\u201cAmerican manufacturing is back, folks,\u201d Biden proclaimed.<\/p>\n\n\n\n
The president\u2019s speech in December focused on creating news jobs in a swing state \u2014 the bread and butter of economic and political victories. But he also announced a \u201cgamechanger.\u201d In 2026, the Taiwan Semiconductor Manufacturing Company would begin building the world\u2019s most advanced microelectronics in Arizona: 3-nanometer chips.<\/p>\n\n\n\n
That\u2019s on top of the approximately 20,000 5-nanometer chips per month TSMC intends to start producing in Arizona next year.<\/p>\n\n\n\n
Mounting tensions with China have spurred a new push in Washington to lessen U.S. reliance on East Asia \u2014 the global epicenter of semiconductor production \u2014 for the vital microelectronics needed to create both conventional arms and the artificial intelligence algorithms integral to building the weapons of the future.<\/p>\n\n\n\n
But left out of Biden\u2019s Arizona speech is a similarly urgent effort the U.S. government is undertaking to slow China\u2019s advancements, including new restrictions that limit Beijing\u2019s access to these highly sophisticated chips.<\/p>\n\n\n\n
In October, the Commerce Department\u2019s Bureau of Industry and Security announced a sweeping range of export controls that severely curtail China\u2019s ability to obtain some of the world\u2019s most cutting-edge microchips. The bureau had argued that Beijing could use them to \u201cproduce advanced military systems\u201d \u2014 although these semiconductors are also used in civilian technology.<\/p>\n\n\n\n
Alan Estevez, the undersecretary of commerce for industry and security, said in December that the export controls will \u201cslow China\u2019s ability to produce the highest-end semiconductors, for a period of time.\u201d<\/p>\n\n\n\n
\u201cThey will figure this out,\u201d he added. \u201cBut what we\u2019ve done is pretty comprehensive.\u201d<\/p>\n\n\n\n
The Commerce Department\u2019s restrictions put the U.S. on the offensive against China\u2019s ability to procure the advanced microelectronics needed to meet its long-term military modernization goals. The export controls prohibit businesses such as TSMC from continuing to produce these sophisticated microchips in China \u2014 even as the Taiwanese company begins manufacturing its advanced semiconductors in Arizona.<\/p>\n\n\n\n Several days after the regulations were unveiled, TSMC obtained a one-year U.S. waiver to continue operating its semiconductor production site in Nanjing, China \u2014 with one condition. Its China-based operations must remain limited to producing lower-end semiconductors and not the advanced chips integral to China\u2019s AI development, which are subject to the new U.S. export controls.<\/p>\n\n\n\n China has set 2030 as its target date to become a global leader in artificial intelligence, with the subsequent goal of putting the People\u2019s Liberation Army on par with the U.S. military by 2035 \u2014 a goal the export controls intend to complicate.<\/p>\n\n\n\n \u201cThis severely limits China\u2019s ability to access advanced nodes or build its own capabilities,\u201d said Jay Goldberg, a specialist on Asia\u2019s electronics supply chain and the chief executive of D2D Advisory, a consulting firm. \u201cI don\u2019t see any way that they can build their own advanced processors for like a decade. There\u2019s no avenue there.\u201d<\/p>\n\n\n\n The Biden administration in December added Yangtze Memory Technologies Corp. and 21 other Chinese companies involved in the nation\u2019s AI microchip sector to the Commerce Department\u2019s export control list.<\/p>\n\n\n\n That same day, Congress passed the fiscal 2023 National Defense Authorization Act<\/a>, including a provision banning U.S. defense companies from using Chinese semiconductors in critical weapons systems \u2014 legislation that will force them to keep better tabs on their lower-tier suppliers.<\/p>\n\n\n\n Coupled with the export controls, \u201cit\u2019s a one-two punch,\u201d Majority Leader Chuck Schumer, D-N.Y., who introduced the semiconductor provision in the defense bill, said in December on the Senate floor.<\/p>\n\n\n\n \u201cThe 21st century will be largely shaped by our two giant economies,\u201d he added. \u201cFor decades, the Chinese Communist Party has cheated their way to the top by piggybacking off American technologies and American [intellectual property], with huge implications for our national security and for our edge in AI, cybersecurity, telecom and other major technologies.\u201d<\/p>\n\n\n\n The groundwork for restricting Chinese exports dates back to the second half of former President Donald Trump\u2019s term. The administration\u2019s export controls prohibited two Chinese microelectronics producers \u2014 Huawei and the Semiconductor Manufacturing International Corp. \u2014 from obtaining U.S.-produced semiconductor equipment and software.<\/p>\n\n\n\n While the U.S. is no longer a major player in producing semiconductors \u2014 something Biden hopes to rectify \u2014 American companies still play a leading role in designing these chips and exporting the equipment needed to physically manufacture them. This gives the U.S. significant leverage over the global semiconductor supply chain.<\/p>\n\n\n\n Biden\u2019s export controls greatly expand the Trump-era restrictions; they require U.S. microelectronics companies, or foreign businesses that use American technology, to obtain licenses from the Commerce Department to sell to Chinese firms the equipment needed to produce the most advanced semiconductors \u2014 licenses Washington is unlikely to grant.