tech
December 29, 2025
China is not catching US in chip race anytime soon
The United States and its allies, Taiwan, South Korea, Japan, and the Netherlands, are engaged in an existential battle for semiconductor supremacy. Chips are at the heart of the artificial intelligence revolution. Semiconductors enable the computation that powers data centers and the physical infrastructure required for AI.
TL;DR
- The US and allies are in an "existential battle" for semiconductor supremacy, crucial for AI.
- The US holds a major advantage over China due to access to advanced manufacturing machines like ASML's EUV systems.
- Taiwan Semiconductor Manufacturing Company is fabricating 2nm chips, while China's SMIC struggles with 5nm chips.
- Export controls prevent China from accessing ASML's most advanced equipment.
- China may have stolen trade secrets but won't be able to use them effectively until 2030 or later.
- The US leads in semiconductor design, with American engineers inventing semiconductors and the US industry commanding over 50% of global chip revenues.
- Nvidia, an American company, dominates the accelerated computing chip market, which China seeks to obtain through espionage.
- China lacks specialized human capital, decades of experience, and a culture of iterative learning required for cutting-edge chip design and manufacturing.
- China's domestic semiconductor industry faces efficiency and management challenges, with "zombie fabs" failing and wasting capital.
- Chinese President Xi Jinping's concerns about AI undermining his authority could lead to controls that hobble China's innovation.
- The US is expected to remain ahead of China in semiconductor technology and AI as long as it maintains commitment to free market capitalism and innovation.
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