New York, 9 September – The $500 billion semiconductor industry has become a key focus of US-China strategic competition, explains a new report on the geopolitics of semiconductors
from Eurasia Group.
This report, by analysts Paul Triolo
and Kevin Allison
, explains how the concentration of advanced semiconductor manufacturing in South Korea and Taiwan, combined with US dominance of key parts of the semiconductor supply chain, has created a major vulnerability for China's technology ambitions. It analyzes the potential implications of recent moves by the Trump administration to restrict shipments of semiconductors to Chinese technology company Huawei for the US, China, and Taiwan. It also explains how a new US industrial policy on semiconductors will help shape the industry well beyond November's election.
A strong reaction to recent US moves targeting Chinese companies' access to cutting-edge chips would roil markets, provide added impetus to US attempts to bring advanced semiconductor manufacturing to US shores, and throw industry supply chains into turmoil, accelerating the bifurcation of the US and Chinese tech ecosystems. For leading technology firms in China, such as Huawei, the search is on for an alternative semiconductor manufacturing ecosystem. China's advantages in this global competition will eventually produce breakthroughs, but the US will continue to hold key advantages and harbor a willingness to use punitive measures.
Some Key Findings from the report
- Semiconductors are a strategic vulnerability for China and its most important tech company, Huawei, which relies on cutting-edge manufacturing facilities in Taiwan to make the chips it needs to remain globally competitive.
- The Chinese technology sector is likely to remain dependent on access to foreign chips for the foreseeable future, despite massive government investment in chip development.
- US moves to restrict Huawei's access to cutting-edge chips have given Washington the upper hand in convincing key European allies and other major economies to ban or sharply restrict Huawei from their 5G rollouts.
- As the US presses ahead with stricter and broader controls over semiconductors, it will hasten the decoupling of the two countries' tech sectors while further spurring China's attempts to establish a separate R&D and production system.
Founded in 2016, Eurasia Group's Geo-technology practice helps clients navigate the complicated intersection of technology and geopolitics globally—from the political risks associated with emerging technologies like 5G and artificial intelligence, to global regulatory and technology policy developments.
For additional information or to request an interview with the report's authors, contact Gregory Roth, director of communications, at [email protected]
Eurasia Group is the world's leading global political risk research and consulting firm. By providing information and insight on how political developments move markets, we help clients anticipate and respond to instability and opportunities everywhere they invest or do business. Our expertise includes developed and developing countries in every region of the world, specific economic sectors, and the business and investment playing fields of the future. With our best-in-class advisory and consulting offerings and GZERO Media, the Eurasia Group umbrella provides the marketplace with a complete political risk solution. Headquartered in New York, we have offices in Washington DC, London, San Francisco, Brasilia, Sao Paulo, Singapore, and Tokyo, as well as on-the-ground experts and resources in more than a hundred countries. "Politics first” grounds our work: Politics is the lens through which we view the world, and we are committed to analysis that is free of political bias and the influence of private interests.