The 300 mm chips that will determine the Geopolitical Landscape

For most of the 20th century, oil was power. It moved armies, built economies, and shaped geopolitics. The countries that controlled it, controlled everything else. But today, a new resource has quietly taken oil’s place, a resource so small it fits on your fingertip, yet powerful enough to drive entire economies, armies, and innovations.

That resource is the semiconductor chip.

You’re likely holding one in your hand right now, or rather, you’re holding a device that couldn’t function without it. Whether it’s your phone, laptop, smart car, or the global network that connects them all, semiconductors are the invisible infrastructure of modern life. They process information, store memory, and transmit signals, forming the digital core of everything from social media algorithms to missile guidance systems.

At the heart of this global industry are advanced microchips, also called integrated circuits (ICs), that power today’s most complex technologies. AI models like ChatGPT and DeepSeek wouldn’t exist without Nvidia’s cutting-edge chips like the H100 and B200, which are capable of processing vast amounts of data in record time. These tiny 300 mm silicon wafers are the “brains” of artificial intelligence, enabling machines to learn, adapt, and even make decisions.

But the chip race is no longer just a tech story. It’s a story of power, influence, and survival.

In a world increasingly defined by AI, supercomputing, and automation, the ability to design, manufacture, and control microchips has become a crucial determinant of national security and global influence. From military defense systems to cybersecurity infrastructure, chips now sit at the center of both economic strength and geopolitical leverage.

Just as oil-rich nations once held sway over global affairs, countries that dominate chip production today hold a similar strategic advantage. And no country embodies this more than Taiwan.

Perched just off China’s southeastern coast, Taiwan is home to TSMC (Taiwan Semiconductor Manufacturing Company), the most important tech company you’ve likely never heard of. Founded in 1987 by Morris Chang, TSMC pioneered a revolutionary model: companies could design their own chips, while TSMC would handle the manufacturing. The model took off. Four decades later, TSMC now produces 90% of the world’s most advanced chips, including those used by Apple, Nvidia, AMD, and countless others.

This centralization of chipmaking power in one small island has ignited geopolitical tensions. As AI and military technologies become increasingly chip-dependent, the stakes of who controls Taiwan, and by extension, the global semiconductor supply, have never been higher. The U.S., China, and Europe are each scrambling to secure their own slice of silicon security.

When COVID-19 disrupted global supply chains, it revealed just how fragile the world’s dependency on Asia, and particularly Taiwan, had become. Car factories shut down, smartphones faced delivery delays, and tech giants lost billions. Apple, Ford, Renault, and many others were caught off guard by a supply crunch that brought entire industries to a standstill.

The microchip supply chain and The Race for Chip Self-Sufficiency

 

To understand why the microchip supply chain is uniquely fragile, we must understand how it operates. It is like a global chessboard, highly interdependent and vulnerable to geopolitical tensions.

Each stage of production is concentrated in different parts of the world, making it both efficient and delicate. It starts with raw materials, where China dominates the supply of rare earth elements, while Japan leads in producing high-quality silicon wafers. On the design side, U.S. firms like Nvidia, AMD, and Qualcomm develop high-performance processors, especially for AI applications.

However, the actual manufacturing of these advanced chips takes place mainly in Asia. TSMC in Taiwan and Samsung in South Korea produce the most cutting-edge semiconductors, particularly those used in AI, smartphones, and high-performance computing. These manufacturers depend heavily on specialized chip-making equipment from ASML in the Netherlands, which is currently the only company in the world capable of producing extreme ultraviolet (EUV) lithography machines, essential for fabricating chips at the 5nm scale and below.

Once manufactured, chips are sent for assembly and testing, largely in Taiwan, China, and Southeast Asia. From there, they are integrated into products by tech companies like Apple, Google, and Tesla, as well as by major car manufacturers. This global distribution of responsibilities creates a supply chain that is efficient, but increasingly seen as risky in times of geopolitical tension or disruption.

Taiwan’s role in this ecosystem is especially significant. Its dominance in chip manufacturing has made it a key player not just economically, but also strategically. TSMC produces about 90% of the world’s most advanced chips, something that has drawn attention amid rising tensions between China and the United States. Taiwan’s semiconductor leadership is widely seen as a buffer against potential conflict, as any disruption would affect the global tech economy. Still, China has made clear its interest in Taiwan, and many observers note that the island’s chip industry adds a layer of complexity to an already sensitive political issue.

