Semiconductors are the foundational technology of the 21st century — every AI model, smartphone, electric vehicle, and military system depends on chips. The geopolitical race to control chip manufacturing has become the most consequential technology competition since the Cold War’s nuclear and space races, with implications for every industry and every country.

The Current Manufacturing Landscape

TSMC (Taiwan Semiconductor Manufacturing Company): Manufactures approximately 90% of the world’s most advanced chips (sub-7nm). Sole manufacturer of Apple’s iPhone chips, NVIDIA’s AI GPUs, AMD’s processors, and Qualcomm’s mobile chips. Revenue: $87 billion (2024). TSMC’s position is arguably the single largest point of concentration risk in the global technology supply chain. Samsung Foundry: The only company besides TSMC capable of manufacturing at 3nm, but with significantly lower yields and smaller market share (~12% of advanced chips). Intel Foundry: Attempting an aggressive comeback from years of manufacturing delays. Intel 18A (1.8nm equivalent) is in production ramp and represents Intel’s best chance at regaining competitiveness. Intel has received $8.5 billion in CHIPS Act subsidies and is building new fabs in Ohio and Arizona. SMIC (China): China’s most advanced foundry, currently producing at 7nm (two generations behind TSMC). US export controls prevent SMIC from acquiring the latest EUV lithography equipment, limiting their ability to advance further.

The Geopolitical Dimension

The US CHIPS and Science Act ($52.7 billion in subsidies) and similar programs in the EU (European Chips Act, €43 billion), Japan ($13 billion), and India (Rs 76,000 crore semiconductor mission) represent the largest government interventions in technology manufacturing in decades. The strategic logic: dependence on Taiwan-based manufacturing creates vulnerability if China-Taiwan tensions escalate. The goal: diversify advanced chip manufacturing across the US, Europe, and allied nations. India’s play: not advanced chip manufacturing (which requires decades of ecosystem development) but semiconductor design, packaging, and testing — leveraging India’s existing strength in chip design (which employs 100,000+ engineers, primarily at companies like Qualcomm, Intel, AMD, and Texas Instruments’ Indian R&D centers).

Capacity, Costs, and the AI Chip Bottleneck

Building a leading-edge fab costs $20-30 billion and takes 4-5 years. TSMC’s Arizona fab (5nm/4nm) represents a $40 billion investment. Intel’s Ohio campus could exceed $100 billion across multiple phases. This capital intensity means only a handful of players can compete at the frontier. The AI boom has created a separate bottleneck: NVIDIA’s H100 and H200 GPUs, manufactured by TSMC, are sold out through 2025. AMD’s MI300 series and custom AI chips from Google (TPU), Amazon (Trainium), and Microsoft (Maia) all depend on TSMC or Samsung for fabrication. Whoever controls advanced packaging (CoWoS, which TSMC dominates) controls AI chip supply.

China’s response to export controls has been aggressive. SMIC reportedly produced 7nm chips using older DUV lithography in 2023 — a technical achievement that surprised analysts, though yields and volumes remain unclear. Huawei’s Mate 60 Pro smartphone uses a 7nm Kirin chip, likely from SMIC. The long-term question: can China build a self-sufficient chip industry without ASML’s EUV machines? Most experts say no — not for 3nm and below. But 7nm and 14nm chips still power the majority of applications, and China is investing $150+ billion in its semiconductor industry. The decoupling of US and Chinese chip ecosystems is accelerating.

For technology leaders and investors, the implications are clear: diversify supply chain exposure, monitor geopolitical developments in Taiwan and the South China Sea, and understand that chip manufacturing has become a national security priority. The companies that will thrive are those that can navigate multi-region sourcing, design for resilience, and participate in the subsidy-driven buildout of manufacturing capacity in the US and Europe. India’s semiconductor mission, while focused on design and packaging rather than leading-edge fabs, positions the country as a critical node in the global supply chain — a bet that could pay off as the industry diversifies.

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Further Reading

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