Semiconductors are the backbone of modern technology, powering everything from smartphones and electric vehicles to satellites and military equipment. Despite the United States’ dominance in chip design through firms like NVIDIA, Intel, and AMD, the country trails in advanced manufacturing. Most notably, nearly 90% of the world’s leading-edge semiconductors originate not from Silicon Valley, but from the factories of TSMC in Taiwan. This transpacific reliance has ignited concerns in Washington over national security and economic independence, prompting a re-examination of supply chains in an era where Artificial Intelligence and data dominate the future.
The technical prowess behind Taiwan’s semiconductor industry is unrivaled. Companies there, especially TSMC, produce chips as tiny as 3 nanometers—capabilities that push the limits of physics and underpin the world’s fastest devices. South Korea, anchored by Samsung, also contributes significantly. However, Taiwan’s tightly integrated supply networks and advanced manufacturing equipment ensure its status as an irreplaceable node in technology’s global web. Accordingly, the U.S. cannot readily disentangle itself from these overseas suppliers, as most of its groundbreaking designs come to life across the Pacific.
Meanwhile, China, recognizing the strategic stakes, has poured resources into closing the gap. Billions have gone into nurturing domestic champions like SMIC, but U.S. export bans have erected steep barriers. Output from China’s foundries lags as they struggle with older equipment—unable to mass-produce chips below 14 nanometers at competitive yields. Domestic giants, including HiSilicon and YMTC, post impressive results in chip design and memory innovation, but production tooling remains a major hurdle; Chinese lithography is decades behind ASML, the Dutch leader. Analysts estimate that even as SMIC reaches towards 5–7 nanometer nodes, China overall is still about five years behind the likes of TSMC, with no quick route to parity unless access to foreign equipment shifts considerably.
This global race isn’t only a contest of technology, but a reflection of national ambition and economic strategy. America leads in innovative design, Taiwan reigns in manufacturing, and China races, fueled by industrial policy, to absorb, adapt, and eventually surpass. With Artificial Intelligence, smart devices, and autonomous tech poised to define the next industrial epoch, semiconductors are more than parts—they’re the currency of future power and the battleground of technological sovereignty.
