Against the backdrop of escalating geopolitical risks, electronics companies are re-evaluating the viability of the "zero inventory" strategy and pursuing more resilient supply chain models, leading to a renewed focus on Just-In-Case (JIC).

Prior to 2018, the global electronics supply chain was in a relatively stable "honeymoon period". Geopolitical risks were low, transportation costs were manageable, information flow and logistics were highly coordinated, and trust among enterprises was strong. In this environment, businesses widely embraced the Just-In-Time (JIT) production model to minimize inventory and boost efficiency.

However, after multiple shocks—including the outbreak of the COVID-19 pandemic, the escalation of China-U.S. trade frictions, and persistent tensions in the international geopolitical landscape—the vulnerabilities of the JIT model have gradually come to light. During the pandemic, factory shutdowns occurred frequently, wafer production capacity fell short, global logistics were disrupted, and demand for consumer electronics surged simultaneously. Enterprise stockpiling further exacerbated the supply-demand imbalance, resulting in shortages of automobiles, smartphones, laptops, home appliances and other products. Coupled with geopolitical risks, electronics manufacturers have begun to re-assess the feasibility of the "zero inventory" strategy and seek more resilient supply chain models, leading to a resurgence of interest in JIC.

Global Electronics Supply Chains Shift from JIT to JIC

JIT is a lean production management method centered on the core philosophy of "producing on demand to avoid inventory backlogs". First introduced by Toyota Motor Corporation in the 1950s as part of the Toyota Production System (TPS), its fundamental principle is "eliminating waste" by precisely controlling production rhythms to achieve zero or minimal inventory levels.

Thanks to its significant advantages in improving efficiency and reducing costs, JIT was widely adopted by the manufacturing industry in Europe and the United States starting in the 1980s. It became the mainstream production management approach, particularly in the electronics and automotive sectors. For example, automakers such as Toyota, Ford, General Motors and Tesla all employ JIT for assembly line management; consumer electronics giants like Apple, Dell and Samsung have optimized their supply chains through JIT to achieve rapid delivery and inventory control.

In the electronics industry, Apple Inc. stands out as the most sophisticated practitioner of JIT. The company has established long-term partnerships with contract manufacturers including Foxconn, Pegatron and Luxshare Precision, driving the implementation of JIT in their manufacturing processes. Its digital procurement, automated warehousing, real-time logistics tracking and other technologies have become benchmarks for peers in the industry.

Nevertheless, amid uncertainties such as the COVID-19 pandemic and geopolitical tensions, the JIT model has exposed supply chain fragility in recent years. To address this issue, Apple has also actively adjusted its supply chain strategy—for instance, increasing safety stock of key components, diversifying supplier layouts (including setting up factories in India and Vietnam), and enhancing supply chain resilience and risk early warning systems.

Today, the global electronics supply chain is far more complex than it was seven years ago. This requires practitioners within the chain to possess stronger collaborative capabilities, risk response mechanisms and digital management capabilities to achieve more efficient and flexible supply chain operations. It is in this context that JIC—a once-dismissed "inefficient" traditional model—has regained the attention of electronics companies worldwide.

The JIC production model emphasizes prevention and preparedness by stockpiling raw materials or products in advance of production or sales to cope with supply disruptions or sudden demand surges. Its core principle is to sacrifice partial efficiency and accept higher inventory costs in exchange for supply chain stability and resilience. Typically, this model features the following characteristics: maintaining high inventory levels, adopting a multi-supplier strategy, deploying redundant production capacity across multiple regions, and prioritizing risk management to address uncertainties such as geopolitical conflicts, natural disasters and pandemics.

Against this backdrop, we are witnessing a trend toward diversification across the entire supply chain—from semiconductor equipment and raw materials to front-end and back-end semiconductor manufacturing processes. Currently, countries around the world are strengthening their domestic supply capabilities and ramping up investments in semiconductor factory construction. Multinational enterprises in the industry are also highlighting their multi-channel supply capabilities. There is a consensus that this diversification is a crucial strategy for mitigating supply chain risks.

