Strategic implications of the US-China semiconductor rivalry

Abstract The ongoing trade war between China and the United States has had a far-reaching impact on a global scale. This rivalry has been most obvious in the semiconductor industry. The two nations have found themselves in a tense geopolitical situation where any economic attack by either side would affect all parties involved. This paper aims to explore the origins of this conflict and highlight the key actions taken by each country, as well as the consequences of those actions. Additionally, it highlights the areas of interdependence between China and the US (i.e., American high-tech chips and Chinese rare earth materials). The study utilizes the theory of weaponizing independence and game theory’s Prisoner’s Dilemma to conclude that while both China and the US have suffered negative consequences due to this conflict, China's latest technological advancements in the 7nm chip and their supply of rare earth materials have given them a stronger hand in the game.