The US-China Tech War and Industrial Policy in the Integrated Circuits Industry: Bridging Gaps or Burning Bridges?

The integrated circuits (ICs) industry is a cornerstone of modern advanced manufacturing, and its global evolution is likely to shape the technological and innovation capacities of countries in the years to come. Several countries have enacted industrial policies to ensure the supply of ICs and protect national interests. Nevertheless, there is still little understanding of the complexity of the global IC market and the degree of dependency between countries. The aim of this paper is twofold. First, it analyses the key industrial policies adopted by the US and China in the IC industry. Second, it performs an in-depth quantitative study on global and regional IC markets. Social Network Analysis (SNA) is applied to analyse the volume and intensity of global trade of ICs, highlighting the "centrality" of the US and China within international and regional trade networks. The findings reveal that China is far more integrated into global trade networks for ICs than the US, suggesting China’s potential for bridging the gaps in its national IC production through international markets, as well as reducing the risks associated with foreign dependence. As for the US, the findings show a weaker global centrality, indicating a greater level of autonomy in its ability to supply ICs for the domestic economy. The paper also proposes a selection of both policy implications, and avenues for future research.