The United States is increasingly leveraging its de facto control over the globalized semiconductor supply chain to punish its geopolitical rivals. Countries are scrambling to boost their domestic semiconductor-manufacturing capabilities, but doing so is proving to be an impossible task because key technologies are geographically dispersed and incredibly hard to master.
Chip-based sanctions have already had enormous economic impacts—especially for Chinese companies. Chip-based sanctions could also become a powerful deterrent against military conflict.
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"The US is considering restricting the flow of semiconductors into Russia to deter Russian President Vladimir Putin from invading Ukraine. The move would prevent the Russian military and much of the nation's economy from advancing technologically."
An influential policy paper in US military circles argues that Taiwan should threaten to destroy its semiconductor foundries if the government of China moves to take physical control of the island. The scholars argue that Taiwan's issuing this threat could deter the government of China from making such a move, because the loss of the foundries' output would do catastrophic damage to the Chinese economy.
China's growing efforts to achieve self-reliance in semiconductor manufacturing are likely to fail, according to semiconductor-industry experts. Despite some recent advances in semiconductor-manufacturing innovation, China's domestic foundries are still four generations behind the state of the art in semiconductor manufacturing. And China may have no way to catch up.
Intel intends to build two semiconductor-fabrication facilities near Columbus, Ohio, with the goal of expanding to eight facilities, which would make the site the largest semiconductor foundry in the world. The investment has ties to emerging efforts by the US government to increase the semiconductor-manufacturing base of the United States, although many promised subsidies have not yet emerged.