Recently, the conversation around semiconductor policy has focused on export controls and tariffs. However, blocking access to chips and critical inputs alone will not allow the United States to secure ongoing leadership in advanced semiconductors. To create a long-term advantage, the United States should:
Advanced semiconductors are increasingly valuable to national security because they enable high-performance computing (HPC) applications critical to weapon systems—from nuclear weapons design and cyber-operations to precision strike and hypersonic platforms. Advanced semiconductors are also necessary for building computational infrastructure to train and deploy state-of-the-art AI models, which is increasingly important both for national security and for driving economic growth.
Although it has been inconvenienced by U.S. and allied export controls, the People’s Republic of China (PRC) continues to build out deep advantages in critical parts of its domestic semiconductor supply chain through a combination of state-sponsored enterprises, artificially lowered prices, chip smuggling, and export restrictions on critical minerals. Since taking office, the Trump administration has begun to accelerate domestic semiconductor investment in the United States, securing significant commitments from TSMC, Nvidia, and others. These commitments are laudable and the administration should continue facilitating such investments, especially where they lead to increased leading-edge chip fabrication capacity being built onshore.
To build lasting American semiconductor leadership, the administration should also:
1. Facilitate the investment of hundreds of millions of dollars per year for five-to-ten year periods to promising early-stage private sector projects. Budgets for these projects must be sufficiently large and predictable (hundreds of millions of dollars annually for 5–10 years) to match the scale of their objectives. Areas that should be prioritized include semiconductor manufacturing equipment, advanced materials, new chip design architectures, advanced fabrication, and advanced packaging.
This early-stage investment initiative might fit well as part of the Commerce Department’s new United States Investment Accelerator, which is meant to facilitate and accelerate investments above $1 billion in the United States. It could also be administered through other proven channels, including the Defense Advanced Research Projects Agency and the National Science Foundation.
Given the administration’s focus on austerity, this initiative need not be solely or even majority government-funded. Many private sector investors, allied sovereign wealth funds, and other institutional funds could be interested in taking part if the federal government were facilitating and backing the overall program.
2. Establish partnerships with countries and companies possessing semiconductor talent pools and IP resources. Where possible, IP assets and talent should be developed inside of the United States. However, given the diffuse nature of research and development and the considerable time it takes to develop strong domestic advantages, a successful national strategy needs to include partnerships with foreign countries and companies that can offer valuable resources in these sectors.
The United States government is currently re-negotiating its trade agreements across the world. This offers a unique opportunity to create new partnerships with countries that have deep existing advantages in semiconductors and semiconductor manufacturing. The following table lays out international advantages that could be worth prioritizing privileged access to in trade negotiations:
Additionally, the United States should secure reliable long-term supplies of critical minerals—such as gallium and germanium—essential to semiconductor production. This access could be negotiated from countries including Canada, Finland, and Russia.
The long-term AI race will be difficult to win alone. If the United States does not lock-in its own network of strategic partners, it will be at a disadvantage to the PRC, which prioritizes locking in suppliers across what it terms the “Global South.”
3. Screen new investments rigorously for malign foreign influence. Support promising ventures in adopting robust research security standards. A lack of careful investment screening could result in the United States losing critical talent and IP to China, and result in an inability for the U.S. military to safely leverage the technologies coming out of new companies. The Committee on Foreign Investment in the United States (CFIUS) should continue to ensure bad actors are unable to invest in particularly promising streams of new research and development. Semiconductor and SME technology developers are also frequent targets of cyber intrusions and intellectual property theft. Through supporting early-stage projects in their adoption of research security practices via the National Science Foundation, the government can keep these technologies outside of the hands of adversaries.
Building a lasting American advantage in SME and semiconductors will take time. This makes it imperative to lay foundations immediately. Fundamental research and development breakthroughs occur in a slow-building, international, and sector-spanning manner. During the initial development of the now-dominant Extreme Ultraviolet Lithography (EUV) technology for chip manufacturing, the United States government made formative investments in convening academia and industry, engaging in international dialogue on research and development, and kickstarting joint development projects with startups that afforded strict IP protections and rights to participants.
These proven tactics should now be re-applied and integrated as part of a comprehensive strategy directed towards developing new semiconductor and SME ventures within the United States, while also partnering with allies who possess existing advantages. A strategy that includes proactive investment and partnership will better ensure that the United States builds a dominant lead in semiconductors and high-performance computing over the coming decades.
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