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

semiconductor exports by 2019. Over these years, the PRC’s response and strategy towards the US has been multifaceted. It comprises targeted sanctions and countermeasures, increasing semiconductor self-reliance, fostering regional tech alliances, and pushing for global adoption of its technological standards.

Reciprocal Restrictions
China has hit back with direct retaliation and strategic countermeasures to counter the US’s strategy. Since 2023, China has restricted the export of at least 16 minerals and related products.[18] Most recently, on 4 April, it added seven rare earths (samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium) to that list as part of its retaliation against US tariffs. In 2024, China moved to restrict exports of key materials to the United States, citing national security reasons. The ban covered gallium, germanium, antimony, and other critical minerals needed for producing semiconductors and batteries for electric vehicles. The new rules also added tighter scrutiny over how graphite shipments to the US are used.

Increasing Semiconductor Self-reliance 
China’s drive towards self-reliance in the semiconductor industry has accelerated dramatically in response to escalating US restrictions. China launched state-backed investments, such as the US$ 47.5 billion China Integrated Circuit Industry Investment Fund Phase III, in line with Xi Jinping’s drive to achieve self-sufficiency for China in semiconductors.[19] Backed by financing from six of China’s biggest state-owned lenders, such as Industrial and Commercial Bank of China (ICBC) and China Construction Bank, the fund highlights President Xi’s broader effort to cement the country’s role as a global technology power. The capital is directed not only into research and development, but also manufacturing and equipment production.

Similarly, Chinese firms like Huawei and Lisuan deliver breakthroughs once deemed impossible under sanctions. Huawei, for example, managed to develop a cutting-edge 7nm chip without relying on US equipment.[20] PRC has worked around the restrictions by tapping into SMIC’s 7nm manufacturing technology and using its design tools. Similarly, Lisuan is making waves with its G100 GPU, China’s first domestically designed 6nm graphics processor. It is expected to enter limited production by the end of 2025, with full-scale manufacturing planned for 2026. By 2025, China’s semiconductor self-sufficiency rate is expected to reach 50 per cent, with the government aiming for 100 per cent import substitution by 2030.

Fostering Regional Tech Alliances
China is also collaborating with global partners to establish its position as a tech giant. For instance, the Asia–Europe Third-Generation Semiconductor Science initiative is a collaborative effort to advance research and development