Strategic Deglobalization: How Recent Crises Are Reshaping Global Supply Chains

For more than three decades, global supply chains expanded in pursuit of efficiency and cost reduction. Companies fragmented their production, distributing activities across multiple continents on the assumption that political stability and global logistics would sustain a model built on maximizing efficiency and minimizing inventories. However, in recent years several shocks, as the pandemic, logistical disruptions, geopolitical tensions and renewed industrial policies, that have exposed the vulnerability of that system.

Some even describe this profound reconfiguration, driven by security, resilience and strategic autonomy concerns, as a full process of deglobalization in which these criteria have moved to the forefront of decisions about bringing industrial capacity back onshore. This phenomenon is redrawing the map of where production takes place, who trades with whom, and how value chains are organized.

Are We Really Seeing Deglobalization?

Global trade data does not show an outright reversal, but it does reveal a shift in geographic and sectoral orientation. Industries considered strategic as advanced technology, batteries, clean energy, or healthcare, are reassessing their dependence on distant or politically sensitive regions. The United States, Europe, Japan, South Korea and other allied economies are implementing industrial policies that encourage the partial return of production or at least the diversification towards politically aligned countries.

In other words, we are not witnessing the end of globalization but rather a reorganized globalization, where efficiency is no longer the sole criterion. Security of supply, regulatory stability and geopolitical risk mitigation now carry significant weight in industrial decision-making.

Key Drivers of This Reconfiguration

1. Logistical and supply disruptions: The pandemic exposed the fragility of long and complex supply chains, with port and factory shutdowns in critical regions halting entire industries.
2. Geopolitical tensions: Rivalries between major powers, technological restrictions and regional conflicts have heightened the perceived risks associated with dependency on specific geographies.
3. More active industrial policies: The United States and Europe are deploying incentives, subsidies and regulatory frameworks designed to attract production deemed strategically important.
4. Technology protection and intellectual property: In highly sensitive sectors, the need to operate within stable and predictable regulatory environments is becoming essential.

Key Sectors Where These Shifts Are Most Evident

1. Semiconductors: Geographic Diversification to Reduce Strategic Risk

Governments and companies are seeking to reduce the heavy concentration of semiconductor manufacturing in East Asia, especially in a context of heightened geopolitical tensions. Production is beginning to expand towards allied regions with predictable regulatory frameworks and public support.

Representative examples:

• TSMC (Taiwan Semiconductor Manufacturing Company), the world’s largest contract semiconductor manufacturer, is building new advanced-chip production facilities in the United States. The move responds both to public incentives and to the need to operate in politically stable territories.
• Intel, one of the sector’s historic leaders, is expanding its manufacturing footprint in the United States and Europe to reinforce industrial autonomy and reduce exposure to distant suppliers of critical technologies.

2. Batteries and Electric Vehicles: Vertical Integration and Market Proximity

The energy transition and the shift towards electric mobility require securing the supply of batteries —a strategic component with an increasing share of total value. This is driving local investments and the integration of critical stages of the supply chain.

Representative examples:

• Volkswagen, through its battery subsidiary PowerCo, is building new cell manufacturing plants in Europe. The planned facility in Valencia is part of a strategy to strengthen technological independence and reduce reliance on Asian production.
• Tesla, the global leader in electric vehicles, is expanding its battery manufacturing capacity in the United States and Europe to ensure stable supply aligned with local regulatory requirements.

3. Pharmaceuticals and APIs: Greater Resilience in Essential Products

Following the pandemic, governments and companies have renewed their focus on securing local capacity for essential drugs and active pharmaceutical ingredients (APIs). The goal is not to abandon global supply chains but to introduce stronger redundancies.

Representative examples:

• Sanofi, one of Europe’s largest pharmaceutical groups, has reinforced API manufacturing in France and other European countries to improve healthcare autonomy.
• Novartis, through its Sandoz division, is expanding production of certain antibiotics in Europe to reduce dependence on external suppliers in critical segments.

4. Solar and Renewable Energy: Diversification in a Highly Concentrated Sector

Solar panel manufacturing is heavily concentrated geographically. To ensure the success of the energy transition and strengthen strategic autonomy, Europe and the United States are promoting domestic production capacity.

Representative examples:

• First Solar, a leading U.S. manufacturer of photovoltaic modules, is expanding production capacity domestically through new facilities supported by industrial incentives.
• Enel, the European energy group, is increasing production of high-efficiency solar modules in Italy through its 3Sun facility, seeking to balance the current concentration of manufacturing in Asia.

5. Advanced Manufacturing and Automotive: Market Proximity and Operational Resilience

In complex industries with sophisticated value chains, proximity to key markets and rapid response capabilities are increasingly decisive. This is prompting new investments in major consumption regions.

Representative examples:

• Toyota, one of the world’s largest automobile manufacturers, has reinforced its production capacity in the United States through investments in new lines and critical components.
• Siemens, the German industrial group, is expanding its U.S. production footprint in response to industrial incentives and the need to be close to customers demanding advanced technologies.

Opportunities for Corporate Advisory and M&A

As supply chains are reorganized and industrial policies gain prominence, companies are being forced to rethink their production structure and their relationship with suppliers, as well as the way they manage strategic technologies and assets. This transformation involves reviewing business portfolios, strengthening essential capabilities, partnering with new technological or geographic allies and optimizing positions within value chains undergoing rapid change.

This dynamic environment is creating significant opportunities for corporate advisory services and M&A activity. Regulatory complexity, the need to secure critical supplies, the availability of public incentives and the urgency to enhance resilience are driving demand for deeper strategic analysis and more decisive corporate action.

It is likely that the trends already observed in the sectors discussed earlier —and for similar, if not identical, reasons— will gradually extend to the rest of the economy. As other industries face comparable risks or identify new opportunities arising from global reconfiguration, demand will grow for specialized advisory services, including:

• acquisition and divestiture of companies with critical technological or productive capabilities;
• formation of corporate alliances and joint ventures to share risks, access technology or expand capacity;
• acquisition and reassessment of strategic assets, such as production facilities or intellectual property;
• reorganization of value chains, including vertical integration, geographic diversification or replacement of key suppliers;
• structuring of industrial investments linked to public incentives or the energy transition.

Conclusion

Rather than a strict process of deglobalization, we are experiencing a reorganized globalization, where efficiency coexists with new criteria of resilience and strategic security. For companies, this environment requires complex decisions about where to produce and how to structure supply chains. For M&A and corporate advisory professionals, it creates a fertile landscape full of opportunities to generate value, anticipate risks and support organizations in their transition towards a new global industrial order.

At CDI Global, we have sector-specialized teams with extensive experience in corporate advisory and cross-border transactions. We would be pleased to discuss specific opportunities and support companies navigating this new landscape of industrial transformation.

By Eduardo González-Gallarza