Cyberspace is a new battlefield for countries vying for global supremacy. At the center of this competition is the semiconductor industry, the cornerstone of modern technology. It is essential for computing, artificial intelligence (AI), and advanced military systems. Understanding the dynamics of semiconductor production and supply chains provides important insight into how cyber deterrence strategies are developed and executed.
Semiconductors: The backbone of cyber power
Semiconductors enable computing power that powers everything from commercial applications to military operations. Advanced chips are critical to AI, autonomous systems, and national security infrastructure. Controlling semiconductor production has become a central element of cyber deterrence as countries compete for technological superiority.
Semiconductor manufacturing is highly complex and dependent on global supply chains. No country is self-sufficient in this area. The manufacturing process requires rare metals, precision tooling, and expertise across Japan, the Netherlands, South Korea, Taiwan, and the United States. Companies such as TSMC (Taiwan), Intel (USA), and Samsung (South Korea) dominate this field, with TSMC leading in advanced chip production. Dutch company Advanced Semiconductor Materials Lithography (ASML) has a monopoly on the production of extreme ultraviolet (EUV) lithography equipment, which is essential for manufacturing cutting-edge chips.
Strategic importance of semiconductors
Semiconductors are not just commercial products; they are strategic resources that nations use to exert power in cyberspace. The United States has long recognized the importance of having an advantage in chip technology, and aims to maintain at least a two-generation lead over adversaries like China. This lead is not only about technological superiority, but also about cyber deterrence.
Cyber deterrence relies on the ability to defend, retaliate, or disrupt an adversary’s cyber capabilities. Advanced semiconductors provide the computing power needed for AI-driven cybersecurity systems, intelligence gathering, and offensive cyber operations. For example, autonomous systems in modern warfare require advanced chips to function effectively. If a nation does not have access to such technology, its cyber capabilities are severely weakened.
China’s vulnerabilities and responses
Despite being the second-largest economy and a global manufacturing powerhouse, China has surprising weaknesses in its semiconductor supply chain. The company spends more on importing chips than oil and is heavily dependent on foreign suppliers, including geopolitical rivals. This dependency creates significant vulnerabilities in our cyber and AI ambitions.
Recognizing this weakness, China has launched a major effort to achieve self-sufficiency in semiconductor production. However, the barriers to entry are high. Manufacturing cutting-edge chips requires material purity levels of 99.99999 percent, and even minor defects can render the chip unusable. The complexity of global supply chains further complicates China’s efforts. For example, ASML’s EUV lithography equipment, which is essential for advanced chip manufacturing, is legally restricted from being sold to China under a U.S.-led export control agreement.
China’s strategy focuses on targeting supply chain pain points while expanding domestic production of less advanced chips. If successful, this effort would significantly shift the balance of power in cyberspace and allow China to compete more effectively in AI and cyber operations. But for now, dependence on foreign technology remains a major deterrent.
US Strategy: Strengthening Deterrence through Domination
As part of its cyber deterrence strategy, the United States has taken aggressive steps to secure its superiority in semiconductor technology. Legislation such as the CHIPS and Science Act of 2022 provides billions of dollars in subsidies to boost domestic chip production. The United States is also working to integrate government, industry, and academia to address challenges in human resources, education, and research and development.
The U.S. approach to cyber deterrence is twofold. First, they seek to maintain their technological edge by investing in cutting-edge chips while ensuring a reliable supply of legacy nodes for critical systems. Second, actively restrict attackers’ access to critical technologies. For example, since 2018, exports of EUV lithography equipment to China have been banned, a move aimed at slowing China’s progress in advanced semiconductor manufacturing.
This strategy is consistent with a broader geopolitical framework in which supply chain management is a tool for exerting influence. By leveraging its advantages in semiconductors, the United States can deny adversaries the tools they need to compete with AI-driven cyber capabilities, thereby strengthening its cyber deterrence posture.
The role of AI and advanced chips in cyber deterrence
AI is fundamental to cyber operations, from defensive systems that identify and mitigate threats to attack tools that exploit vulnerabilities in hostile networks. AI capabilities are directly tied to the availability of advanced chips, which enable higher computational efficiency and data processing.
Semiconductors are a key enabler in the AI arms race. Countries with access to advanced chips can train larger models, process more data, and deploy more sophisticated algorithms. Conversely, those without access are at a major disadvantage. This move highlights the importance of protecting the semiconductor supply chain as part of a national cyber deterrence strategy.
The future of geopolitics and cyber deterrence
The geopolitical implications of semiconductor dominance extend beyond cyber operations. Control of the chip supply chain has implications for alliances, trade policy, and even the balance of power in global governance. Governments are increasingly forcing countries and businesses to choose sides, creating a polarized situation.
Although the United States and its allies currently hold a strong position, the competition is far from over. The risk of a semiconductor arms race continues to rise as China invests heavily in self-sufficiency. The future of cyber deterrence depends on countries’ ability to secure supply chains, innovate chip technology, and adapt to the rapidly evolving AI and cybersecurity landscape.
conclusion
Semiconductors are not just technological wonders, they are strategic weapons in the cyber realm. As nations vie for supremacy, chip production and supply chain management will play a vital role in shaping cyber deterrence strategies. While the United States aims to maintain its dominance through technological superiority and an integrated approach, efforts to overcome China’s vulnerabilities will redefine the world order. In this high-stakes competition, the invisible hand of the market is guided by the visible hand of government to ensure that semiconductors remain the center of cyberpower.
Dr. Adam Harris is a career cyber expert who works as a practicing cyber expert and teaches at the university level. The views expressed are his own.
