The stated goal of Janet Yellen’s travel to Beijing was economic diplomacy, which is the type of high-level interaction between the two biggest economies in the world that both parties occasionally stage to show that their relationship hasn’t completely collapsed. However, interest rates and trade deficits in the traditional sense were not the main topics of discussion when she arrived. The chip battle was at the top of the agenda, and Beijing had already set the tone the morning before she arrived by putting export limits on two minerals that U.S. officials said are crucial to the production of semiconductors. The timing was intentional. It was an obvious message. China was not in a conciliatory mood when it arrived at the table.
In just a few years, the US-China rivalry for advanced semiconductors has evolved from a specialized issue in technological policy circles to one that both governments now view as a major front in a larger struggle for strategic dominance in the twenty-first century. Chips are more than just parts of consumer gadgets.
Artificial intelligence, autonomous weapons, electronic warfare, hypersonic missile guidance systems, and the communications and surveillance infrastructure that underpins contemporary military might are all made possible by these technologies. The person who can manufacture the most sophisticated chips, as well as the person who controls access to the tools that enable those chips, will have the same leverage as those who used nuclear weapons or naval might in earlier generations of strategic conflict. The topography has shifted. The reasoning is well known.
| Category | Details |
|---|---|
| Topic | US-China Semiconductor / Chip War |
| Key US Official | Janet Yellen (US Treasury Secretary) |
| Key Chinese Leader | President Xi Jinping |
| US Core Concern | PLA military advancement via US chip technology |
| China’s Military Goal | “World class” military by 2049 (CCP centenary) |
| China’s Countermeasure | Export restrictions on minerals essential to chip production |
| US Countermeasure | Restrictions on advanced chip/equipment sales to China |
| Key Military Technology | Hypersonic missiles, AI, electronic warfare, autonomous systems |
| China’s AI Strength | Facial recognition and specific applications |
| China’s AI Weakness | Cannot yet produce most advanced semiconductors domestically |
| ASML Role | Dutch EUV machine export restrictions pressure from US |
| Reference Website | semiconductors.org |
Washington experiences anxiety on two levels that are mutually reinforcing. The first is simple: according to the U.S. Department of Defense, China’s People’s Liberation Army is aiming for next-generation combat capabilities at all levels of warfare, which are characterized by artificial intelligence and cutting-edge technology. By 2049, when the Chinese Communist Party celebrates its centennial, President Xi Jinping has mandated that the PLA develop into a top-tier armed force. Autonomous weapons,
AI-enabled decision systems, and the processors that power them are necessary to achieve that goal. The second concern is the mechanism: despite substantial investment, China’s local semiconductor sector is still unable to manufacture the most sophisticated processors needed for these applications. In order to obtain what domestic manufacture is unable to provide, Chinese businesses and, consequently, the PLA, have been depending on imports. Cutting off that supply chain before the gap closes is the U.S. plan.
China’s export limitations on vital minerals, such as germanium, gallium, and related compounds, are a response to a series of more stringent regulations that both sides have been developing for a number of years. China has no reason to deplete its mineral resources only to be prevented from pursuing technological advancement, according to the Global Times, Beijing’s official media newspaper.
This framing presents the chip limits as a reaction to a number of American export restrictions and equipment limitations that have been building since the end of the Trump administration and have escalated under Biden, rather than as a first step. The mineral restrictions serve as a reminder that the supply chain is bidirectional, that China controls substantial amounts of the inputs used in American chip production, and that the interdependence that both countries have been attempting to unravel was never as clearly separable as the export control frameworks assumed.
Despite neither being Chinese or American, ASML, a Dutch company that manufactures the only devices able to produce the most sophisticated chips, is in the center of this conflict. Because EUV is the only technology needed to produce sub-7nm chips, which are the category most relevant to advanced AI and military applications, the United States’ pressure on the Netherlands has resulted in restrictions on selling ASML’s EUV lithography machines to Chinese customers. This is a particularly significant intervention. With significant government financing and technological expertise focused on the issue, China has been working for years to create homegrown alternatives.
The majority of independent observers believe that it will take decades rather than years to replicate what ASML has developed over thirty years, with thousands of specialized suppliers supplying components throughout the entire stack. The question that elevates this above a commercial disagreement is whether China can close that gap before the military and economic ramifications become significant.
Regardless of what the diplomats agree upon in meeting rooms, it’s difficult to ignore the fact that the diplomatic engagements—the Yellen visits, the ministerial phone calls, the carefully crafted joint statements—occur concurrently with a cycle of restrictions and counter-restrictions that seems to have its own momentum. The chips continue to progress. The limitations continue to grow. Export control lists continue to include the minerals. It seems as though the competition is setting the pace and the formal diplomatic channel is running on different tracks when both procedures are happening at the same time.
