State subsidies, supply chain resilience, and geopolitics influencing firm strategies in a post-2020 context: case study of the German semiconductor industry

For the first time in over two decades, semiconductor firms have significantly increased their manufacturing investments in Germany between 2021 and 2023. We argue three interconnecting factors have influenced these firm strategies in what we call the ‘post-2020 context’: heightened risks of supply chain disruptions, geopolitical trade tension, and state subsidies. Conceptually, we integrate these factors into the global production network 2.0 framework by discussing how risks and the de-risking state interact with the market imperative and cost–capability ratio dynamics to influence firm strategies. Drawing on interviews with semiconductor firms, we discuss the interaction between positive market dynamics for automotive semiconductors, customer concerns for supply chain resilience related to environmental risk, the effect of heightened geopolitical risk mainly concerning China, and European Union subsidy schemes which reduced Germany’s cost disadvantage. We show how these varied interactions drove unprecedented semiconductor investment in Germany.