. Decisions about where to source, warehouse, manufacture and repair equipment can have significant fiscal and environmental consequences. Outsourcing partners with diverse supply chain networks, robust repair and refurbishment capabilities and certified facilities in close proximity to customers can help OEMs lower emissions and costs tied to extraction and shipping.
The Paradox of Semiconductor Shortages
There may be no greater paradox than a semiconductor shortage that limits the production of semiconductor manufacturing equipment. It’s the definition of a vicious cycle, further constraining the supply of semiconductors and slowing manufacturing in the sectors that depend on them. While semiconductor equipment manufacturers are subject to the same market forces that govern the notoriously cyclical semiconductor industry, it’s not just new machines that are affected. Production capacity is in a holding pattern until new equipment arrives, but those already-in-place machines may be nearing their performance limits trying to keep up with demand. And those in the queue for maintenance, repair or refurbishment have to wait their turn for many of the same semiconductors their on-order brethren are after.
Semiconductor scarcity not only slows production but can also create supply chain bottlenecks for high-priced equipment already in use. Many of the photolithography, deposition and etching machines used for semiconductor production cost upward of $10 million — and often much more — and comprise thousands of parts and electronic components. Inevitably, some may malfunction or be recalled. Fixing or replacing a component that’s gone awry is a sound fiscal approach when the alternative is throwing the very expensive baby out with the bathwater.
The Innovation Race — and Staying Adaptable
First, NVIDIA captured the imagination of gamers with the world's first GPU in 1999. Then, it captured the research and development budgets of companies in just about every industry on Earth and remains a leading technology innovator in GPUs and AI hardware and software. As the arms race for ever-more-powerful computing in ever-tinier packages continues, semiconductors for AI and accelerated computing are driving innovation rapidly. The companies that design the machines that make the semiconductors are moving in lockstep to accommodate trends in miniaturization, heterogeneous integration and advanced packaging.
Considering what it takes to repair or refurbish that semiconductor manufacturing equipment, outsourcing partners must come to the table with advanced technical skills, state-of-the-art tools, pristine cleanroom environments and sophisticated processes of their own to support equipment through rapid iterations and long product lifecycles. Adaptability is intrinsic to innovation, whether you’re on the cutting edge of design or are responsible for keeping the products operating at peak performance.
The Fierce Competition for Tech Talent
By 2030, the talent shortage in semiconductor manufacturing could result in $8.5 trillion in unrealized annual revenue. In the US alone, more than $162 billion could be lost annually if more high-tech workers cannot be found or trained. The talent crunch is by no means confined to the tech industry itself — skilled engineers, technicians, project managers and other professionals in technical fields are in high demand across numerous industries beyond manufacturing, such as finance, healthcare, education and agriculture. They’re also highly sought after in outsourcing partners.
Repairing technologically sophisticated semiconductor manufacturing equipment on a global scale requires mechanical, electrical and software engineers, along with people whose expertise lies in metrology, electronics, mechatronics, vacuum and gas systems, optical systems and more. It takes a strong bench and top talent in the right technologies and geographies to meet quality standards and customer expectations.
The Necessity of Supply Chain Resilience
Speaking of customer expectations, consider the exorbitant cost of downtime. When plating equipment caught fire at a Renesas semiconductor fab, it cost the company $156 million per month while production was being restored, and no doubt that plating equipment needed attention, if not replacement.
A report by Siemens found that unscheduled downtime saps 11% of annual revenues from the world’s 500 biggest companies, some of which are semiconductor equipment manufacturers. While depot repairs are often part of a planned maintenance program designed to limit exposure to unplanned downtime, any glitch in the system that affects the availability of replacement parts can escalate costs quickly.
Supply chain resilience rests, in large part, on global diversification and relationships, which permeate procurement and inventory management practices, informing decisions about sourcing, warehousing, production, delivery, repairs and more. Together, global diversification and relationships can create a more flexible, agile and responsive supply chain that is better equipped to handle unexpected challenges and ensure product availability.
Outsourcing partners must maintain a disciplined approach to supply chain resilience to ensure repairs can be executed in a timely manner. While countries enact legislation such as the CHIPS and Science Act to encourage the production of legacy and AI-era semiconductors within their borders, it can take years to bring a semiconductor fab online — and even then, there’s no guarantee that the equipment used to make the semiconductors is manufactured in-country, or that it can be repaired locally. And not to belabor a point, but the volatile nature of tariffs with even a whiff of “might affect semiconductor availability” sends shivers down the spines of CEOs in industries as diverse as automotive, medical device, industrial, consumer and many more. Why? Because it introduces supply chain risk that complicates forecasting, inventory management, supplier negotiations, budgeting, investor confidence and a whole host of other day-to-day business concerns, including lead times for replacement parts.
So, asking “Can they repair it?” isn’t enough. An outsourced depot repair services partner must be able to provide timely, high-quality repair and refurbishment services at scale worldwide, often under strict service level agreements — and that means having the right parts on hand to do so. A balanced supply network and practical approach to onshoring, nearshoring and offshoring give semiconductor equipment manufacturers the flexibility and adaptability they need to cover all the bases for their customers.
Outsourcing Services to Overcome Today’s Semiconductor Equipment Challenges
The complexity and precisely engineered nature of the equipment required to produce semiconductors calls for uncompromising services and support. A balanced logistics, repair and refurbishment strategy that prioritizes technology, tariff, customs, regulatory and supply chain expertise ensures more reliable access to the critical skills and inventory required for timely, high-quality semiconductor manufacturing equipment repairs and other lifecycle services.
A partner like Shyft Global Services marries deep expertise and experience with OEM-authorized component sourcing, global supply chain relationships and superior inventory management to ensure optimal quality and support.
In "Solving the Top 7 Repair Challenges for Semiconductor Equipment," discover how depot repair services from Shyft can help you address today’s challenges head on and extend your product lifecycle without compromising performance or the customer experience.
About the Author
Steve Bair has been with the company since 1997 and currently serves as the Director of Global Engineering for the repair services organization within Shyft Global Services. He has extensive experience with and passion for product and services solution design, engineering, delivery and management. He has a proven track record in cross-functional leadership roles as well as weighing and balancing the objectives of the company and the customer to develop innovative solutions that solve complex business needs.
