Why are tiny chips making global headlines? Semiconductors, the essential part behind our phones, cars, and even satellites. Without them, artificial intelligence can’t compute, electric vehicles won’t move, and communication systems would go silent. But while their size is small, the competition to control them is anything but. Who makes them, who designs them, and who depends on whom — these are questions shaping the future of the global economy.
The United States leads the world in chip design, with companies like NVIDIA, Intel, and AMD pushing boundaries in AI, gaming, and data processing. However, when it comes to manufacturing, America is a little bit behind. Nearly 90% of the world’s most advanced chips are made in Taiwan, not the U.S. (2). That means American innovation still depends on foreign factories — and that dependence has raised serious concerns about national security and economic stability.
Taiwan, through TSMC, has become the world’s chip factory. With unmatched technological capabilities and a tightly coordinated supply chains, Taiwan produces chips as small as 3 nanometers — thousands of times thinner than a human hair. South Korea, through Samsung, also plays a key role. But Taiwan’s dominance in the most advanced chips makes it a critical link in the global tech supply chain.
Meanwhile, China has invested billions into building its own chip industry, but it’s still years behind. Facing U.S. export bans on key tools and software, China struggles to produce chips smaller than 14 nanometers. While companies like SMIC have made progress, they are not yet competitive with TSMC or Samsung. The Chinese government’s ambition is clear — reduce reliance on imports, catch up in manufacturing, and eventually lead in both innovation and scale. But as one report notes, even after years of investment, China still produces only about 16% of the chips it needs, relying heavily on foreign suppliers to meet domestic demand. The question remains: how long will it take for China to catch up, or will it ever?
While China is making significant progress, limits remain clear. According to Rest of World, China heavily subsidizes its semiconductor industry, achieving breakthroughs in chip design and memory—such as HiSilicon’s Ascend series and YMTC’s 294-layer NAND chips—but still lags far behind in chip production equipment, especially lithography.
SMIC has produced 7nm chips and is working on 5nm with Huawei, but lacks the EUV machines TSMC uses; its older equipment leads to low yields, high costs, and limited scale. India also notes that SMEE, China’s light‑exposure tech, is “15–20 years behind ASML”. Analysts like Chris Miller argue SMIC is consistently about five years behind TSMC, and while China’s chipmakers gradually improve, so do their competitors.
So, can China truly catch up? It may narrow some gaps, but closing the lead in design, production tools, and industrial scale will likely take many more years—and may never fully materialize without access to cutting-edge equipment and global partnerships.
Semiconductors are not just technology, but as a mirror reflecting a country’s capacity and ambition. The U.S. still excels in design, Taiwan leads in manufacturing, and China is fiercely determined to catch up—yet real bottlenecks remain. In a world shaped by AI, chips define more than tools; they outline our future.
