The Technology Cold War — Semiconductors, 5G, Data

The exchange of tariffs was a fight in which the U.S. and China contended over ‘which side sells cheaper.’ But the two countries soon realized that the true battlefield lay in a deeper place. It was technology itself, which drives the next era.

The semiconductors that run smartphones. The communication standards that connect the world. The vast data that keeps emerging from people’s lives. Whoever holds these grasps the leadership of the future in both economic and military terms — having passed through the entrance of tariffs, the U.S.-China conflict changed form here all at once into a cold war over technology.

Huawei — The First Target

What became the symbol of the technology cold war was Huawei (Huawei Technologies), the major Chinese telecommunications-equipment maker. The company was a world-class maker of communications equipment and a leading bearer of the next-generation communication standard 5G.

America argued that Huawei’s equipment could become a security threat. If a Chinese firm’s equipment penetrated deep into the communication network — society’s nervous system — there was a danger that information could be siphoned off, or that functions could be halted in an emergency. Out of such concerns, in May 2019 the U.S. Department of Commerce added Huawei to the Entity List (in effect, a target of export controls). To sell American technology or parts to Huawei now required government permission.

The controls were tightened step by step. In 2020, the rules were extended so that even semiconductors made abroad using American technology were restricted from being supplied to Huawei. Since semiconductor makers around the world use U.S.-made manufacturing equipment and designs, there was no escaping this net. Cut off from the cutting-edge chips that are the heart of smartphones, Huawei reportedly suffered a heavy blow to its main business.

Semiconductors — The ‘Rice of Industry’ Turned Strategic Material

The sanctions on Huawei were only the prologue to a larger fight. What the U.S. and China truly contended over was control of semiconductors themselves, the brains of every electronic device. Also called the ‘rice of industry,’ this tiny component drives everything in modern civilization, from smartphones to weapons to artificial intelligence.

America moved from two directions. One was ‘defense’ — in August 2022, President Biden signed the CHIPS and Science Act, backing domestic semiconductor production with enormous subsidies. The aim was to call manufacturing, which had tilted toward Asia, back home, and to strengthen the resilience of the supply chain.

The other was ‘offense’ — on October 7, 2022, the U.S. rolled out comprehensive export controls of unprecedented scope on advanced semiconductors bound for China. It strictly restricted selling China high-performance chips used in training artificial intelligence, as well as the equipment that makes them. The aim, it was said, was to stop China from applying cutting-edge computing power to military use.

China, too, did not simply stand idle. It made the self-sufficiency of semiconductors a top national priority and poured in enormous funds to hasten domestic production. It is, reportedly, trying to reduce its dependence on foreign equipment and materials one step at a time, and eventually to build a supply network it can complete on its own. A country cut off from technology, precisely because it has been cut off, hastens toward independence. The controls, ironically, also had the effect of lighting a fire under China’s own development, it has been observed.

A World Splitting in Two — Decoupling

From the Huawei sanctions to the semiconductor controls. What this whole sequence pointed to was the reality that the U.S. and China were trying to cut the world economy in two. This movement is called decoupling.

In the Cold War era, the world was split into two camps, West and East. What is now underway is a division resembling it. This time, however, the dividing line is drawn not on military alliances but on technological standards and supply chains. Which standard to adopt, which communication network to use, which chips to run artificial intelligence on — the nations of the world began to be asked, quietly, which of the two technological spheres, U.S. or China, they belonged to.

Yet a complete severance is not easy. The U.S. and Chinese economies are intertwined far too deeply, and cutting everything would deal both sides a great wound. So from around 2023, in Europe and America a milder word began to be used: de-risking. Rather than severing ties entirely, reduce dependence only in the advanced fields tied directly to security — a realistic line that seeks the middle between complete division and total interdependence. Even so, how much to sever and how much to leave? The tug-of-war over where to draw that line is said to continue even now.

The Visible Consequences of an Invisible Battlefield

The technology cold war has neither cannon fire nor tanks. Yet its consequences reach surely into our daily lives. The price of a smartphone, whether a new service can be used, and even a nation’s security — the contest over a single semiconductor is spreading its influence into every corner of society.

And as the U.S. and China divide their technological spheres and try to redraw the supply chains, everyone’s gaze was drawn to a single point. It is the fact that a single island produces the bulk of the world’s most advanced semiconductors. If that island were drawn into the flames of war, the technology cold war could turn in an instant into a hot one — semiconductors, geopolitics, and the U.S.-China conflict alike. Every spark was gathering toward a single island.