Ruling Chips: Power and U.S. Dominance in the Global Semiconductor Industry

Yan Xu, University of Chicago

There has been much talk about American economic decline, yet for the past twenty years the US has maintained steadfast dominance in the global semiconductor industry, the foundation of information technologies, holding a tight grip on half of the global market share and most of the profits. I argue that US market size, influence over intellectual property (IP) rules, and leadership in R&D give it tremendous power in shaping the global semiconductor industry in its favor. Moreover, market power enabled US to strengthen IP protection beyond its borders, which became increasingly crucial for sustaining US leadership as its market declined in relative importance. An examination of the industry’s evolution shows that the rise of a Japanese chip industry with a competitive structure in the 1980s drew strong trade pressure from the US, which helped to revive the American chip industry, whereas the subsequent emergence of South Korea and Taiwan as important players was accommodated and, to some degree, facilitated by the US due to their industries’ complementarity with that of the US. I also show that despite the industry’s globalization, US continues to wield substantial power through its centrality in global networks of production, knowledge, and finance.

No extended abstract or paper available

 Presented in Session 39. Power, Governance, and Political Economy