Harvard Study: Global semiconductor industry faces complex challenges amid geopolitical tensions and rising AI demand

Semiconductors, specifically integrated circuits with transistors, resistors, and capacitors, are the backbone of modern computing, enabling data processing, storage, and transmission. Their production involves a complex supply chain, from advanced software and chip design to silicon wafer production, transistor fabrication, and final packaging for use in devices like smartphones and vehicles. This intricate ecosystem relies on specialized firms and significant investments in research and development.
No single country controls the entire semiconductor supply chain. The United States leads in chip design, tools, and equipment but lags in manufacturing and fabrication. China excels in economic resources, assembly, testing, and manufacturing, with a strong position in mining and refining materials, though it struggles with equipment and specialized materials. Taiwan dominates in manufacturing, fabrication, and specialized materials but depends on foreign equipment. Japan and South Korea are strong in human capital, chip design, and manufacturing but rely heavily on the Chinese market. These four countries United States, Japan, Taiwan, and South Korea hold critical chokepoints in advanced manufacturing, chip design, and equipment due to high costs and technical barriers.

Geopolitical tensions, particularly between the U.S. and China, have heightened the strategic impo...