The US-China chip war is over: who actually won?

01The history of US chip export controls

The semiconductor industry is the aggregate of companies engaged in the design and fabrication of semiconductors and semiconductor devices, such as transistors and integrated circuits. Its roots can be traced to the invention of the transistor by Shockley, Brattain, and Bardeen at Bell Labs in 1948. Over decades, the industry globalized, with fabrication moving to East Asia while design remained concentrated in the United States. This interdependence was taken for granted until the US government began systematically restricting China's access to advanced chip technology starting in 2019.

The export control campaign escalated through a series of increasingly stringent measures. In October 2022, the Bureau of Industry and Security (BIS) imposed sweeping restrictions on the export of advanced computing chips and chip-making equipment to China, targeting both the chips themselves and the lithography tools needed to manufacture them. Further restrictions in 2023 and 2024 closed loopholes, expanded the list of restricted entities, and pressured allies — particularly the Netherlands and Japan — to align their export controls with US policy. The controls specifically targeted chips used for AI training and advanced military applications.

02China's self-sufficiency efforts

China responded to export controls with a massive push for semiconductor self-sufficiency. The Chinese government committed over $150 billion through the National Integrated Circuit Industry Investment Fund, commonly known as the "Big Fund," across multiple funding rounds. SMIC, China's largest foundry, advanced its manufacturing capabilities but remains generations behind TSMC and Samsung in process node technology. As of 2025, SMIC reportedly achieved 7nm production, but at low yields and using older DUV lithography equipment stockpiled before export controls took effect.

Huawei's release of the Mate 60 Pro smartphone in 2023, powered by a domestically produced 7nm chip, was hailed in Chinese state media as evidence that US sanctions had failed. However, industry analysts noted that the chip relied on existing equipment and that scaling production to competitive yields for mass market products remained a significant challenge. China's domestic EUV lithography development lags far behind ASML, the Dutch company that holds a monopoly on EUV systems. Without EUV, China cannot produce chips at the 5nm and 3nm nodes that define the cutting edge.

03The impact on global semiconductor supply chains

The decoupling of US and Chinese semiconductor ecosystems has fragmented what was once a unified global supply chain. Companies are now forced to maintain separate product lines — one for the Chinese market using older technology, and one for the rest of the world using the latest advances. This duplication increases costs and reduces economies of scale. The supply chain has also become more resilient in some respects, as multiple countries invest in domestic capacity, but more fragile in others, as the loss of Chinese customers reduces revenue for equipment makers like ASML, Lam Research, and Applied Materials.

The CHIPS and Science Act, signed into law by President Biden on August 9, 2022, authorizes roughly $280 billion in new funding to boost domestic research and manufacturing of semiconductors in the United States, appropriating $52.7 billion directly. The act includes $39 billion in subsidies for chip manufacturing on US soil along with 25% investment tax credits. TSMC, Samsung, Intel, and Micron have all committed to building new fabs in the US, though construction timelines have slipped and costs have exceeded initial projections.

04Which companies benefited and which lost

The chip war created clear winners and losers. Nvidia, the dominant designer of AI accelerators, initially faced revenue losses from restrictions on selling its most advanced chips to China, but adapted by creating modified versions (the H800 and A800) that complied with export rules. When the US tightened the rules further in 2023, even those chips were banned, costing Nvidia an estimated $5 billion in annual China revenue. However, surging global demand for AI chips more than compensated, with Nvidia's market capitalization exceeding $3 trillion in 2024.

ASML, the sole producer of EUV lithography equipment, was caught between US pressure and Dutch sovereignty. The Dutch government restricted ASML from selling its most advanced systems to China, cutting off a major revenue stream. SMIC and other Chinese foundries lost access to the equipment needed to advance beyond 7nm. Intel, which had fallen behind TSMC and Samsung in manufacturing technology, received CHIPS Act funding to rebuild its foundry business but faces an uncertain path to competitiveness. On the winning side, companies in the defense and legacy chip segments saw increased demand as Western governments prioritized supply chain security.

05The role of TSMC and Taiwan

Taiwan Semiconductor Manufacturing Company Limited is a Taiwanese multinational semiconductor contract manufacturing and design company headquartered in Hsinchu Science Park. It is one of the world's largest companies by market capitalization and holds a commanding majority in the semiconductor foundry market, accounting for approximately 70% of the global market share. As the leading dedicated contract chipmaker, TSMC serves as the main supplier for Nvidia, Apple, Broadcom, and Qualcomm. This concentration of advanced chip production on a single island has been described as the most dangerous chokepoint in the global economy.

The geopolitical risk of a potential Chinese invasion or blockade of Taiwan has driven unprecedented investment in geographic diversification. TSMC is building fabs in Arizona (USA), Kumamoto (Japan), and Dresden (Germany), supported by government subsidies from each country. However, these facilities will produce chips at older process nodes and smaller volumes than Taiwan's flagship fabs. The Arizona project, originally announced in 2020, has faced repeated delays, labor disputes, and cost overruns. The reality is that Taiwan's ecosystem of suppliers, engineers, and infrastructure cannot be replicated quickly, and the world's dependence on Taiwanese chips remains a critical vulnerability.

06Next-generation chip technology competition

The competition for next-generation chip technology extends beyond shrinking transistors. TSMC and Samsung are racing to 2nm and angstrom-era nodes, while Intel's "five nodes in four years" plan aims to regain process leadership by 2025-2026. Advanced packaging — stacking chips vertically and connecting them at high density — has become as important as transistor scaling, with TSMC's CoWoS packaging in critical shortage for AI accelerators. China is investing heavily in alternative architectures, including chiplet designs that could partially circumvent lithography restrictions.

Beyond silicon, the competition includes emerging technologies. Photonic computing, neuromorphic chips, and quantum processors represent potential paradigm shifts. China has invested heavily in quantum computing research, while the US leads in venture-funded startups pursuing novel architectures. The next phase of the chip competition may be less about who can build the smallest transistor and more about who can commercialize a fundamentally new computing paradigm first.

07Geopolitical implications of chip independence

The chip war has accelerated a broader trend toward technological sovereignty — the idea that nations must control their own critical technologies. The US, EU, Japan, South Korea, and India have all launched semiconductor industrial policies, committing hundreds of billions in subsidies. This represents a historic shift from the free-trade consensus that governed the semiconductor industry for decades. The CHIPS Act marked the first time the US government directly subsidized chip manufacturing since the industry's origins.

The long-term implications are still unfolding. A fragmented semiconductor market could slow innovation by reducing the cross-border collaboration that drove the industry's progress. Higher chip prices could ripple through the entire economy, affecting everything from smartphones to automobiles to military systems. For China, the chip war has demonstrated that technological dependence can be weaponized, reinforcing the strategic imperative of self-sufficiency even as the costs mount. The question of who "won" the chip war depends on the metric: the US maintained its grip on design and AI chips, China gained limited manufacturing autonomy at older nodes, and Taiwan's strategic importance only increased.