The Political Economy of Semiconductor Supply Chains and Great Power Competition

Abstract

Semiconductors have become the defining strategic commodity of the twenty-first century, occupying a position in contemporary geopolitics analogous to that once held by oil. This paper offers an analytical political economy examination of how semiconductor supply chains have become both an instrument and a battleground of great power competition, with particular attention to the United States, China, Taiwan, and the emerging role of India. Drawing on global production network (GPN) theory, techno-nationalism, and strategic trade theory, the paper argues that the semiconductor industry's extreme specialization and geographic concentration have transformed ordinary commercial interdependence into a source of structural power and vulnerability. The paper traces the evolution of export control regimes such as the United States' 2022 and subsequent restrictions on advanced chip technology, China's countervailing industrial policy under initiatives comparable to the "Big Fund," and Taiwan's "silicon shield" strategy centred on TSMC. It then undertakes a detailed case study of India's semiconductor ambitions, examining the India Semiconductor Mission, the Production Linked Incentive scheme, and recent investments by Tata Electronics, Micron Technology, and CG Power, situating India's strategy within the broader "friend-shoring" and diversification logic pursued by Western governments. The analysis concludes that semiconductor geopolitics is producing a fragmented, bloc-oriented global technology order in which economic efficiency is increasingly subordinated to strategic autonomy, with significant implications for developing economies seeking to enter high-technology manufacturing. The paper contributes to the political economy literature by integrating emerging-market perspectives, particularly from India, into a field that has hitherto been dominated by US-China-Taiwan-centric analysis.