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The SemiConductor Race

Published January 13th, 2025 by JMSCapitalGroup

Although China is the world’s predominant manufacturer of goods, one key area in the which the US leads the world is the semiconductor industry. Visual Capitalist has a chart showing that American companies account for 71.5% of the global semiconductor industry’s market cap (though most chips themselves are not produced domestically):

The Biden Administration, stressing national security concerns, instituted export controls on Chinese chip firms in 2022. Noah Smith cites evidence that the export controls are slowing the progress of Chinese chip manufacturing. He argues that as the US is unlikely to topple Chinese dominance in manufacturing, the US’s ability to maintain a military-technology edge on China thus depends on retaining its technological advantages.

As Smith observes, it’s unclear whether Trump will retain Biden export controls. Trump’s advisors include both China hawks and China doves. Trump himself called for a TikTok divestment when he was President, then reversed his position as Congress passed a divestment bill in 2024. Smith is agnostic on what Trump will do, but warns that the export control decision is much more important than what he calls tariff theater—and that the abandonment of export controls would show that the US is no longer serious about containing Chinese power.

JMS Capital Group Wealth Services LLC

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This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument or investment strategy. This material has been prepared for informational purposes only, and is not intended to be or interpreted as a recommendation. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice.


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