Enforcing US Hegemony or Accelerating its Decline? The US-China Technological Confrontation and the Changing Geoeconomics of Global Semiconductor Value Chains.

This paper examines the US-China technological confrontation, which came to a head with the Trump Administration’s efforts to stymie the global expansion of Chinese technology companies, such as Huawei, ZTE, and DJI. The most notable aspect of US policies—including export controls, the ‘unreliable entity list’ designation, and (in the case of Huawei) political pressure on allied nations to block Chinese FDI and sales—have purportedly facilitated the bifurcation of global technology value chains and supply chains along Sino-centric and US-centric poles. This paper tests this assumption by examining the recent history and trajectory of the global semiconductor industry—the industry at the heart of the US-China technological confrontation. This paper posits that rather than a bifurcation, we are more likely to see a significant diffusion of extant, US-centric technological value chains. This disruption has begun to manifest in three ways: 1) a greater nationalization and regionalization of global semiconductor supply chains; 2) the resurgence of integrated device manufacturing—referring to practice of firms designing and manufacturing integrated circuit devices in-house rather than outsourcing them to highly-efficient fabs like the Taiwan Semiconductor Manufacturing Corporation (TSMC); and 3) the diffusion of market power more generally along national and corporate lines. Evidence with respect to the first disruption will be comprised of a stylized examination of news reports, trade journals (such as IAM-Media), and business surveys. With respect to the second, this paper will review annual reports of a select number of large IC design firms, including Huawei, Apple, AMD, Intel, and Samsung to obtain a broad picture of the changing nature of investment in the global semiconductor industry and the impact of US export controls, Entity List designations, and Executive Orders aimed at Chinese technology firms on the industry. With respect to the third, this paper will review patent data (downloaded from the Orbis Intellectual Property Database) of leading IC firms, including granted and pending patent applications, to project corporate strategy and the direction of global value chains going forward.