In recent years a cold war of sorts between the U.S. and China has been ramping up over the one thing that makes modern life possible, chips. Also known as integrated circuits, IC’s, and microchips, chips serve as the foundation for our modern way of life. You can find them in cars, phones, and even toasters. With the rise of artificial intelligence, chips only grow more important in the global struggle for computing power. It is not an understatement to say that chips are THE most important commodity in the world right now.
Before we get back to the U.S. and China, we need to quickly understand the world’s chip ecosystem. Advanced chips are unsurprisingly incredibly complicated to design, manufacture, and assemble which has left only a few big companies able to compete and return a profit. The ecosystem is incredibly complicated but for the sake of simplicity we will focus on the major players:
ASML(Advanced Semiconductor Materials Lithography): ASML, a Dutch company, is the only company in the world capable of manufacturing extreme ultraviolet lithography (EUV) photolithography machines. EUV’s are required to fabricate the most advanced chips, making ASML an indispensable part of the chip supply chain.
Fun fact: ASML is currently Europe’s most valuable tech company with a valuation of $281 billion.
TSMC(Taiwan Semiconductor Manufacturing Company): TSMC is the world’s most powerful semiconductor company, with around 90% of the global market share of advanced chip manufacturing.
Nvidia/AMD: Gamers and PC enthusiasts will be the most familiar with these two GPU companies. In addition to their gaming enterprises, they are the two leading players in the AI hardware acceleration market (Nvidia is currently miles ahead of AMD though).
As the world’s premier economic heavyweights, both the U.S. and China recognize the importance of computing power and are accordingly investing heavily in chip advancements.
Due to purported national security concerns the U.S. has repeatedly attempted to stifle China’s burgeoning chip industry and cut it off from key suppliers like ASML, Nvidia, and TSMC. To sum up America’s approach we can look to U.S. Secretary of Commerce Gina Ramoindo who said at the Reagan Defense Forum: “We cannot let China get these chips. Period”. Whether or not you agree with America’s protectionist approach, its sanctions on China have prevented China from importing Nvidia chips and ASML EUV machines. This may keep China’s chip industry lagging behind the US's. It’s also possible that by restricting access to the world’s largest technological market (China), the U.S. may hurt its own interests. Only time can tell.
The U.S. also recently passed its CHIPS and Science act, which incentivizes domestic chip production and goes as far as partnering with companies like TSMC to create chip plants within the U.S, making the U.S. an even bigger part of the chip ecosystem.
Sanctions have caused a flurry of innovation in China, with Chinese companies like SMIC and Huawei now focused on catching up to western (and western-adjacent) rivals. If the U.S. continues its sanctions and enacts sanctions on TSMC, China may finally follow through on invading Taiwan. China has poured trillions into its domestic chip industry as well.
There’s a LOT more to this. Way more than I can fit here (or in a few books), but this was a brief overview. Try out the following sources to learn more.
Further reading on Nvidia’s AI ventures
Financial Times Documentary (very detailed)
- Vishal














