How chip security and supply chains reshape global power
Chips, China, and the Silicon Shield
The global semiconductor landscape is increasingly a battlefield where technology, economic security, and geopolitical power intersect. As advanced chips become the cornerstone of artificial intelligence, communications, and military hardware, the where and how chips are designed, manufactured, and shipped now decisively shape great-power competition. Recent developments highlight not only the centrality of the U.S.–Taiwan–China triangle but also the rising vulnerability of European supply chains and critical equipment providers.
Taiwan’s Semiconductor Dominance: A “Silicon Shield” and a Strategic Vulnerability
Taiwan continues to occupy a unique and precarious position as the world’s semiconductor foundry powerhouse, producing over 90% of the most advanced chips. This dominance has earned the island the nickname of a “silicon shield” — a natural deterrent against potential Chinese military aggression due to the global reliance on its chip manufacturing capabilities.
However, this status is double-edged. Experts warn that Taiwan’s semiconductor concentration is a single point of failure in global supply chains, raising alarms about what would happen if the island’s production were disrupted. Such concerns have intensified amid rising cross-Strait tensions and ongoing political uncertainty.
U.S. Export Controls and Supply Chain Scrutiny
In response to these risks, the U.S. has intensified its export controls targeting AI hardware destined for Chinese companies, especially those that depend on Taiwanese components. These measures aim to curb China’s technological advancements in AI and sensitive military technologies without directly confronting Taiwan militarily.
Key elements include:
- Restrictions on advanced chip technologies and manufacturing equipment that can be used to produce AI hardware.
- Scrutiny of supply chains to ensure that chips shipped to China do not incorporate restricted Taiwanese parts or U.S.-origin technologies.
- Encouragement of domestic chip production, with significant investments and incentives to expand U.S. semiconductor fabrication capabilities.
Big Tech’s Strategic Diversification: Apple and Beyond
Recognizing the geopolitical risks, major technology companies are diversifying their semiconductor supply chains:
- Apple has ramped up chip production in Texas, moving away from sole reliance on Taiwanese foundries.
- Other Big Tech firms are exploring manufacturing partnerships in South Korea, Japan, and the U.S. to mitigate disruption risks.
- This diversification reflects a broader industry trend to balance efficiency with security, ensuring continuity despite geopolitical uncertainties.
Taiwan’s Domestic Debate on Chip Legislation
Within Taiwan, policymakers and industry leaders are actively debating new legislation aimed at strengthening chip supply chain resilience and security. These discussions focus on:
- Protecting intellectual property and sensitive technologies from foreign espionage.
- Encouraging investment in homegrown semiconductor R&D and fabrication.
- Balancing openness to foreign investment with national security concerns.
The outcome of these debates will shape Taiwan’s semiconductor strategy in the coming years and influence its role in the global chip ecosystem.
China’s Expanding Leverage: Rare Earths and Political Maneuvers
China’s position as a dominant supplier of rare earth elements, essential for chip manufacturing and other high-tech industries, has become a powerful geopolitical lever. Recent political moves signal China’s willingness to use this resource dependency as a form of economic coercion:
- Heightened export restrictions on rare earths to certain countries.
- Diplomatic pressure on European and U.S. companies involved in semiconductor supply chains.
- Coordinated actions to influence global chip markets and technology flows.
New Front: China Targets ASML and European Supply Chains
Recent reports reveal that China has specifically targeted ASML, the Dutch company that produces the world’s most advanced photolithography machines essential for cutting-edge chip fabrication. This development signals a widening scope of chip-related geopolitical tensions beyond the traditional U.S.–Taiwan–China triangle:
- ASML’s equipment is a critical chokepoint in the semiconductor supply chain, with few global alternatives.
- China’s moves to cut off or restrict ASML’s access threaten Europe’s $300 billion tech industry and highlight the continent’s vulnerability.
- This escalation underscores the importance of securing equipment-level supply chains, not just raw materials or chip fabrication sites.
Implications and Outlook
The intertwining of chip technology and geopolitics is accelerating, with several key takeaways:
- Semiconductors are no longer just commercial products but strategic assets central to military and economic power.
- Taiwan’s semiconductor industry remains both a shield and a risk point, prompting urgent diversification and legislative action.
- The U.S. and its allies are increasingly coordinating export controls and supply chain security measures to contain China’s technological rise.
- China is expanding its influence through rare earth supply control and targeting critical equipment providers, adding new dimensions to the competition.
- Europe emerges as a new front in chip geopolitics, with vulnerabilities in key technology providers like ASML.
In this rapidly evolving environment, control over chip design, production, and distribution will be a defining factor in shaping global power structures for decades to come. Companies, governments, and alliances are racing to build resilient supply chains and technological sovereignty to navigate the complex interplay of innovation, security, and geopolitics.