Semiconductors Minilateral Agreement: Preventing Friendly Fire

Chips have become one of the most valuable and strategic commodities. At the same time, the chip industry and its global supply chains are increasingly subject to trade and technology wars, sanctions, export controls and investment restrictions amid growing geo-economic tensions. These unilateral measures and conflicts can lead to friendly fire, i.e., the extraterritorial sanctioning of companies from third, often like-minded, countries. In other words, given the complexity of supply chains and interdependencies, many countries and their companies, potentially partners and allies, could be caught in the middle of a conflict. Such situations can lead to supply chain disruptions and, even worse, to reduced trust, even among allies. The effectiveness of joint sanctions or restrictions and the avoidance of supply chain disruptions for key technologies therefore depend on the cooperation of likeminded countries, which should intensify their cooperation and consider a permanent platform for it based on a sector-specific minilateral agreement for the semiconductor industry that should include common rules, including standard setting, as well as tools for monitoring, information sharing and supply chain resilience planning, ultimately leading to a sectoral mini-regime. The agreement should also provide a platform for dialogue and cooperation on export controls and subsidies for the semiconductor industry. As such, it has the potential to become an effective driver of regulation and policy coordination and a step against the gradual fragmentation of the industry.