The intricate dependencies woven into the digital technology value chain have made it a central theater of geopolitical competition. Nations are deploying industrial policies, subsidies, and regulations as active levers to reshape the global landscape. This strategic intervention is clearest in the race to re-shore and strengthen semiconductor manufacturing.
The United States: CHIPS Act and Industrial Policy
Legislative Framework
The CHIPS and Science Act of 2022 represents the most significant U.S. industrial policy initiative in the semiconductor sector's history. The legislation authorized $52.7 billion in incentives, with $39 billion targeted at boosting domestic chip manufacturing and R&D.
Major Funding Recipients
- Intel: $19.5 billion in grants and loans, plus a 10% equity stake for the U.S. government
- TSMC: $6.6 billion in grants for Arizona fabs producing 4nm and 3nm chips
- Micron: Over $6 billion for memory chip fabs in New York and Idaho
- Texas Instruments: $4.6 billion in grants and loans
- Samsung: $6.4 billion for Texas fab expansion
💰 U.S. CHIPS Act Funding Allocation
European Union: Chips Act and Critical Raw Materials
EU Chips Act
The EU is implementing its own strategy with the EU Chips Act, which aims to boost Europe's share of global chip manufacturing to 20% by 2030 (up from 9% in 2023). The act mobilizes €43 billion in public and private investment.
Critical Raw Materials Act
The EU's Critical Raw Materials Act seeks to have 40% of the bloc's annual rare earth processing occur within the EU by 2030, reducing reliance on China.
China: Made in China 2025 and Self-Sufficiency
Strategic Goals
China is pursuing a classic industrial policy under its "Made in China 2025" strategy, which explicitly targets dominance in advanced manufacturing, including semiconductors. The government provides massive subsidies and support to domestic champions like SMIC.
Investment Scale
China has invested over $150 billion in semiconductor development since 2014 through:
- National Integrated Circuit Industry Investment Fund: Two phases totaling $47 billion
- Provincial and municipal subsidies: Additional $100+ billion
- Tax incentives: 10-year tax holidays for advanced chip manufacturers
Export Controls as Retaliation
China has demonstrated willingness to weaponize its supply chain strengths through export controls:
- 2025 Gallium/Germanium Controls: Restrictions on dual-use materials critical for semiconductors
- Rare Earth Export Quotas: Tightened controls on medium and heavy REEs
The Bifurcation of Global Technology
The result of these competing strategies is a bifurcation of the global technology ecosystem, where economic efficiency is increasingly subordinated to strategic imperatives of security and sovereignty. This creates:
- Parallel Supply Chains: Western and Chinese ecosystems with limited overlap
- Technology Decoupling: Divergent standards and architectures
- Reduced Efficiency: Duplication of R&D and manufacturing capacity
- Higher Costs: Loss of economies of scale and specialization
🎯 Key Takeaways
- ✓U.S. CHIPS Act ($52.7B) aims to increase domestic capacity from 10% to 14% by 2032, with Intel ($19.5B), TSMC ($6.6B), Samsung ($6.4B) as major recipients
- ✓EU mobilizes €43B to reach 20% global capacity by 2030, plus Critical Raw Materials Act targeting 40% rare earth processing within EU
- ✓China invested $150B+ since 2014 targeting 70% self-sufficiency, retaliating with export controls on gallium, germanium, and rare earths
- ✓Emerging bifurcation creates parallel Western and Chinese supply chains, prioritizing strategic autonomy over economic efficiency