Circularity of Semiconductor Chip Value Chains: Advancing AI Sustainability Amid Geopolitical Tensions

Semiconductor chips are the foundational hardware driving the capabilities of artificial intelligence (AI) systems. This paper explores the potential of circular economy strategies to address key challenges in semiconductor chip value chains, including environmental impacts, resource constraints, and geopolitical risks. The study fills a gap in existing literature by focusing on an industry that remains largely underexplored in circular economy research. The key research questions the paper explores are: 1. How can circular economy practices transform the semiconductor value chain to reduce environmental impact and improve resource security? 2. How can these circular practices strengthen the value chain against geopolitical risks and supply chain disruptions?Using a value chain approach and complex systems perspective, informed by a narrative literature review of academic and grey literature, the paper examines how circular practices across five key stages of the semiconductor value chain can mitigate environmental pressures, reduce dependency on critical raw materials like silicon and gallium, and enhance supply chain resilience against geopolitical disruptions. Existing initiatives by leading companies such as TSMC, ASML, and Intel are reviewed, alongside emerging technological innovations in semiconductor chip materials and manufacturing processes. The paper concludes by identifying critical future research questions and providing actionable insights for policymakers, industry and researchers.