Two materials lie at the heart of the defining economic competition of the twenty-first century, and both are concentrated in Asia. One is silicon, the chips that power everything from smartphones to fighter jets and the data centers training the world's AI models. The other consists of a cluster of lesser-known elements with names like dysprosium, terbium, and gallium. Without these elements, it would be impossible to manufacture chips, motors, or missiles. Together, semiconductors and critical minerals have become the sharpest tools in the competition for global power, and by 2026, the struggle for control over them has transitioned from a theoretical discussion to a pressing reality.
Asia’s Dominance in Chip Production
Starting with some staggering statistics: Taiwan alone manufactures about 92 percent of the world's most advanced chips, particularly the specialized type used in AI models. When we expand our view, the entire Asia-Pacific region accounts for over four-fifths of global chipmaking capacity. South Korea's Samsung and SK Hynix dominate 88 percent of the high-bandwidth memory market, which supplies the specialized chips necessary for training AI models and driving the AI revolution. In contrast, China excels in producing simpler AI chips used in everyday electronics, generating approximately two-thirds of the global supply. In summary, one island, two Korean companies, and one country represent the entire landscape of advanced chip production.
Washington has attempted for years to lessen this dependency, which many argue poses a national security risk. To mitigate this risk, the U.S. has invested hundreds of billions of dollars to develop domestic manufacturing capabilities for these chips. However, the world still heavily relies on Asia. The current security threat that the United States faces in its competition with China is that the entire technology and defense industries depend on these chips. A disruption in supply could impede not just everyday consumer electronics but also critical sectors such as artificial intelligence, telecommunications, automotive, medical equipment, and defense. The same technology that powers a civilian data center is crucial for military assets such as fighter jets, missile systems, satellites, and intelligence platforms, making semiconductor production a strategic issue beyond its economic implications.
China views Taiwan as part of its territory and has increasingly incorporated its reunification into its national security strategy. For China, Taiwan is not just a political dispute; it is also home to the world's most vital concentration of advanced semiconductor manufacturing. Any conflict surrounding the island could jeopardize a significant portion of the world's chip supply. The United States is working to address these risks by bolstering domestic manufacturing and strengthening alliances with countries like Japan and South Korea. However, building a new industry from the ground up will require years and billions of dollars in investment. Although the U.S. is striving to eliminate this dependence, such changes cannot happen overnight.
The Minerals Behind the Machines
Chips represent only half of the story; behind the industry that produces them—and the defense sector—lies another battleground: critical minerals. Elements such as gallium, germanium, and others are essential for advanced electronics, powerful magnets, electric vehicles, missiles, and radar systems. China has positioned itself at the center of this supply chain, becoming the largest supplier of many crucial minerals due to decades of investment in infrastructure and production capacity. This dominance provides China with substantial leverage; it has already begun to use it by restricting exports. The message to the global community is clear: supply chains can be wielded as instruments of national power. China is cultivating this leverage as much as Saudi Arabia uses oil as a bargaining chip. We are now in a race, a new technological race akin to the Cold War competition between the United States and the Soviet Union for nuclear weapons and space exploration. Today, the two giants of our era, China and the United States, are racing to build the infrastructure for the next generation of technology. The supply chains in Asia are now the ICBMS of the Cold War; each side needs them to stay open, but each wants to take complete control over them to counter the other. We are entering a dangerous era where the world's lifelines will now be in the crosshairs of the two world giants' competition. This will not be decided by traditional military only, but by who can build the most resilient network of allies, factories, resources, and tech the fastest. The race for the 21st century's economic power is already underway, and much of the track runs through Asia.
Until next time,
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