The trade war between the United States and China has found its most decisive battlefield in semiconductors. These tiny components, which govern everything from a smartphone to a missile, have become the epicenter of a dispute that transcends economics to touch the fibers of national security and technological sovereignty. While Washington tightens export restrictions on advanced chips, Beijing accelerates investments in local manufacturing, in a race that reshapes the map of the global industry.
In 2025, global investment in semiconductor manufacturing exceeded $200 billion, according to the Semiconductor Industry Association, led by the United States, China, and Europe.
The new technological siege
The latest measures by the US administration have banned the sale of advanced lithography equipment to Chinese companies, cutting off access to the technology needed to produce chips smaller than 7 nanometers. China's response has been swift: it has announced a $150 billion investment plan to develop its own supply chain, from design to packaging. But the technological gap remains enormous: Chinese manufacturers still depend on Dutch and Japanese machines to make the most sophisticated chips.
Taiwan, with TSMC as its crown jewel, finds itself in the eye of the storm. The island produces more than 60% of the world's advanced chips, and its stability is vital to the global economy. However, fear of a Chinese invasion has led TSMC to diversify its production, building new factories in Arizona, Germany, and Japan. These plants, which will begin operations between 2026 and 2028, aim to reduce the geographic concentration of production but also face challenges of cost and skilled labor.
Europe and Latin America: new players?
The European Union has launched its own chips act, with €43 billion in subsidies to attract manufacturers and double its global market share by 2030. Companies like Intel and STMicroelectronics have already announced investments in Germany, France, and Italy. Meanwhile, Latin America is beginning to appear on the radar: Costa Rica, with its skilled workforce and political stability, has attracted Intel to expand its design center, and Brazil is exploring agreements with Asian companies to set up assembly plants.
But the race is not just about manufacturing chips. It is also about controlling critical materials: gallium, germanium, and rare earths, essential for production, are dominated by China. Beijing has restricted their export, pressuring the West to seek alternative sources in Australia, the United States, and Africa. Dependence on these materials adds an extra layer of vulnerability to the global supply chain.
What are nanometers in chips?
Nanometers (nm) measure the size of transistors on a chip. The smaller the nanometer, the more transistors fit in the same space, resulting in higher performance and lower energy consumption. Chips of 7 nm or less are considered advanced and are used in artificial intelligence, smartphones, and military equipment.
Impact on the global economy
The chip shortage that hit the automotive and electronics industry between 2020 and 2023 is behind us, but the risk of new disruptions persists. Trade restrictions and the concentration of production in a few countries mean that any geopolitical conflict can paralyze entire sectors. The prices of advanced chips have risen by 20% in the last year, and delivery times have lengthened. For tech companies, uncertainty is the new normal.
Artificial intelligence, with its voracious demand for specialized chips (GPUs and TPUs), adds pressure. Companies like NVIDIA have seen their revenues soar, but they depend on TSMC to manufacture their designs. Any disruption in Taiwan could halt the advance of AI globally. That is why governments consider chip production a matter of national security, not just market.
What does this mean for the world?
The semiconductor dispute is redefining global alliances. Countries that were once mere consumers now seek to become producers, and supply chains are fragmenting into rival technological blocs. For the average citizen, this translates into more expensive electronics, lower device availability, and a growing dependence on geopolitical decisions beyond their control. Technological sovereignty has become the currency of the 21st century, and whoever controls the chips will control the future.
The path to a more resilient and diversified supply chain will be long and costly. But the lesson is clear: in a world where technology is power, relying on a single supplier or country is a vulnerability no government can afford.