- The geopolitical contest for control over their production and supply is reshaping alliances, deepening rivalries, and redefining the contours of international relations.
- By enforcing sweeping export controls in 2022 and 2023, Washington banned the shipment of advanced chips and the tools needed to make them, especially sub-10nm nodes, to Chinese entities.
- China imports over $300 billion worth of chips annually, making semiconductors its largest import. Yes, more than oil.
- Any disruption to TSMC’s operations, be it from invasion, blockade, or sabotage, would send seismic shocks through global markets, defence systems, and digital infrastructure.
In today’s rapidly transforming world order, power is no longer measured solely by military might or fossil fuel reserves. The new frontier of strategic dominance lies within the intricate grids of silicon. Yes, I’m talking about semiconductors, the invisible engines that fuel the global digital ecosystem. Once relegated to the backrooms of consumer electronics manufacturing, microchips have now emerged as the lynchpin of economic competitiveness, military power, and diplomatic leverage.
From smartphones to satellites, from AI to missile guidance systems, semiconductors are the backbone of 21st-century civilization. The geopolitical contest for control over their production and supply is reshaping alliances, deepening rivalries, and redefining the contours of international relations. Welcome to the era of techno-geopolitics, where chips are both the currency and the weapon.
Semiconductors: The Strategic Commodity of Our Times
At their core, semiconductors are minuscule devices that control the flow of electrical signals. But their significance is colossal. Without them, there would be no data processing, no AI revolution, no autonomous cars, and no digital military systems. As nations push for digital transformation through missions like Digital India, AI supremacy, and smart warfare capabilities, semiconductors are no longer just commercial assets, they are national security imperatives.
The semiconductor industry is built on a fragile and hyper-globalized supply chain. Different countries specialize in different stages: the United States leads in chip design and EDA (electronic design automation), Taiwan and South Korea dominate high-end manufacturing, Japan supplies critical materials and precision equipment, and the Netherlands, through ASML, monopolizes the production of EUV lithography machines, essential for producing cutting-edge chips.
This complex interdependence, while economically efficient, has created strategic chokepoints. And as geopolitical tensions rise, these chokepoints are being weaponized.
The United States: From Tech Patron to Tech Gatekeeper
Historically, the United States has been the pioneer of the semiconductor age. Companies like Intel, AMD, NVIDIA, and Qualcomm have shaped the global computing landscape for decades. Yet, in terms of manufacturing, the U.S. saw a sharp decline from producing 37% of the world’s semiconductors in 1990 to just around 10% today.
That realization hit home when supply chains collapsed during the COVID-19 pandemic. But the real strategic alarm sounded in 2022, as geopolitical tensions with China intensified and Russia’s invasion of Ukraine highlighted the West’s dependence on critical imports.
In response, Washington passed the CHIPS and Science Act (2022), allocating over $52.7 billion to revive domestic chip manufacturing and incentivize companies like Intel, TSMC, and Samsung to build fabs on American soil. But more significantly, the U.S. began leveraging its dominance in chip design and fabrication tools to choke China’s access to advanced chips.
By enforcing sweeping export controls in 2022 and 2023, Washington banned the shipment of advanced chips and the tools needed to make them especially sub-10nm nodes to Chinese entities. It also pressured allies like the Netherlands and Japan to align with its strategy, severely curtailing China’s technological advancement.
The message was clear: in the global tech order, the U.S. is not just a participant, it’s the gatekeeper.
China: Self-Reliance Under Siege
For China, the semiconductor blockade is both a threat and a catalyst. Beijing’s aspirations to become a global tech superpower hinge on mastering chip production. Yet, despite years of investment through initiatives like “Made in China 2025” and the National Integrated Circuit Fund, it remains heavily dependent on foreign technology for high-end chip manufacturing.
The U.S. restrictions have been a major blow. Firms like Huawei and SMIC have struggled to maintain competitiveness in the face of sanctions and tech bans. China imports over $300 billion worth of chips annually, making semiconductors its largest import. Yes, more than oil.
