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The technology industry has been the poster-child of a truly globalised supply chain, accounting for at least 9% of global trade. In that process, it became ever more specialised and clusterised, bringing innovation at diminishing costs. All of this should contribute to Tech net profits growing from USD700bn globally to USD1.5tn by 2030. Yet over the past few years, the technology industry, in particular semis, have been at the center of more assertive government policies such as "Made in China 2025", US exports controls, or the CHIPS Act. Could those threaten the globalisation of Tech? Leveraging the expertise of 50 ÃÛ¶¹ÊÓƵ Global Equity Research and Macro team analysts, over 20 industry/expert calls, and ÃÛ¶¹ÊÓƵ Evidence Lab, we conclude that a full de-coupling scenario is unlikely. Even so, US export controls may develop further, pushing China to reconsider its policy options. Re-shoring will occur to some extent. Amidst those megatrends, we analyse which sectors and stocks could benefit or be negatively impacted.Ìý

"Made in China 2025" has already lead to c. USD120bn of spending into the semis industry. The various subsidy plans for semis manufacturing and re-shoring such as the US CHIPS Act amount for over USD190bn into 2030, and semis fab announcements totalling c. USD270bn of capex. In spite of all this, the current order of things will not dramatically change. We estimate that the US will still only account for 10% of global semis capacity by 2026, while South Korea and Taiwan will still represent 21% / 24% respectively. The de-coupling of supply chains will have natural limits as the US will still lack scale for manufacturing and access to specialised components. The US exports controls will make it very challenging for China to develop and bring up to scale its leading edge semis manufacturing ecosystem. Our industry and expert discussions indicate that more restrictions are possible, notably regarding AI and possibly software.

Assuming that more export restrictions occur, and re-shoring continues, we assess the net impact to the Tech industry would be negative. In that scenario, global tech industry net profits may move down to USD1.3tn and semis revs USD850bn by 2030 (base case USD950bn). If export restrictions are largely rolled back, and government let private capital more efficiently allocate where semis manufacturing capacity is built, we see upside to tech net profits to USD1.8tn and semis revs to USD1.05tn.