In response to these risks, the United States has launched efforts to bring chip production back home. In 2022, it passed the CHIPS and Science Act, allocating $52 billion to domestic semiconductor manufacturing and research. That same year, it restricted the export of high-end AI chips to China, citing national security concerns. In 2023, the U.S. further tightened controls by pressuring ASML to limit the sale of its advanced machines to Chinese companies. TSMC, in turn, began building factories in Arizona and Ohio, expanding its production base beyond Taiwan.

China, meanwhile, is working to build its own chip-making capacity. In 2023, it announced a $143 billion investment plan to support domestic semiconductor development, alongside export restrictions on key minerals like gallium and germanium. Despite international sanctions, SMIC, China’s top chipmaker, succeeded in producing 7nm chips, and Huawei launched its own high-performance chip, the Kirin 9000S, in the same year.

Europe is also stepping up its efforts, seeking to reduce dependence on external suppliers. Through the European Chips Act, EU’s aim is to increase its share of global chip production from 10% to 20% by 2030, backed by €43 billion in public and private investment, and more broadly by €80 billion in related semiconductor R&D and infrastructure. Intel is building a €17 billion facility in Germany, while STMicroelectronics and GlobalFoundries are expanding operations in France and Italy. At the same time, the EU continues to take advantage of its unique strengths in equipment manufacturing through ASML, and in research through IMEC in Belgium.

Across the board, the focus has shifted toward greater self-reliance and supply chain resilience.

The Future Will Be Written in Chips

As the digital age deepens, computing power is becoming the new currency of global influence. Artificial intelligence is rapidly transforming industries, and the ability to access and utilize advanced semiconductor technology is becoming the dividing line between global leaders and laggards. Countries and companies with cutting-edge AI chips, capable of handling massive data processing and model training, will outpace those still relying on outdated infrastructure.

 

Powerful supercomputers are being used to develop next-generation drugs, forecast global climate events, design sustainable technologies, and even predict and prevent cyber threats. In this new AI-driven world, the country with the most computing power controls the future of knowledge, defense, and economic stability. Access to high-end chips is no longer a luxury but a strategic imperative.

 

The relentless pace of technological progress has pushed the semiconductor industry to pursue smaller, faster, and more energy-efficient chips. According to Moore’s Law, the observation that the number of transistors on a chip doubles approximately every two years, this miniaturization is at the heart of sustaining innovation. Industry leaders like IBM, Samsung, and TSMC are in a fierce race to develop 2nm and sub-1nm chips, which will dramatically enhance the power of AI systems, cloud computing, and machine learning applications.

 

But beyond traditional silicon chips, the industry is also exploring frontiers like quantum computing and neuromorphic chips, which mimic the structure and function of the human brain. These technologies promise a paradigm shift, enabling machines to process information in fundamentally new ways, handling uncertainty, context, and creativity more naturally. Quantum processors could crack problems currently unsolvable by classical computers, like protein folding simulations in medicine, and real-time optimization in logistics and energy systems.

 

Ultimately, the next wave of innovation, in AI, climate solutions, space exploration, and personalized healthcare, will be powered by these advanced chips. Control over their design and production will define who drives the future and who follows.

What’s in it for India

One of the world’s fastest-growing digital economies cannot afford to sit on the sidelines of the global semiconductor and AI race. While India has made strides in software development, IT services, and digital platforms, it still remains heavily dependent on imports for advanced semiconductor chips. This vulnerability threatens national security, economic growth, and technological sovereignty. If India wants to lead in AI, space exploration, green tech, and 5G/6G development, it must build a resilient and self-reliant semiconductor ecosystem.

 

India has already taken steps, such as launching the Semicon India Programme and offering incentives for chip design and fabrication, but much more is needed. The country must focus on attracting global chipmakers, investing in STEM education and R&D, and developing public-private partnerships to foster innovation. It must also integrate its chip strategy with its national AI mission, such that Indian startups, researchers, and industries have access to the computing power they need.

 

As global powers redraw the map of chip alliances, India has a strategic opportunity. Advocating its democratic values, skilled talent, and market scale, India can become a trusted alternative in the global semiconductor supply chain, but only if it moves quickly and strategically.

 

The future of India’s economic competitiveness, strategic autonomy, and digital leadership depends on how seriously it engages with the semiconductor and AI revolution. Chips are no longer just components; they’re national assets, and India must act accordingly.

About the Author: Reetuparna Vishwanath

An economist with a Masters in International Economics from the Geneva Graduate Institute, Switzerland. Currently pursruing her PhD at HEC Lussaine, Reetuparna is a member of IFPP's Global Advisory Council.