Hello! Welcome back to our course.
In our last lesson, we examined the broad economic conflict of the US-China trade war. We saw how tariffs were used as a weapon and how they led to a reconfiguration—but not a true decoupling—of global supply chains, often resulting in a "China + 1" strategy where underlying dependence on Chinese manufacturing persists.
Today, we sharpen our focus from the general economic battlefield to the most critical strategic high ground in the entire US-China rivalry: technology. Specifically, we'll dive into the "chip war." As someone with a background in computer engineering, you're already intimately familiar with the function of semiconductors as the building blocks of all modern computing. This lesson will connect that technical understanding to the world of geopolitics, showing how these tiny silicon wafers have become central to national power.
Our learning outcome is to: Explain the strategic importance of semiconductors and analyze the 'chip war' as a key front in US-China tech competition.
We will explore:
- Why semiconductors are considered the "oil of the 21st century."
- The highly concentrated and vulnerable global supply chain for chips.
- The core strategies of the US (containment) and China (self-sufficiency) in this technological contest.
1. The "New Oil": Why Semiconductors are Strategic
Semiconductors are more than just components; they are the bedrock of the modern world. They power everything from your smartphone and the servers running your code to advanced weapons systems and the data centers training the next generation of AI. This dual-use nature—critical for both the commercial economy and national security—is what makes them a primary arena for geopolitical competition.
To understand this centrality, let's hear from Chris Miller, the author of the seminal book Chip War.
Chip War 2.0: The Global Battle for Semiconductor Supremacy│Chris Miller (The Author of “Chip War")
In this talk, Chris Miller argues that to understand the modern world, you must understand semiconductors. He explains their critical role in powering artificial intelligence, which in turn drives economic and military advantage.
First, watch the introduction from 00:00 to 03:41 to grasp the link between chips, computing power, and AI. Then, watch from 29:18 to 33:41, where he explicitly connects AI to military and intelligence applications. Notice how he frames the competition as a technological 'arms race'.
As Miller explains, both Washington and Beijing believe that leadership in AI is fundamental to future national power. Since AI capability is directly tied to the amount of computing power you can access, and computing power depends on the most advanced semiconductors, control over these chips becomes a matter of paramount national security.
2. The Global Supply Chain: A Network of Chokepoints
The power of semiconductors comes not just from their function, but from the unique geography of their production. The process is incredibly complex and has become highly specialized, creating a global value chain with critical chokepoints. No single country controls the entire process.
This specialization creates extreme interdependencies and vulnerabilities. Let's examine the two most significant chokepoints.
Chokepoint 1: Fabrication in Taiwan
The most advanced chips—those with the smallest, most powerful transistors—are overwhelmingly manufactured by a single company: Taiwan Semiconductor Manufacturing Company (TSMC).
The race for semiconductor supremacy | FT Film
This segment from a Financial Times documentary details TSMC's dominant position and explains why its location in Taiwan, a major geopolitical flashpoint, represents a massive risk to the global economy and to US national security.
Watch from 13:36 to 16:45. Pay attention to the statistics cited about TSMC's market share in advanced chips and the discussion of what a conflict over Taiwan would mean for global supply chains.
TSMC's production of over 90% of the world's most advanced logic chips makes it arguably the most strategically important company in the world. Its location creates what many call Taiwan's "silicon shield"—the idea that its importance to the global economy deters a Chinese invasion. At the same time, it represents a single point of failure that worries policymakers in both Beijing and Washington.
Chokepoint 2: Manufacturing Equipment from the Netherlands
To manufacture these cutting-edge chips, you need unbelievably complex machinery. The most critical tool is for Extreme Ultraviolet (EUV) lithography, which uses light to etch patterns onto silicon wafers. There is only one company in the world that can make these machines: ASML, based in the Netherlands.
Chip War 2.0: The Global Battle for Semiconductor Supremacy│Chris Miller (The Author of “Chip War")
Let's return to Chris Miller's talk, where he provides a vivid description of the complexity of EUV machines and ASML's absolute monopoly.
Watch from 23:32 to 27:00. This segment explains why EUV technology is a critical bottleneck and why replicating it is nearly impossible, highlighting the mind-boggling science involved.
ASML's monopoly gives the United States and its allies immense leverage. Since ASML's machines contain a significant amount of US-origin technology, Washington can use its export control laws to prevent ASML from selling these crucial tools to China.
3. The Chip War: US Containment vs. Chinese Self-Sufficiency
Understanding these chokepoints is key to analyzing the "chip war." It's a strategic contest defined by two opposing goals.
