Silverado CEO Sarah Stewart notes: “China has a stated intent to indigenize its semiconductor industry in the coming years, and what it lacks is the technology and the knowledge to produce the most advanced chips. The United States, Japan, the Netherlands and a pocketful of other countries do have that knowledge.”

This concentration of expertise and commercial control creates both strategic leverage and a critical opportunity for alignment among allies who have a shared interest in combating the problem. “We have to always prioritize moving forward with allies on the most cooperative basis possible,” Stewart said. “If we can’t get to that place of alignment, though, then we do need to have these backstopping tools. Hopefully they are used only as a last resort, but they need to exist.”

Silverado research also highlights the scale and urgency China’s ability to pursue semiconductor manufacturing dominance and why US export controls alone are not sufficient - we need to incentivize our partners to take complementary actions to prevent China from achieving its stated market domestic and global share targets: "China’s imports of semiconductor manufacturing machinery have surged in recent years in tandem with soaring demand for AI chips in China and around the globe. China's imports of the equipment grew from $10.7 billion in 2016 to about $51.1 billion last year, according to analysis from Silverado Policy Accelerator, a Washington, D.C., think tank that focuses on national security and AI."