1America: dominates the “brains” of the chip

This is where Nvidia becomes enormously important.

Nvidia doesn’t primarily manufacture its own most advanced chips. It designs them.

For example, Nvidia designs GPUs such as its Blackwell and newer generations. Those designs then get manufactured by TSMC.

So you can think of it as:

• Nvidia = architect
• TSMC = factory
• ASML = supplier of some of the machines the factory needs

That’s an extraordinarily powerful combination.

And Nvidia’s advantage isn’t just the physical GPU. It’s also CUDA, its software ecosystem. That’s one reason competitors can’t simply make a chip with similar raw performance and immediately replace Nvidia.

China is now specifically trying to break that moat. Chinese companies including Huawei and several domestic AI-chip firms are developing alternatives to Nvidia’s hardware/software ecosystem.

2Taiwan: the most strategically important manufacturing link

This is where TSMC comes in.

TSMC is essentially the world’s premier “foundry”: companies like Nvidia, Apple, AMD and others design chips, then TSMC manufactures them.

And Taiwan isn’t merely one chip manufacturer among many.

The U.S. Commerce Department says Taiwan accounts for more than 60% of global foundry revenue and more than 90% of leading-edge chip manufacturing.

That’s extraordinary concentration.

And there’s a second advantage:

TSMC has an ecosystem, not just factories.

Around TSMC are:

• engineers
• suppliers
• chemical companies
• packaging companies
• testing companies
• equipment specialists
• universities
• logistics infrastructure
• decades of accumulated manufacturing knowledge

That’s very difficult to replicate.

This is why you can’t simply say:

“We’ll build a $20 billion fab somewhere else.”

You can build the building.

Recreating the ecosystem is much harder.

3The Netherlands: ASML is one of the world’s biggest semiconductor chokepoints

This one surprises people.

A company called ASML, headquartered in the Netherlands, makes the world’s most sophisticated lithography machines.

These machines essentially allow manufacturers to “print” extraordinarily tiny patterns onto silicon.

For the most advanced chips, ASML’s EUV (extreme ultraviolet) lithography technology is indispensable.

And this is an amazing geopolitical situation:

1. Nvidia 🇺🇸designs chip
2. TSMC 🇹🇼manufactures chip
3. ASML 🇳🇱supplies critical manufacturing equipment

So even TSMC doesn’t independently control the entire technology stack.

ASML is currently expanding aggressively because AI has caused enormous demand for advanced chips; virtually all of its EUV production capacity is booked well into 2027.

4Japan is much more important than it looks

Japan isn’t necessarily the country people associate with AI chips, but it occupies numerous critical positions in the supply chain.

Japanese companies produce:

• semiconductor materials
• photoresists
• silicon wafers
• chemicals
• manufacturing equipment

And companies such as Tokyo Electron are major equipment suppliers.

This is important because semiconductor manufacturing involves thousands of incredibly specialized inputs.

You could have:

Nvidia + TSMC + ASML

and still have a problem if a Japanese supplier can’t provide a particular ultra-pure chemical or component.

That’s why semiconductor geopolitics is often described as a “chokepoint” competition.

5South Korea: Samsung and SK Hynix

South Korea is particularly powerful in memory.

Think:

• DRAM
• NAND
• HBM (high-bandwidth memory)

HBM has become especially important because AI accelerators need enormous amounts of fast memory.

The big three are:

• Samsung 🇰🇷
• SK Hynix 🇰🇷
• Micron 🇺🇸

Memory is becoming a strategic bottleneck of its own because AI data-center demand is exploding.

So there’s actually a second semiconductor race happening alongside the Nvidia/TSMC race:

Who controls AI memory?

And South Korea is right in the middle of it.

6China: enormous scale, but a major technological gap remains

China is the interesting one.

China has enormous advantages:

• gigantic manufacturing base
• enormous domestic market
• huge government investment
• massive engineering workforce
• control over many upstream materials
• increasingly capable semiconductor companies

The major names include:

• Huawei
• SMIC
• YMTC
• CXMT

Huawei in particular has become a sort of national champion.

China is aggressively trying to eliminate its dependence on American, Taiwanese, Dutch and Japanese technology.

And it’s making progress.

For example, Chinese companies are increasingly developing their own semiconductor equipment, including lithography.

But there’s still a significant gap at the absolute cutting edge.

Recent reporting indicates China’s lithography technology remains well behind ASML, particularly in the ability to produce advanced machines at high throughput and reliability.

So the Chinese strategy increasingly looks like:

“If America cuts us off, we’ll build the entire ecosystem ourselves.”

And ironically, American export controls have given China more incentive to do exactly that.