‘Friendshoring’ ensures the US is not alone in moving key supply chains away from China

The list of technologies the US wants to bring closer to home include semiconductors, solar panels and batteries for electric cars

This goes hand in hand with securing supply chains of critical minerals, such as lithium

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Akhil Ramesh

Akhil Ramesh is director of the India Programme and Economic Statecraft Initiative at the Pacific Forum.

Published: 9:15am, 20 Oct 2022

In the first week of October, US President Biden Joe Biden issued new export control regulations on advanced computing chips and other items used in semiconductor manufacturing, in an attempt at kneecapping China’s ambitions of becoming a tech powerhouse. With this measure, competition has transformed into containment.

Aside from strengthening domestic industrial policy through legislation such as the Chips and Science Act and Inflation Reduction Act, the Biden administration is upping the ante on US competition with China through trade and supply chain diversification strategies and export regulations.

As economists and leaders in the corporate world have highlighted, it is not feasible to reshore entire value chains of certain industries. However, overreliance on one supplier can be reduced through diversification. This is where “friendshoring” can play a role.

According to data provider Sentieo, mentions of different forms of “shoring” during company earnings calls are higher than at any other time since 2005, indicating that the decision to relocate supply chains is not just a Washington phenomenon.