Semiconductors are central components of both major defence systems and platforms, and many ubiquitous civilian technologies. They are critical in advancing technologies such as artificial intelligence (AI) and quantum computing. The United States, in particular, defends its need for leadership and control over microelectronic production and exports that ensure that the American economy is well supplied, and U.S. military supremacy is maintained. While the United States is currently the dominant power in semiconductors, China is making major advances. In response, the U.S. government is taking measures against China and pressuring allies that are home to significant microelectronic companies to do likewise. The Netherlands has responded with export control policies that, while not explicitly singling out any country, are widely understood to be aimed at China. Canada and other U.S. allies could be next. Most states acknowledge that today’s complex global supply chains make national sovereignty in semiconductor production infeasible for them. The new goal is greater stability among the key producers. While allies—particularly Canada—are likely to follow the U.S. lead, the continued competition between the Great Powers contributes to the further destabilizing of the global order and requires diplomatic responses.
Speaking at the 2023 Aspen Security Forum, China’s Ambassador to Washington, Xie Feng, warned that if the United States continued to threaten China’s chip sector with escalating scrutiny and tighter restrictions on semiconductor exports, China would be forced to respond. Xie stated, “China, definitely ... will make our response. But definitely it’s not our hope to have a tit-for-tat. We don’t want ... a trade war, technological war, we want to say goodbye to the Iron Curtain as well as the Silicon Curtain.”
A year later such sentiments appear to have fallen by the wayside as the struggle between the United States and China over key technologies intensifies. Meanwhile, U.S. strategists continue to call for expanded government intervention to ensure that the United States maintains a competitive position in the development and deployment of next-generation technologies. American national industrial policy currently employs leveraging subsidies, tax credits, and other tools to foster domestic production and mitigate the risk of overdependence on foreign technologies. For some experts, such as Evan Ellis, a research professor at the U.S. Army War College, the outcome of the United States–China tech competition raises an “ethno-civilisational question.”
Other experts have also claimed that neutrality will not be possible and eventually countries will need to choose between Beijing and Washington. Thus, it is important for Canada and other middle powers to consider their positions and anticipate diplomatic solutions. Most states, even with greater investment in the semiconductor sector, remain beholden to the few states capable of producing the necessary chips and the even fewer states designing the means of manufacturing them. Thus, aligning with either side could negatively affect a particular country’s continued access to relevant resources and knowledge.
U.S. allies will certainly support American actions to some extent, for both strategic and ideological reasons. Their challenge lies in balancing this support with their own technological development. Ultimately, it is in the interest of most states if U.S.-Chinese competition in semiconductors avoids further escalatory measures. Whether the middle powers are going to be able to navigate the technological divide, the impacts of which will be felt beyond military technologies and on civilian products, remains to be seen.