The Indispensable Role of Chips in U.S.-China Relations

The semiconductor industry is caught in the crossfire of the escalating US-China technology war, with both countries imposing restrictions and punitive measures. While the US aims to reduce reliance on China by offering incentives for chipmakers to build new operations domestically, the industry's close ties with China and its status as a major market for chips pose challenges. China accounts for roughly a third of global semiconductor sales, and even chips manufactured in the US are often sent to China for assembly and testing. The Biden administration plans to invest heavily in American semiconductor manufacturing and is considering further curbs on chip exports to China. However, any changes to the global semiconductor market will unfold gradually as new facilities take years to construct.