Nate Picarsic & Emily de La Bruyère
The “Chip War” remains a critical domain in U.S.-China competition. This was clearly the case during the Biden administration, which made semiconductor investment the focus of its marquee legislation. And the emphasis on semiconductors – and competition with China therein – remains under the Trump administration; the field is front and center for the Commerce Department’s newly announced United States Investment Accelerator.
Still, despite this consistent prioritization, Washington risks heading the wrong direction in the chip war. Washington’s framing of the semiconductor competition misinterprets China’s positioning. In particular, the U.S. risks ignoring the upstream foundations on which all integrated circuits (ICs) are built, and China’s growing stranglehold over that foundation.
Beijing’s industrial, scientific, and technological policy prioritizes the semiconductor sector. And Beijing operationalizes this prioritization according to a practiced and well-documented playbook: Beijing backs companies with State investment and subsidies, directly funds research and development, and leverages international ties to acquire foreign technology and human capital. This playbook has already allowed China to catch up to international leaders in mature nodes of the semiconductor value chain and in the less high-tech, but nonetheless critical, realms of packaging and testing IC products.
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