Few technologies are as vital to modern society as semiconductors—without them, most technological devices cannot function.[1] Consequently, any interruption to the semiconductor production process is guaranteed to create problems in critical industries.[2] The semiconductor shortage caused by COVID-19 forced automakers like Toyota and General Motors to suspend production for weeks and debilitated an otherwise strong automobile market.[3] The shortage similarly worried US defense strategists because semiconductors are necessary components of military hardware, and advanced semiconductors in particular are critical to developing cutting-edge weaponry.[4] Without a stable semiconductor supply, the defense industries of the US and many other nations are, like the automotive industry, subject to shutdown.[5]
Today, COVID is no serious threat to the semiconductor industry. Supply chains have stabilized, and production in semiconductor-dependent industries continues without issue. However, a new, more subtle threat is emerging—one in which semiconductors are treated as inseparable from national security.[6] This threat is the ensuing semiconductor rivalry between the United States and China, a contest for technological supremacy in the twenty-first century.[7] Its importance cannot not be understated, since rather than creating another semiconductor shortage the rivalry increases the likelihood of armed conflict between the US and China.[8] Preventing such a catastrophe could depend on mitigating this confrontation.[9]
The origins of this rivalry are simple. Emerging as America’s primary geopolitical rival, China realized that establishing a stable supply of semiconductors for consumer products and basic military hardware is essential to challenging American hegemony.[10] Similarly, it sought to procure advanced semiconductors that would allow it to develop high-end weaponry to match or surpass the American armed forces technologically.[11] Being far behind the US in semiconductor technology and manufacturing, China mobilized considerable resources toward closing the gap with the US.[12] But this objective encountered a significant obstacle: The US is allied with Taiwan, Japan, and the Netherlands—all critical links in the global semiconductor supply chain.[13] Taiwan alone produces 94% of the world’s advanced semiconductors, so China naturally worried that the US could cut off Chinese access to advanced semiconductors on a whim.[14]
China therefore discreetly moved to modernize its armed forces.[15] Relying on American semiconductor technology, it successfully developed hypersonic missiles capable of evading US ballistic missile defense systems.[16] Alarmed and lacking any comparable weapon, the US eventually “announced its intent to cripple China’s ability to produce, or even purchase, the highest-end chips” through considerable export controls.[17] Washington also convinced the Netherlands and Japan to implement similar restrictions.[18] China retaliated by enacting controls on materials used in producing chips, solar panels, and fiber optics.[19] In time, it could expand the scope of the semiconductor rivalry outside the defense periphery by restricting the export of materials used for making EV vehicles, a sector highly reliant on Chinese resources.[20]
The semiconductor rivalry arrives at a pivotal moment for modern society, as advanced semiconductors will be indispensable to expanding the frontier of artificial intelligence.[21] Worker productivity is expected to multiply dramatically as a result of AI, creating a significant incentive for countries to adopt AI systems en masse.[22] Advanced semiconductors will also play a greater role in national security as militaries integrate AI into defense systems.[23] Thus, one rival’s efforts to disrupt the other’s semiconductor supply will be increasingly viewed as a threat to national security and economic stability.[24] Suppose China perceives US influence over its semiconductor procurement as an unacceptable risk to national security. In that case, it may escalate by demanding that Taiwan cede its semiconductor industries to Chinese control.[25] Such a crisis could become the flashpoint for armed conflict between the US and China in the Taiwan Strait.[26]
Semiconductors are “at the heart of the global economy” today, as global productivity is inextricably linked to their use.[27] Disruptions to the semiconductor supply chain reverberate through countless vital public and private industries—most sensitive of all national defense.[28] By attacking each other’s ability to acquire semiconductors, the US and China play a dangerous game at a time when tensions between them already run high.[29] American policymakers should tread carefully, since as a matter of national security, China is certain to evade export controls and reduce its reliance on other nations for semiconductors.[30]
[1] Sihao Huang & Bill Drexel, China Goes on the Offensive in the Chip War, Foreign Affs. (Oct. 11, 2023), https://www.foreignaffairs.com/united-states/china-goes-offensive-chip-war; Ayvay Duggirala, Microchips: The Importanceand Shortage, Hadron (Feb. 1, 2023), https://sites.imsa.edu/hadron/2022/02/01/microchips-the-importance-and-shortage/.
