Friend-Shoring Means You Have To Worry About The Health Of Your Friends

Friend-shoring is a term that has been making the news lately, with the U.S.-Japan trade agreement covering critical minerals being the latest example. It is shorthand for locating supply chains in countries where the political risk to disruption is low. It makes sense, because in a complex world, it is nearly impossible for a country to be self-sufficient in everything that it consumes. Not only would that be wasteful and duplicative when other countries might be able to produce something better or less expensively, it expands the overall pool of ideas from a larger overall population, which should be good for innovation. But it also means that leaders need to pay attention to the health of strategic sectors in the home bases of those friends. This is not something most people are accustomed to doing.

A case in point is the information display industry, and specifically flat panel displays (FPDs). Displays are ubiquitous and have become the human–machine interface for indispensable ICT products including smartphones, computers, TV sets, medical monitors, and a wide range of consumer and industrial products. A Boeing 787 has five 15.1 inch diagonal displays, an F-35 Joint Strike Fighter has an 8 x 20 inch panoramic display, and one of the central interfaces of a Tesla
TSLA
Model 3 is a 15 inch touchscreen display. Almost all of the flat panel displays in the world are manufactured in two time zones in East Asia, which means four countries: Japan, Korea, Taiwan, and China.