U.S.-China Tech Rivalry: The Geopolitics of Semiconductors

semiconductor manufacturing and R&D in states like Idaho, New York and Virginia.[9]

The Trump administration also laid the groundwork for potential revisions to the CHIPS and Science Act to secure the domestic supply chain of semiconductors.[10] The administration would use tariffs instead of giving billions in subsidies to companies like Taiwan’s TSMC to build factories in the US. Similarly, firms that accepted US government funding but continued to expand operations overseas could face penalties or be required to return part of the funds. These policy shifts were designed to enhance US self-sufficiency in chip production and lessen dependence on international supply chains.

Reducing China’s dominance in the global supply chain
Since Trump’s first term, multiple restrictions have been placed on China with the intention of weakening China’s position in the worldwide supply chain. Four layers of supply chain restrictions can be identified as part of the US’s semiconductor strategy.[11]

·  The first layer includes restrictions on the direct sale of semiconductors made with US technology. The two leading Chinese semiconductor companies, ZTE (in 2018) and Huawei (in 2019), were added to the Commerce Department’s Entity List, which banned these companies from buying US exports without a license. Later, the US added eight more Chinese tech firms to the Entity List, including HiSilicon, a Huawei-affiliated entity.

·  As part of the second layer of its semiconductor strategy, the United States targeted restrictions on Semiconductor Manufacturing Equipment (SME), highly specialized machinery essential for fabrication plants to produce chips. Washington pressured the Dutch government to block ASML from receiving export licenses that would have allowed it to sell its most cutting‑edge tools to Chinese manufacturers. In December 2020, China’s leading chip-making company, Semiconductor Manufacturing International Corporation (SMIC), was added to the US Entity List.

·  The third layer involved cutting off Chinese access to many key components used to make SME. In October 2022, the Biden administration introduced a new export controls policy on artificial intelligence (AI) and semiconductor technologies to China. The policy prohibited leading US AI chipmakers, such as Nvidia and AMD, from selling their advanced chips used in AI and supercomputing to China.[12]

·  The fourth layer prevents US citizens and residents from working with Chinese semiconductor companies.[13] Chinese design companies are also being prevented from accessing fabrication plants running American tools, domestic fabs