- ASML’s EUV machines, essential for advanced chipmaking, are only produced in the Netherlands and are restricted from being sold to China.
- Taiwan’s TSMC manufactures 90% of the world’s most advanced semiconductors, making it a key player in global tech and a strategic interest for the U.S.
- Despite Western controls, China is advancing rapidly in AI and quantum tech, leveraging older chipmaking tools, dominance in rare earths, and a growing talent pool.
In a quiet Dutch town, a factory produces machines capable of creating extreme ultraviolet (EUV) light—technology essential for manufacturing the world’s most advanced semiconductor chips. This light, naturally found only in outer space, enables the production of tiny transistors carved into silicon wafers, forming the basis of modern electronics. These machines, developed by ASML, are so intricate and valuable that transporting just one requires cargo planes, trucks, and a meticulously dust-free environment. Yet despite their importance, sales of these machines to China are prohibited under Western export controls.
At the heart of the global chip supply chain sits Taiwan’s TSMC, which manufactures the vast majority of high-performance chips, including those powering smartphones and AI systems. While ASML builds the machines, TSMC brings them to life, using them to produce chips designed by American companies like Nvidia. This interdependence has geopolitical implications, especially as the U.S. seeks to prevent China from gaining access to the most advanced chipmaking tools—tools China currently lacks.
That hasn’t stopped China from pushing forward. Despite its limited access to EUV machines, Chinese developers stunned the tech world by releasing DeepSeek, a chatbot rivaling ChatGPT, built using less sophisticated and more affordable chip technology. The achievement signaled that even older-generation tools could yield powerful outcomes in AI—one of the most hotly contested fronts in the U.S.-China tech rivalry. Meanwhile, China’s military has increasingly integrated AI into its systems, adding urgency to Western efforts to maintain a technological edge.
China holds another trump card: dominance in rare earth and critical minerals used in chip production. The country controls the majority of the global supply of materials like gallium and germanium, essential for semiconductors and defense applications. With China also leading the processing of these resources, Western powers have begun to strike new deals, including with Ukraine and India, to reduce reliance on Beijing. The strategic importance of these materials has become a key factor in international diplomacy and trade policy.
Looking ahead, the race for supremacy may shift from traditional to quantum chips—devices that could exponentially accelerate computing capabilities. These chips, carved using electrons rather than EUV light, are already being explored by China, which heavily funds quantum research. While quantum breakthroughs are still in early stages, progress is accelerating, and China’s pool of highly trained engineers and scientists may be its most overlooked advantage. As the microchip frontier expands, so does the battle to control it—one that is as much about brains as it is about machines.
