The United States controls much of the industry's core intellectual property, electronic design automation (EDA) software through companies such as Cadence, Synopsys, and Siemens EDA, and produces leading-edge AI processors through companies including NVIDIA, AMD, Intel, and Qualcomm.
Japan dominates the supply of highly specialised semiconductor chemicals and advanced manufacturing equipment through firms such as Tokyo Electron, SCREEN Holdings, JSR, Shin-Etsu Chemical, and SUMCO. The Netherlands is home to ASML, the only company in the world capable of manufacturing Extreme Ultraviolet (EUV) lithography machines, which are essential for producing the most advanced computer chips.
Rather than simply banning exports of finished chips, Western policy has focused on restricting China's access to the sophisticated machinery and technology required to manufacture them.
Without access to ASML's EUV systems and other critical manufacturing equipment and software, Chinese chipmakers face significant barriers in producing the world's most advanced semiconductors domestically.
Ukraine's role is often misunderstood. Before Russia's full-scale invasion in 2022, Ukraine supplied an estimated 50–70% of the world's semiconductor-grade neon gas through companies such as Ingas in Mariupol and Cryoin in Odesa. Neon is an ultra-pure gas used in the high-powered excimer lasers employed during chip manufacturing. The disruption to global neon supplies was not the result of a political agreement targeting China, but rather a direct consequence of the war, which damaged or halted production facilities.
The resulting supply shock affected semiconductor manufacturers worldwide, including those in the United States, Europe, Taiwan and China.
Together, the United States, Japan and the Netherlands effectively control the technologies, equipment and materials at the heart of advanced semiconductor manufacturing, creating a tightly protected supply chain that has become one of the West's most significant strategic advantages in the global technology competition with China.
Furthermore, this containment strategy is reinforced by control over critical manufacturing nodes and regional security alliances. While the US, Japan, and the Netherlands dominate software and machinery, Taiwan's TSMC remains the actual foundry hub, producing over ninety percent of the world's most advanced processors. Western strategies rely heavily on securing Taiwan's stability while funding domestic fabrication plants through massive subsidies like the American CHIPS Act and European initiatives. These multi billion dollar funding packages aim to rebuild local manufacturing loops, reducing vulnerability to a potential Pacific conflict. Meanwhile, China is aggressively pouring state capital into its domestic "Big Fund" to bypass Western patents, master mature legacy nodes, and pioneer advanced packaging techniques to bridge the lithography gap. This geopolitical race accelerates technological decoupling, fracturing the global electronics ecosystem into two distinct spheres.
The semiconductor industry has become the modern equivalent of controlling the world's oil supply. Rather than tanks or missiles, today's geopolitical power increasingly depends on who controls the tools to manufacture advanced computer chips. Until China can replicate the technologies dominated by the United States, Japan and the Netherlands, the West retains one of its strongest strategic advantages.
Steven is an entrepreneur and an ex RNZN diver who likes travelling, renovating houses, Swiss Watches, history, chocolate art and art deco.
Japan dominates the supply of highly specialised semiconductor chemicals and advanced manufacturing equipment through firms such as Tokyo Electron, SCREEN Holdings, JSR, Shin-Etsu Chemical, and SUMCO. The Netherlands is home to ASML, the only company in the world capable of manufacturing Extreme Ultraviolet (EUV) lithography machines, which are essential for producing the most advanced computer chips.
Rather than simply banning exports of finished chips, Western policy has focused on restricting China's access to the sophisticated machinery and technology required to manufacture them.
Without access to ASML's EUV systems and other critical manufacturing equipment and software, Chinese chipmakers face significant barriers in producing the world's most advanced semiconductors domestically.
Ukraine's role is often misunderstood. Before Russia's full-scale invasion in 2022, Ukraine supplied an estimated 50–70% of the world's semiconductor-grade neon gas through companies such as Ingas in Mariupol and Cryoin in Odesa. Neon is an ultra-pure gas used in the high-powered excimer lasers employed during chip manufacturing. The disruption to global neon supplies was not the result of a political agreement targeting China, but rather a direct consequence of the war, which damaged or halted production facilities.
The resulting supply shock affected semiconductor manufacturers worldwide, including those in the United States, Europe, Taiwan and China.
Together, the United States, Japan and the Netherlands effectively control the technologies, equipment and materials at the heart of advanced semiconductor manufacturing, creating a tightly protected supply chain that has become one of the West's most significant strategic advantages in the global technology competition with China.
Furthermore, this containment strategy is reinforced by control over critical manufacturing nodes and regional security alliances. While the US, Japan, and the Netherlands dominate software and machinery, Taiwan's TSMC remains the actual foundry hub, producing over ninety percent of the world's most advanced processors. Western strategies rely heavily on securing Taiwan's stability while funding domestic fabrication plants through massive subsidies like the American CHIPS Act and European initiatives. These multi billion dollar funding packages aim to rebuild local manufacturing loops, reducing vulnerability to a potential Pacific conflict. Meanwhile, China is aggressively pouring state capital into its domestic "Big Fund" to bypass Western patents, master mature legacy nodes, and pioneer advanced packaging techniques to bridge the lithography gap. This geopolitical race accelerates technological decoupling, fracturing the global electronics ecosystem into two distinct spheres.
The semiconductor industry has become the modern equivalent of controlling the world's oil supply. Rather than tanks or missiles, today's geopolitical power increasingly depends on who controls the tools to manufacture advanced computer chips. Until China can replicate the technologies dominated by the United States, Japan and the Netherlands, the West retains one of its strongest strategic advantages.
Steven is an entrepreneur and an ex RNZN diver who likes travelling, renovating houses, Swiss Watches, history, chocolate art and art deco.
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