As US-China competition grows, emerging military technologies could shift the balance of power. Underlining this rivalry are semiconductors, without which neither side can truly master modern warfare. Whoever secures the most resilient supply chain will prevail in this race to become the next superpower.

The global semiconductor industry is geographically concentrated in East Asia, with Taiwan, South Korea, and Japan leading in manufacturing, although the United States and the EU also hold significant stakes. Amid China’s continuous pressure on Taiwan and a trade war that is reshaping the industry, the United States is pushing to boost domestic production and kick the ladder out from under China. Yet these efforts actually risk boosting China’s standing instead of damaging it.

How Chips Power Emerging Military Technologies

All modern military systems run on semiconductors, but military AI and quantum computing make chips crucial for US-China competition. While AI acts as a combat multiplier, allowing for faster data processing, quantum computing could further improve military AI, offering disruptive benefits across networks, communications, sensing and imaging. Their combination could enable breakthroughs in defense-related computational capabilities, making military forces more informatized and intelligentized–exactly the Chinese military objective set for 2027.

The growth of military AI and quantum computing increases the need for specialized semiconductors. While most weapon systems are built on legacy chips that offer reliability in harsh battlefield conditions, both AI and quantum computing require cutting-edge semiconductors. While the Pentagon has adopted the “More than Moore” approach to make AI chips better suited for military needs, making military quantum computing reliable under harsh conditions remains a challenge.

Three elements are critical. First, temperature: so far, quantum computing chips have operated at most at room temperature, too high for military purposes. Second, silicon: the backbone material for higher-performing semiconductors offers startups and industry leaders the opportunity to produce quantum chips at scale, making this technology soon accessible. Third, radiation-hardened design for military processors: as of now, highly specialized requirements prevent a “one-size-fits-all” manufacturing model for these chips, whose manufacturing instead relies on narrow, low-volume supply chains involving specialized materials, extensive defense-specific testing, and certification.

Despite market need, the limited comparative demand and precarious production of military-grade chips have alienated large-scale commercial manufacturers. Consequently, military semiconductor supply chains rely on fewer suppliers, making them less substitutable and more vulnerable to external shocks. This fragility has prompted US defense companies to push for onshoring production. While this move reflects President Trump’s intention to boost US dominance, tariffs against East Asian countries have increased AI and quantum semiconductor supply chain vulnerabilities and weakened Taiwan’s strongest deterrent–the “Silicon Shield”–against Chinese invasion. Eventually, these efforts could catalyze the industry’s collapse, benefiting China over the United States.

Semiconductors: The Heart of US-China Military Competition

While US production accounts for only 12% of the world’s chips–none of which are the most advanced–Taiwan makes more than half of the world’s semiconductors, and about 90% of the most advanced. Well-established industrial districts give Taiwan a competitive advantage, including specialized labor pools, supplier linkages, knowledge spillovers, and concentrations of tacit knowledge. An invasion by China would cause catastrophic supply chain disruptions, including shortages in key global industries, destruction of physical capital, and the loss of talent and technology flows.

However, shifting the industry away from Taiwan is highly unlikely. Because the semiconductor industry is static, physical infrastructure is key, with about 66% of manufacturing facilities in East Asia across 292 sites. This established cluster makes the physical transfer of semiconductor infrastructure equivalent to bringing Silicon Valley’s capabilities across the ocean.

As a result, East Asia is at the center of US-China geostrategic competition, sparking a tense tit-for-tat of sanctions and restrictions. To shield itself from volatile chip and tariff wars, China has been pursuing AI self-sufficiency. This quest has even prompted China to recommend domestic semiconductors for state-run AI data centers, despite NVIDIA’s plan to ship H200 chips to Chinese clients in early 2026 after the United States reversed a Biden-era ban.

The acceleration of Beijing’s domestic supply chains has also affected quantum development. Intended to slow China’s quantum advancements, the 2024 US export controls have pushed Beijing to invest in domestic supply chains to avoid further disruptions, increasing unprecedented specialized infrastructure, effectively shielded from foreign interference. Worse, experts have warned that the Trump administration’s 2025 tariffs risk crippling the United States’ quantum leadership, potentially pushing China to turbocharge AI’s warfare applications.

China’s defense sector stands as the greatest beneficiary of supply chain self-reliance. The tariff war accelerated China’s development of sovereign AI defense supply chains, with Beijing leveraging its “civil-military fusion” strategy to increase AI integration into its military logistics. Furthermore, China has stated the intent to achieve “national reunification” with Taiwan by 2049. China’s 2025 military exercises amid rising allied support for Taiwan signal imminent danger. China’s military rehearsed an encirclement of Taiwan in 2023, with US intelligence sources estimating a potential invasion by 2027.

China’s progress poses a twofold threat to the United States. On one hand, Beijing’s supply chain self-reliance and exclusion from global supply chains could turn Taiwan’s Silicon Shield into an incentive for military invasion rather than a deterrent. On the other hand, the legacy chips powering US military systems are a supply chain vulnerability. Although Taiwan still produces the majority of both legacy and cutting-edge chips, China is rapidly advancing as the world’s powerhouse for legacy semiconductors. An invasion of Taiwan would not only endanger the primary source of legacy chips for the US military but also turn China into the most reliable backup.

Resilient Semiconductor Supply Chains: The Silver Bullet

Instead of onshoring and imposing strict ally restrictions, building supply chain resilience requires spreading knowledge and capabilities across producing countries to prevent bottlenecks and create regional resilience without dismantling established industrial districts. Over time, these countries will be poised to specialize within the industry, diversifying semiconductor production and innovation.

While China and the United States are advancing quantum computing, they are not in direct technical competition. As development continues, subfields will emerge, and entirely new supply chains will be built to accommodate these specializations. Instead of moving away from East Asian-based semiconductor manufacturing, encouraging trade and talent flows with existing partners will empower the trade bloc as a defense and economic measure against China, as complete domestic replication and dominance of each emerging specialization is highly unlikely. Development and investment on US soil can continue with trade, avoiding excessive reliance on foreign suppliers without stifling innovation or risking supply chain collapse. Investing in more specialized semiconductor industrial clusters across different regions can protect the overarching supply chain and drive innovation without long-term repercussions from trying to quickly move the entire industry.

The US Department of State’s recent initiative, Pax Silica, aims to build a new economic consensus on AI and supply chain security. While Taiwan is notably absent from the cohort, it reportedly held a seat during the discussions on manufacturing and semiconductors. Additionally, the most recent US-Taiwan trade agreement allows Taiwan’s technology companies to invest at least $250 billion in US production capacity in exchange for reduced tariffs. These crucial developments further intertwine the United States and East Asian countries in advanced chip development.

Ultimately, the prevailing power will not come down to who has the most advanced byproduct of AI and quantum computing. Rather, whoever has access to several clusters of the most specialized technologies will determine resilience and primacy. But more work is needed to ensure highly resilient semiconductor supply chains sustain the current pace of AI and quantum military technologies amid geopolitical tensions. Previous efforts to stall Beijing’s AI and quantum developments have encouraged a booming Chinese domestic supply chain. Now is the time to double down on US’s inherent strengths: allies capable of isolating China from advanced chip development.

The views expressed in this article belong to the author(s) alone and do not necessarily reflect those of Geopoliticalmonitor.com.