Climate and geopolitical risk correlations and response decisions for semiconductor global supply chains

Threats from climate risk (CR) and geopolitical risk (GR) undermine the resilience of the Semiconductor Global Supply Chain (SGSC). Plenty of company profit has plummeted due to the chip supply disruptions and delays. Particularly, the complex risk correlations (RCs) in a multi-project environment, and the inter-entity relationships, render the risk analysis and risk response decisions (RRDs) within CR and GR challenging. To address the problem, this study proposes a novel three-stage approach to explore the impact of CR and GR and obtain RRDs. First, based on the actual operation of SGSC, a system dynamics model of the RCs is conducted to analyze the effects of CR and GR. Second, a Stackelberg game model is formed based on the project interdependencies to find the optimal response resources and profit considering the inter-entity relationships. Third, a binary optimization model constrained in the optimal response resources is developed to determine RRDs. From the simulation results and the numerical example, the proposed approach is a powerful tool for risk managers of SGSCs. The actionable recommendations on managing and responding to CR and GR are summarized. This study provides theoretical and managerial insights for resilient supply chain management.