US-China Semiconductor Decoupling: Companies Caught in the Middle
The escalating US-China technology conflict is forcing semiconductor companies to make difficult choices about where to build, who to supply, and how to navigate competing regulatory regimes.
The Dilemma
- US companies losing China revenue but must comply with export controls
- Chinese companies seeking alternatives to US technology
- Third-country companies (TSMC in Taiwan, Samsung in Korea) caught between both sides
- Startups facing reduced addressable market
Company Strategies
| Company | Strategy |
|---|---|
| NVIDIA | China-specific chips (H20) within legal limits |
| TSMC | Expanding in US (Arizona), maintaining Taiwan ops |
| ASML | Complying with Dutch/EU export restrictions |
| SMIC | China domestic champion, improving but behind |
Analysis
Decoupling is expensive and incomplete. The semiconductor supply chain is the most globally integrated industry in history — designing a chip in the US, fabricating in Taiwan, packaging in Malaysia, and assembling in China was the norm. Dismantling this network creates redundancy (good for resilience) but also cost (bad for prices and innovation).
The companies best positioned are those with diversified manufacturing (Samsung, with fabs in Korea, US, and Vietnam). The most vulnerable are single-facility operators and specialized equipment makers. Long-term, the industry is splitting into two ecosystems with limited technology transfer between them — a outcome that benefits no one except maybe India, which could emerge as a third semiconductor manufacturing hub.