U.S.-China Tech Rivalry: The Geopolitics of Semiconductors
tall fence approach—the strategy aimed at restricting the exchange of crucial technologies like cutting-edge AI chips, semiconductor fabrication equipment and quantum computing, while keeping other trading alternatives open.[4] The idea is to keep this ‘small yard’ of critical technologies highly secured (‘high fence’) with stringent export controls and investment restrictions, while allowing broader, less-sensitive economic exchanges with China to continue.
The Biden administration also focused on domestic capacity building through legislation like the CHIPS and Science Act of 2022. The act offered billions in subsidies for onshore semiconductor manufacturing and research and tightened export controls on advanced AI and semiconductor technologies critical to China’s tech ambitions. The act allocated US$ 53 billion to boost US semiconductor production, spurring over US$ 395 billion in private investments and creating more than 115,000 jobs since 2021.[5]
The current Trump administration has been focusing on pushing the same goals promoted by Biden, but more aggressively. As of August 2025, Trump announced a 100 per cent tariff rate on foreign semiconductors, while companies that establish research or manufacturing operations in the US would be exempt from these tariffs. However, they might still face tariffs if they fail to fulfil their investment commitments.[6]
The Trump administration also incentivized manufacturers to build plants domestically.[7] On 1 July, the administration proposed increasing federal tax credits for eligible semiconductor firms from 25 per cent to 35 per cent for domestic projects. The administration recently established a new entity, the US Investment Accelerator, to take charge of the Chips Act program and accelerate corporate investments within the United States. This body is responsible for overseeing the execution of the Chips and Science Act. The initiative aims to motivate companies to invest heavily in the US by streamlining regulatory requirements, expediting the permitting process, coordinating efforts among federal and state agencies, enhancing access to national resources, and helping cut fab costs in the US by as much as 10 per cent.
The administration also launched investigations under Section 301 and Section 232 of the Trade Expansion Act targeting semiconductor imports and critical minerals essential for chip manufacturing.[8] This involved probes into imports of mature-node chips from China and critical mineral processing, aiming to reduce dependence on adversarial suppliers and strengthen domestic supply chains. On the domestic front, the administration facilitated historic private-sector investments, securing a landmark US$ 200 billion commitment from Micron Technology to expand
