The semiconductor chip shortage is old news, but when the second-largest public company in U.S. stock market history says it just lost $6 billion in potential sales due to limited chip supply — as Apple just did — it reinforces why the U.S. economy needs to rethink how it sources its semiconducting technology so that this doesn’t happen again. This short-term supply chain phenomenon will pass, but tech executives and policy advisors predict that the future will be characterized by even larger, longer-term supply chain shocks. To ensure the supply of key components, a shift from decades in which the largest companies benefited from a manufacturing model in which “designed in California” and “assembled in Asia” reigned supreme must occur.

From $2 trillion Apple to $1 billion lidar sensing technology marker Ouster, industry and government supply chain policies must change.

Ouster’s co-founder and chief technology officer, Mark Frichtl, stated that as the maker of products with dozens or hundreds of integrated parts, it must manage and ensure that all of those are available. The current labor shortage is the top concern cited across sectors (57 percent), more than twice that of the supply chain (26 percent), according to the results of the recently completed fourth quarter survey of CNBC Technology Executive Council members, but the two are linked.

According to survey respondents, the inability to upgrade their own technology was the second-worst consequence of supply chain bottlenecks.

The Q4 survey was completed by 41 members of the CNBC Technology Executive Council between October 1 and October 15. Policy advisors and executives from a variety of industries are concerned that the business sector is not preparing for long-term supply shocks that could be far worse than the current crisis.

The current commercial issues that are causing supply chain shortages will be resolved, but “what frightens me the most is the geopolitical… the politics of this is just getting started in Washington and Beijing,” said Dewardric McNeal, managing director and senior policy analyst at Longview Global, who worked for the Secretary of Defense on East Asia and China security relations during the Obama administration, at a recent CNBC Technology Executive Council Town Hall. McNeal is concerned that policy discussions about a semiconductor “rebalance” and “supply chain sovereignty” or “minimal viable manufacturing capacity” will leave the industry unprepared for what is to come. If not handled properly, the situation could lead to mandates requiring companies to purchase a certain percentage of domestic chips.

The automotive industry is a good example, where the chip shortage is still wreaking havoc on carmakers. The auto industry is all about efficiency and scale, and if companies have to start divvying up semiconductor buying based on a government mandate, “you start chipping away at these economies of scale,” said Mark Fields, former Ford CEO and current interim CEO at Hertz, on the recent CNBC TEC Town Hall.

According to Fields, many of the economic decisions made by automakers on where to source supply over the last half-decade did not take recent geopolitics and trade decisions into account, and this may yet come back to haunt the automakers.

The cost of disruption from Covid and trade has been significant in recent years, which has resulted in companies rethinking supply chains and accepting that increased costs may be worth it if they de-risk the business “from some of those unknowns that can hit your business very significantly as they have in the past few years,” according to Fields.

Matt Murphy, CEO of Marvell Technology, which designs chips but outsources manufacturing, said the situation should be on everyone’s radar, and it has been on his since the 2018 events involving the Trump administration and Chinese cell phone maker Huawei.

Ouster buys and sells a significant amount of material in China, and a deterioration in the US-China trade relationship is bad for almost everyone, according to Frichtl. However, he believes that for the business community, the argument should be made in terms of economic competitiveness rather than saber-rattling. The way to avoid mandates on domestic component sourcing is for government and industry to work on the creation of a U.S.-based supply of semiconductors that is economically competitive.