[2] See Ian King et al., How a Chip Shortage Snarled Everything From Phones to Cars, Bloomberg (Mar. 28, 2021), https://www.bloomberg.com/graphics/2021-semiconductors-chips-shortage/; Chris Miller, Chip War: The Fight for the World’s Most Critical Technology xxiii (2022).
[3] Chris Miller, Chip War: The Fight for the World’s Most Critical Technology xxiii (2022).
[4] Alan Patterson, Experts: U.S. Military Chip Supply is Dangerously Low, EE Times (Jan. 6, 2023), https://www.eetimes.com/experts-u-s-military-chip-supply-is-dangerously-low/#:~:text=Global%20chip%20shortages%20have%20impeded,reliance%20on%20older%20chip%20architectures; Michael A. Peters, Semiconductors, Geopolitics, and Technological Rivalry: The US CHIPS & Science Act, 2022, 55:14 Educ. Phil. & Theory 1644, available at https://www.tandfonline.com/doi/epdf/10.1080/00131857.2022.2124914?needAccess=true.
[5] Bradley Martin, The National Security Implications of the Semiconductor Supply Chain, Supply Chain Q. (Sept. 27, 2023), https://www.supplychainquarterly.com/articles/8740-the-national-security-implications-of-the-semiconductor-supply-chain.
[6] See Huang & Drexel, supra note 1; Sebastian Moss, TSMC Chairman on Chinese Invasion of Taiwan: “Nobody can control TSMC by force”, Data Ctr. Dynamics (Aug. 4, 2022), https://www.datacenterdynamics.com/en/news/tsmc-chairman-on-chinese-invasion-of-taiwan-nobody-can-control-tsmc-by-force/.
[7] See Huang & Drexel, supra note 1.
[8] See id.
[9] See id.
[10] See Ming-Chin M. Chu, China’s Defence Semiconductor Industrial Base in An Age of Globalisation: Cross-Strait Dynamics and Regional Security Implications, J. Strategic Stud. 1-2, available at https://www.tandfonline.com/doi/epdf/10.1080/01402390.2023.2164852?needAccess=true.
[11] See Huang & Drexel, supra note 1.
[12] Chu, supra note 9, at 2.
[13] Alex W. Palmer, ‘An Act of War’: Inside America’s Silicon Blockade Against China, N.Y. Times (July 12, 2023), https://www.nytimes.com/2023/07/12/magazine/semiconductor-chips-us-china.html.
[14] See Martin, supra note 5.
[15] Ellen Nakashima & Gerry Shih, China Builds Advanced Weapons Systems Using American Chip Technology, Wash. Post (Apr. 29, 2021), https://www.washingtonpost.com/national-security/china-hypersonic-missiles-american-technology/2021/04/07/37a6b9be-96fd-11eb-b28d-bfa7bb5cb2a5_story.html.
[16] Id.; Chu, supra note 9, at 12.
[17] Alex W. Palmer, supra note 12; Sujai Shivakumar & Charles Wessner, Semiconductors and National Defense: What Are the Stakes?, Ctr. for Strategic & Int’l Stud. (June 8, 2022), https://www.csis.org/analysis/semiconductors-and-national-defense-what-are-stakes.
[18] Alex W. Palmer, supra note 12.
[19] Zeyi Yang, China Just Fought Back in the Semiconductor Exports War. Here’s what you need to know., MIT Tech. Rev. (July 10, 2023), https://www.technologyreview.com/2023/07/10/1076025/china-export-control-semiconductor-material/.
[20] Id.
[21] Huang & Drexel, supra note 1.
[22] Your Job is (Probably) Safe From Artificial Intelligence, Economist (May 7, 2023), https://www.economist.com/finance-and-economics/2023/05/07/your-job-is-probably-safe-from-artificial-intelligence.
[23] Huang & Drexel, supra note 1.
[24] Sarah B. Danzman & Emily Kilcrease, The Illusion of Controls, Foreign Affs. (Dec. 30, 2022), https://www.foreignaffairs.com/united-states/illusion-controls.
[25] See Martin, supra note 5.
[26] See id.
[27] Miller, supra note 3, at xxiii; Huang & Drexel, supra note 1.
[28] Ellen Nakashima & Gerry Shih, supra note 14.
[29] See id.
[30] Huang & Drexel, supra note 1.