From Centralization to Decentralization: Strategic Restructuring of the Semiconductor Supply Chain

After experiencing the COVID-19 pandemic, geopolitical tensions and trade frictions, the earlier approach of concentrating production capacity investments in a single region is no longer mainstream. In recent years, many semiconductor original equipment manufacturers (OEMs) have expanded their production capacity layouts globally, bringing them closer to customers in different regions. We have even seen some companies that suspended or canceled overseas factory construction projects in previous years accelerate such initiatives or pursue overseas collaborations in recent times.

Take three enterprises engaged in semiconductor foundry services as examples. In recent years, TSMC has built several advanced wafer fabs in Arizona, USA and Kumamoto, Japan, and also established a joint venture—European Semiconductor Manufacturing Company (ESMC)—with Bosch, Infineon and NXP in Dresden, Saxony, Germany. Intel has invested in new wafer fabs in Arizona, USA; Magdeburg, Germany; and Leixlip, Ireland. GlobalFoundries has expanded its wafer manufacturing facilities in New York State and Vermont, USA, as well as in Singapore. These multinational companies have strengthened the regional diversification of their supply chains and enhanced risk resilience through new construction and expansion of wafer fabs.

In recent months, GlobalFoundries announced its "China for China" initiative. Additionally, it has partnered with Ascend Semiconductor in Guangzhou, China, to jointly develop 40nm automotive CMOS products, leveraging production technologies from GlobalFoundries. The company stated that this collaboration is primarily aimed at fulfilling the demand for products manufactured in China for the Chinese market, with local delivery.

In response to this partnership, some readers commented on the official WeChat account of Electronic Engineering Times (EETimes), asking: "Why did GlobalFoundries cancel its Chengdu fab project earlier, but now cooperate with Ascend Semiconductor?" In fact, GlobalFoundries had originally planned to build the world's first 22nm FD-SOI 12-inch wafer foundry in Chengdu, Sichuan (with a designed monthly capacity of 65,000 wafers). However, the project was ultimately canceled due to the limited market ecosystem for FD-SOI technology and adjustments to the company's global production capacity layout. The production focus for its 22FDX platform was shifted to factories in Dresden, Germany and Malta, New York, USA. Currently, the company is advancing its next-generation 12nm FDX technology, which is expected to be launched around 2026, targeting emerging applications such as automotive electronics and AIoT.

Semiconductor Integrated Device Manufacturers (IDMs) are also implementing multi-regional layouts to enhance the flexibility of their supply chains. For example, IDMs such as STMicroelectronics (ST), NXP Semiconductors (NXP) and Infineon Technologies (Infineon) have all announced their own "China for China" strategies in recent years.

Among them, STMicroelectronics has established a joint venture, Anhui Xinyi Semiconductor Co., Ltd., with Sanan Optoelectronics in Chongqing, China, to produce 8-inch silicon carbide (SiC) wafers for automotive-grade power control chips (with mass production scheduled for Q4 2025). It has also entrusted Huahong Semiconductor to manufacture products such as 40nm STM32 MCUs in China. NXP plans to build a new supply chain in China, moving front-end manufacturing to local facilities, and has established a joint venture—VSMC—with Vanguard International Semiconductor Corporation (VIS) in Singapore, a location close to China (with mass production set for 2027). Infineon aims to achieve localization of its major automotive products by 2027, covering microcontrollers, high and low-voltage power devices, analog mixed-signal components, sensors and memory devices. Meanwhile, its next-generation 28nm TC4x products will undergo both front-end and back-end production locally in China.

These adjustments to semiconductor supply chain strategies reflect how enterprises are gradually shifting toward more resilient and independently controllable supply chain layouts in response to global uncertainties. In this context, businesses within the supply chain are presented with both new opportunities and numerous challenges.

Supply Chain Reshaping: Driven by Digitalization and Domestic Substitution

Against the backdrop of growing global uncertainties, semiconductor manufacturers are adjusting their supply chain strategies—a clear indication that enterprises are transitioning to more resilient and independently controllable supply chain layouts to navigate complex environments. This trend not only represents a proactive response to geopolitical risks but also reflects enterprises' higher demands for supply chain efficiency and stability.