China's Goal: Achieve Self-Sufficiency
China is the world's largest consumer of semiconductors, but it manufactures very few of the advanced chips it needs.
Chip War 2.0: The Global Battle for Semiconductor Supremacy│Chris Miller (The Author of “Chip War")
This reliance on foreign technology is a profound strategic vulnerability for Beijing. Chris Miller explains the scale of this dependency and the motivations behind China's massive push for self-reliance.
Watch from 19:10 to 23:32. Note the comparison between China's spending on imported chips and imported oil. This highlights the economic and national security drivers behind industrial policies like 'Made in China 2025'.
From Beijing's perspective, relying on geopolitical rivals for the economy's lifeblood is untenable. This has led to a state-directed industrial policy to pour hundreds of billions of dollars into building a domestic semiconductor industry, aiming to break free from foreign dependence.
US Goal: Maintain the Chokepoint
The US strategy is a direct response to China's ambition. Realizing that advanced manufacturing is China's key weakness, Washington has adopted a strategy of technology denial. The goal is not just to compete, but to actively slow China's progress by cutting off its access to the critical technologies it cannot yet produce itself.
The two main pillars of this strategy are:
- Export Controls: The US has used tools like the Foreign Direct Product Rule to prevent companies like TSMC from manufacturing advanced chips for designated Chinese firms (most notably Huawei). It leverages US dominance in chip design software and other intellectual property to control what foreign companies can produce using that technology.
- Industrial Policy: The CHIPS and Science Act represents a major shift in US policy. It allocates over $52 billion in subsidies to incentivize companies like TSMC, Samsung, and Intel to build advanced fabrication plants ("fabs") on US soil. This is a direct attempt to "re-shore" manufacturing and reduce the vulnerability of relying on Taiwan.
4. Analyzing the Conflict Through an IR Lens
The "chip war" is a rich case study for applying the international relations theories we've discussed. A comprehensive honors thesis provides a useful framework for this analysis.
[PDF] The U.S.-China Chip War: Using International Relations Theories to ...
This paper, 'The U.S.-China Chip War: Using International Relations Theories to Explain the Reasons Behind Technological Decoupling,' systematically applies different theoretical perspectives to the conflict. Its analysis section provides a concise summary of how each theory helps explain the motivations of the US and China.
Please read the section titled 'ANALYSIS PART I: ASSESSMENT OF EACH PERSPECTIVE' (pages 64-71). As you read, focus on how the core concepts of each theory apply: Realism: How do concepts like national security, dual-use technology, geopolitics (Taiwan's location), and the balance of power explain the conflict? Liberalism: How has deep interdependence, which liberalism might predict would foster peace, become 'weaponized'? Identity (Constructivism): How does 'technonationalism'—linking technological leadership to national pride and identity—fuel the rivalry on both sides?
As the paper demonstrates, a purely realist lens focused on power and security is powerful but incomplete. The concept of "weaponized interdependence" shows the failure of liberal assumptions in this high-stakes competition. Furthermore, the constructivist idea of "technonationalism" helps explain the domestic political drive and sense of national destiny that fuels both the US and Chinese strategies. The conflict is not just about material power, but also about national identity and status.
Conclusion
The battle for semiconductor supremacy is far more than a commercial dispute; it is a central front in the great power competition between the United States and China.
Key Takeaways:
- Strategic Importance: Semiconductors are a foundational, dual-use technology essential for both economic prosperity (AI, 5G) and military power (smart weapons, surveillance), making them the strategic high ground of the 21st century.
- Vulnerable Supply Chain: The global semiconductor supply chain is highly specialized and geographically concentrated, creating critical chokepoints at advanced manufacturing (TSMC in Taiwan) and equipment (ASML in the Netherlands).
- Opposing Strategies: The "chip war" is defined by the US strategy of technology denial—using export controls to exploit chokepoints and slow China's advance—and China's strategy of self-sufficiency, a massive state-led effort to build a domestic industry and break its technological dependence.
- A Multi-faceted Conflict: The rivalry is best understood by combining IR theories: it is a realist struggle for power, a demonstration of liberalism's weaponized interdependence, and a constructivist clash of technonationalist identities.
Preview of the Next Lesson:
In this lesson, we introduced the US strategy of technology denial. In our next session, we will perform a deep dive into the specific tools of this strategy. We will analyze the US strategy of technology denial toward China through export controls, entity lists, and allied coordination, assessing their effectiveness and the challenges involved.