But China isn’t backing down. It has doubled down on self-reliance, pumping tens of billions into Indigenous R&D, nurturing homegrown champions, and reportedly pursuing grey-market acquisitions of restricted equipment through third-party networks. Huawei’s 2023 release of the Mate 60 Pro, powered by a 7nm chip allegedly manufactured domestically, was as much a technological feat as it was a political statement.
Yet, challenges remain. Without access to ASML’s EUV machines or U.S.-made EDA tools, China’s path to 3nm or 2nm fabrication remains steep. And while China may achieve technological parity in mature nodes, the race for cutting-edge chips is far from over.
Europe: Between Strategic Autonomy and Strategic Dilemma
The European Union has often found itself caught in the crossfire of U.S.-China tech tensions. While it houses ASML, one of the world’s most critical semiconductor companies, the EU lacks its end-to-end semiconductor supply chain. Most EU nations depend on Asian fabs and American designs.
The EU Chips Act (2023) aims to reverse that. With an investment package of €43 billion, Europe intends to double its global chip production share to 20% by 2030, focusing on resilience and autonomy. Intel and TSMC have announced major investments in Germany and other EU countries, while France, Italy, and the Netherlands are ramping up research funding.
But Europe faces a balancing act. On one hand, it aligns with Washington’s efforts to curb China’s technological rise. On the other, it seeks to retain a degree of strategic autonomy and avoid being pulled entirely into the binary U.S.-China rivalry. As de-risking becomes the new buzzword in Brussels, Europe’s semiconductor strategy may well determine its future geopolitical posture.
Fragmenting Supply Chains and the Rise of “Techno-Blocs”
The semiconductor content has triggered a broader realignment of global supply chains. A growing number of countries are adopting “friend-shoring” and “reshoring” strategies, seeking to build secure and politically aligned chip networks.
- The Chip 4 Alliance (U.S., Taiwan, Japan, and South Korea) is emerging as a strategic tech bloc, focusing on secure semiconductor ecosystems and coordinated investments.
- India is pitching itself as a “trusted alternative,” launching the India Semiconductor Mission with over $10 billion in incentives to attract global chipmakers.
- The Global South, meanwhile, fears marginalization in this new tech Cold War. Without access to advanced chips, these nations risk falling behind in the digital economy, widening the global tech divide.
The consequence? A potential bifurcation of the global semiconductor ecosystem into U.S-led and China-led spheres, with trade barriers, restricted IP flows, and competing standards.
Chips, Peace, and the Possibility of Conflict
It’s no longer unthinkable that semiconductors could become the trigger or at least the catalyst for a major international conflict. Nowhere is this more evident than in Taiwan, home to TSMC, which produces over 90% of the world’s most advanced chips.
Beijing views Taiwan as a breakaway province, while the U.S. views it as a linchpin of the global tech economy. Any disruption to TSMC’s operations, be it from invasion, blockade, or sabotage, would send seismic shocks through global markets, defence systems, and digital infrastructure. The world’s economic security now rests on an island the size of Kerala.
The Future: Toward Strategic Coexistence or Technological Cold War?
The semiconductor struggle is far from over. As both superpowers invest billions into chip sovereignty, the question is not just who will win but at what cost?
- Will we see new arms control regimes for chips, akin to nuclear non-proliferation treaties?
- Could semiconductor diplomacy become a new tool for peace-building or simply another front in the great power competition?
- And can the global system afford to decouple from a commodity that underpins everything from insulin pumps to ICBMs?
The stakes could not be higher. In the past, wars were fought over land and oil. Today, the battle is over bits and silicon. And the outcome may very well shape the next century of global power.
In this new geopolitical age, the side with the smartest chips may well hold the upper hand not just in technology, but in diplomacy, security, and the very future of global order.
Diksha Bharti is currently pursuing a Master’s program in Russian studies. She has previously worked as a Research Associate at Politika and the Consilium Research Institute. She has a keen interest in geopolitics and has contributed to several reputed platforms. Views expressed are the author’s own.
Shashank Pandey 
Megna Devkar