The Business Security Dilemma: responses to the US weaponization of semiconductors

Abstract The growing rivalry between the United States (US) and China has made the global semiconductor supply chain a central arena for economic statecraft, with US export controls restricting China’s access to advanced chips. This paper examines why some governments and semiconductor firms cooperate with these measures, while others resist. It argues that security alignment with the US is the primary factor driving cooperation, surpassing economic power or market interests. Through case studies of South Korea, Chinese Taiwan, Germany, and the Netherlands, the analysis demonstrates that governments with stronger security ties to the US –such as Chinese Taiwan and South Korea– show higher cooperation, while Germany and the Netherlands, with weaker security alignment, show lower adherence. The article challenges arguments that emphasize the role of high-value businesses within the dominant power or firms' indirect dependence on the targeted state as the main determinants of cooperation. Instead, by extending the concept of the security dilemma in alliance politics to corporations, the paper argues that security alignment is more decisive in shaping the outcomes of economic statecraft. In doing so, it introduces the Business Security Dilemma as a tool for understanding how firms respond to the pressures of great power competition.