Semiconductors in the Crossfire – U.S. – China – Japan Tensions

Introduction: Chips as the New Oil

Every major geopolitical contest eventually finds its bottleneck. In 2025, it is semiconductors. Without them, AI, 6G, electric vehicles, defence systems - all stall. This autumn, chips are once again at the epicentre of geopolitical tension.

1. Nvidia’s Tightrope in China

Despite U.S. restrictions, Nvidia continues to sell into China through tailored chipsets.

• Washington’s Concern: leakage of AI-capable chips into military use.

• Corporate Reality: China remains a third of Nvidia’s market.

• Board Signal: expect volatility; revenues in restricted markets can vanish overnight.

2. Japan’s Power Semiconductor Struggles

• Once dominant in the sector, Japan now lags in producing high-efficiency power semis.

• National Security Implication: Without strong domestic supply, Japan risks dependency on Taiwan, South Korea, and China.

• Global Consequence: automotive and EV industries face fragility in their supply chains.

3. The Broader Supply Chain Fragility

• Taiwan: perpetually exposed to geopolitical risk.

• U.S. & EU CHIPS Acts: slow progress, long lead times.

• China: aggressive subsidisation, but restricted access to cutting-edge lithography.

"Semiconductors have become the 21st century’s chokepoint—where trade policy, industrial strategy, and national security collide."

4. Board-Level Questions

• Where are your dependencies on semiconductors by geography?

• How exposed are you to export controls?

• Is your risk planning tied to dual sourcing and stockpiling?

Conclusion

Boards should not treat chips as “industry news.” They are systemic. Expect Q4 headlines to amplify how semiconductors define the balance of power in both economics and security.