Today, the electronic components supply chain is facing unprecedented opportunities and challenges. On one hand, enterprises can leverage digital procurement platforms to achieve rapid inquiry and contract signing, reducing the average procurement cycle to 5 days and significantly improving response speed and operational efficiency. According to cases from future think tanks and industry practices, digital platforms can help some enterprises shorten procurement cycles from 4 weeks to 2 weeks or even less. On the other hand, the widespread application of intelligent tools such as predictive analytics and Vendor Managed Inventory (VMI) enables enterprises to more accurately monitor inventory dynamics and demand changes, improve inventory turnover rates, reduce stockout risks, and thereby enhance supply chain flexibility and risk resistance. For core components, for example, through supplier collaboration and intelligent forecasting, overall lead times are expected to be shortened by 20% to 30%.

At the same time, "domestic substitution for imports" has become a key strategic direction for the electronic components industry, emerging as a mainstream trend in China, the United States and European countries. In China's electronic components market, continuous technological breakthroughs in key areas such as MLCCs, SiC and GaN have gradually increased their localization rates. Today, in critical industries such as new energy vehicles, industrial control and AI servers, domestic electronic components have gained the capability to replace imported products in some core sectors—particularly in power devices, sensors, PCBs and mid-to-low-end chips—significantly enhancing the independent controllability of the supply chain.

Specifically, domestic power devices are widely used in new energy vehicles and industrial control, with representative enterprises including Star Semiconductor, China Resources Microelectronics and CRRC Times Electric. Domestic sensors are also gradually replacing imported products in industrial automation and automotive electronics, with leading manufacturers such as Hanwei Electronics, Senba Sensing Technology and Memsic Semiconductor. Domestic PCB companies are emerging in the mid-to-high-end segment, including Shennan Circuits, Kingboard Laminates Holdings and Wus Printed Circuit. In areas such as MCUs, analog chips and power management chips, domestic enterprises such as GigaDevice Semiconductor, Holtek Semiconductor and Ingenic Semiconductor have developed strong substitution capabilities.

Nevertheless, localization in high-end chips and special-purpose devices is still in an accelerated phase. Currently, overseas manufacturers still dominate significant market share in key areas such as GPUs, FPGAs, automotive-grade MCUs, analog chips and AI accelerators—including companies like NVIDIA, Intel, AMD, STMicroelectronics, Texas Instruments and Infineon. Their products hold distinct advantages in performance, ecosystem and reliability.

Domestic enterprises are gradually breaking through technical bottlenecks to achieve independent controllability. Companies such as BYD Semiconductor, GigaDevice Semiconductor, National Chip Technology, AutoChips Technology and CoreWise Microelectronics have already achieved mass production in mid-to-low-end applications such as body control and motor drives. However, they remain in the technology accumulation and validation phase for high-end areas such as power systems, chassis control and intelligent driving.

In addition, China's electronic components industry has formed highly collaborative industrial clusters in regions including the Yangtze River Delta, Pearl River Delta and Bohai Rim, covering the entire value chain from raw materials and components to complete machine manufacturing. Achieving a high degree of localized production not only significantly shortens logistics cycles and delivery times but also improves resource allocation efficiency and supply chain anti-interference capabilities, providing enterprises with more stable production support.

Meanwhile, the rapid development of emerging technologies has opened up vast market space for the electronic components industry. Explosive growth in areas such as AI servers, 5G base stations, new energy vehicles and industrial automation has driven strong demand for high-performance chips, RF devices, sensors and other key components. These application scenarios impose higher requirements on the performance, reliability and delivery speed of components, prompting the supply chain system to accelerate its evolution toward greater efficiency, intelligence and flexibility.

Conclusion

The shift from JIT to JIC marks a profound resilience revolution in the electronics supply chain. The traditional model, which relied on zero inventory and high efficiency, has exposed its vulnerabilities amid growing global uncertainties, forcing enterprises to re-examine their supply chain strategies. Today, facing multiple challenges—including geopolitical tensions, export controls, differences in certification cycles and production capacity fluctuations—digital transformation and localized layout have become the core response strategies. Digitalization not only shortens procurement cycles and improves collaborative efficiency but also enhances risk early warning capabilities through predictive analytics and intelligent inventory management. Localization, through industrial clusters and redundant production capacity, reduces logistics risks and improves supply chain stability. Only by proactively embracing this transformation can enterprises seize the initiative in the reshaping of the global industrial chain and achieve a strategic leap from vulnerability to resilience.