SECURITY AND SUPREMACY: AN EXAMINATION OF THE US-CHINA TECHNOLOGICAL RIVALRY IN THE SEMICONDUCTOR INDUSTRY

Abstract

The US-China competition in the semiconductor industry represents a strategic rivalry that stops short of direct conflict. This competition is particularly intense because semiconductors are a critical strategic commodity, underpinning advanced commercial and military technologies that enhance national power. Due to the oligopolistic nature of the semiconductor supply chain, both the US and China aspire to dominate this sector while diminishing the other’s influence, leading to heightened competition within the industry. Drawing on data from the World Intellectual Property Organisation (WIPO) and the World Trade Organisation (WTO) spanning 2010 to 2022, this article examines the US-China semiconductor rivalry through the lenses of innovation leadership and supply chain security. In terms of innovation, the US holds a clear advantage over China, although China is making gradual progress. While the semiconductor export market shares of the US and China were comparable until 2013, China overtook the US in 2014, with the gap continuing to widen. However, this growth has been accompanied by a significant trade deficit in semiconductors, underscoring China’s heavy dependence on foreign sources to sustain its manufacturing sector. China’s pursuit of global technological leadership and its alleged unfair trade practices pose a challenge to US national interests, further intensifying the competition. In response, both countries have implemented various industrial and foreign policies aimed at strengthening their respective positions in the semiconductor supply chain while undermining each other’s advantages.