Introduction
In a world increasingly shaped by technological dominance and access to essential components, the global geopolitical landscape is shifting. While populist-nationalist governments in countries like Mexico focus on outdated energy nationalism and petroleum, the real power struggle is unfolding in the United States, China, and Europe through semiconductor chips.
The Global Impact of Semiconductors
Semiconductor chips not only fuel algorithms but also reshape global power dynamics. These regions are not just competing over who will lead artificial intelligence (AI) development, but also who will set the rules.
US Strategy and Export Controls
In October 2022, Washington tightened export controls on advanced semiconductors and chip-making equipment to curb China’s rise in AI and military capabilities. The Biden administration expanded these restrictions in 2023 and 2024, banning companies like Nvidia from exporting their most powerful chips to China. This move aimed to prevent China from using these chips in military applications or mass surveillance systems.
However, the US strategy extends beyond technological competition; it’s an economic containment doctrine. The logic is that controlling chips means controlling AI, and controlling AI shapes the future. Consequently, the Department of Commerce has pressured allies like Japan and the Netherlands, home to ASML—the sole producer of extreme ultraviolet lithography for chip fabrication—to impose similar restrictions.
China’s Response
China has labeled these measures as “technological intimidation” and responded with restrictions of its own, including export controls on gallium and germanium, crucial minerals in chip manufacturing. Meanwhile, China has invested billions to accelerate its self-sufficiency, strengthening domestic champions like SMIC and Huawei. Despite US component bans, Huawei’s Ascend 910B chip has made significant progress. Nvidia reports that its market share in China plummeted from 90% to 50% in less than four years, paradoxically making China more resilient.
Europe’s Dilemma
Europe finds itself in a challenging position, balancing between relying on the US, resisting China, and building its “digital sovereignty.” The European Commission promotes initiatives like the Chip Act and AI Act, but faces a harsh reality: most capabilities depend on talent, funding, and value chains flowing from across the Atlantic.
Mexico and Latin America’s Role
Strategically, Mexico and Latin America could play a crucial role in the semiconductor supply chain, given Mexico’s proximity to the US and the USMCA as an anchor. However, simply assembling chips isn’t enough; industrial policy, talent investment, and innovation ecosystems are needed—elements currently lacking.
The Opportunity Lost
Instead of capitalizing on industrial policy opportunities, Mexico and Latin America are missing the boat by focusing on outdated fossil fuels and basic manufacturing. Controlling and participating in semiconductors will dictate conditions, while those left behind will rely on external decisions.
Key Questions and Answers
- What is the new geopolitical struggle? The competition for technological dominance, particularly in semiconductor chips, is reshaping global power dynamics.
- Why are semiconductors so important? Semiconductor chips fuel AI algorithms and, consequently, shape global power dynamics by determining who sets the rules for this technology.
- What is the US strategy? The US has implemented export controls on advanced semiconductors and chip-making equipment to curb China’s technological advancements.
- How has China responded? China has labeled US measures as “technological intimidation” and responded with export controls on key minerals, while investing heavily in domestic chip production.
- What challenges does Europe face? Europe’s reliance on US talent, funding, and value chains complicates its pursuit of digital sovereignty in the semiconductor sector.
- What role can Mexico and Latin America play? With strategic positioning and investment in industrial policy, talent, and innovation ecosystems, Mexico and Latin America could become vital links in the semiconductor supply chain.
