Chip Wars: Geopolitics of Semiconductors

How the US and China compete over semiconductors through export controls and subsidies, and how this creates opportunities and risks for India.

Semiconductors are at the centre of geopolitical competition, especially between the United States and China.

US export controls

In October 2022, the US imposed sweeping export controls restricting China’s access to:

Advanced chips, especially for AI.
Chipmaking equipment for advanced nodes.
US technology and talent in advanced chipmaking.

Allies like the Netherlands and Japan also restricted exports of advanced equipment.

China’s response

China invested heavily to build its own chip industry and expanded production of mature-node chips, raising concerns about oversupply in those markets.

Subsidy race

The US CHIPS Act (2022) offered around 52 billion dollars for chip manufacturing and research.
The EU Chips Act (2023) and programmes in Japan and South Korea.
India’s Semiconductor Mission.

Taiwan risk

Taiwan’s central role creates global worry about supply disruptions if tensions rise in the region.

Opportunities for India

Companies seeking “China+1” and trusted partners.
Partnerships: India joined initiatives with the US, Japan and others on semiconductor supply chains, such as the iCET framework with the US.

Risks for India

Competition from subsidised Chinese mature-node chips.
Dependence on foreign technology and equipment.

The restricted machine

Export controls prevent Chinese fabs from buying the most advanced lithography machines. Chinese firms focus on older technology, while global companies look for other locations, including India, for new investments.

Thinking chips are just a business issue

Chips are central to US-China rivalry, export controls and national security.

Key takeaways

The US imposed sweeping chip export controls on China from October 2022.
China expanded mature-node production in response.
The US, EU and others launched large chip subsidy programmes.
India sees opportunities in China+1 but faces competition and dependence risks.