<\/p>\n\n\n\n The restrictions also block blacklisted Chinese microchip companies from employing American citizens; those who remain with the companies risk losing their citizenship.<\/p>\n\n\n\n On aggregate, these restrictions strike a major blow to China\u2019s ability to produce supercomputers needed to generate AI algorithms.<\/p>\n\n\n\n Goldberg said the export controls hinder the Chinese military\u2019s ability to build \u201cadvanced capabilities into their systems.\u201d<\/p>\n\n\n\n \u201cEspecially for the Chinese military, the really limited things will be around supercomputing, which is really important for weapons design, for nuclear weapons simulation, advanced weather modeling, those kinds of things,\u201d he explained.<\/p>\n\n\n\n China has the largest number of the world\u2019s most powerful supercomputers. It surpassed the U.S. in quantity in 2016, according to Top500, which tracks the world\u2019s most powerful supercomputers. These computers are necessary for developing artificial intelligence algorithms, and they can also simulate nuclear and missile tests. But they require the advanced semiconductors now subject to U.S. export controls.<\/p>\n\n\n\n For instance, China seeks to develop a new military construct it calls Multi-Domain Precision Warfare<\/a>, which is roughly analogous to the Pentagon\u2019s Joint All-Domain Command and Control initiative. These systems require advanced AI algorithms and supercomputing to rapidly sift through data that informs battlefield decisions under very compressed time frames.<\/p>\n\n\n\n The restrictions will also hamper China\u2019s ability to use supercomputers for dual-purpose activities like space exploration, vaccine development and weather modeling.<\/p>\n\n\n\n Jon Bateman, a senior fellow at the Carnegie Endowment for International Peace who previously served as a special assistant to former Chairman of the Joint Chiefs of Staff Gen. Joseph Dunford, said the export controls effectively amount to an economic policy of \u201cquasi-containment.\u201d<\/p>\n\n\n\n \u201cWith each year that goes by, AI algorithms at the cutting edge require more and more computing power, and therefore need more and more advanced chips,\u201d Bateman told Defense News. \u201cIf the rest of the world moves forward and China can\u2019t, then it\u2019s going to face bigger and bigger problems.\u201d<\/p>\n\n\n\n But Bateman said he\u2019s \u201cskeptical about the immediate impact\u201d of the export controls on China\u2019s defense-industrial base, noting they wouldn\u2019t thwart a possible Chinese attack on Taiwan within the next few years.<\/p>\n\n\n\n China considers Taiwan a breakaway province, and Beijing has said it will take back the island, by force if necessary. Such an attack would rely on more conventional weapons systems that use less advanced semiconductors.<\/p>\n\n\n\n \u201cIf there were to be war over Taiwan in the next five or 10 years, the outcome of that war wouldn\u2019t depend on artificial intelligence,\u201d Bateman said. \u201cIt would depend on China\u2019s amphibious landing capabilities; it will depend on China\u2019s political will \u2014 really traditional stuff.<\/p>\n\n\n\n \u201cChina has a lot of the chips that it needs already and probably has a certain level of stockpiling and will be able to do a lot of the same things with chips that fall slightly below the threshold for export controls just by buying more of them.\u201d<\/p>\n\n\n\n China does not yet have the capacity to domestically mass manufacture the world\u2019s leading semiconductors, but it still produces plenty of cheap, less-sophisticated microchips \u2014 many of which it exports to the United States.<\/p>\n\n\n\n The National Defense Authorization Act, which became law in December, includes Schumer\u2019s provision that will eventually ban U.S. defense companies and other federal contractors from using these semiconductors in critical national security systems. However, it remains unclear to what extent Chinese chips are currently used in U.S. weapons.<\/p>\n\n\n\n But even low-end semiconductors could potentially disrupt U.S. weapons systems.<\/p>\n\n\n\n \u201cChina\u2019s capable of building low-end semiconductors, and those tend to be low-value, overlooked chips that sell for a few dollars or a few pennies a piece,\u201d Goldberg said. \u201cFrom a national security perspective, I think we should be paying more attention to that and being more concerned about that.\u201d<\/p>\n\n\n\n Proponents of the ban fear a faulty semiconductor could sabotage an entire weapons system, or that Chinese chips could give Beijing access to technology, systems and classified information relevant to U.S. national security.<\/p>\n\n\n\n The congressionally mandated U.S.-China Economic and Security Review Commission\u2019s 2022 report to Congress warned \u201clow-quality, counterfeit microelectronics\u201d could compromise U.S. military equipment. For instance, Air Force Times reported in September<\/a> that several faulty semiconductors in a malfunctioning ejection seat \u2014 which caused the 2020 death of F-16 pilot Lt. David Schmitz \u2014 may have been counterfeits, though it\u2019s unclear if they came from China.<\/p>\n\n\n\n The commission\u2019s report also found \u201cthe United States faces exposure to backdoor vulnerabilities from integrated circuits that undergo final assembly, packaging and testing in China.\u201d It noted 38% of the world\u2019s semiconductor assembly, packaging and testing occurred in China as of 2019.<\/p>\n\n\n\n \u201cI don\u2019t think anyone has seen active exploits out in the wild, but they\u2019re theoretically possible,\u201d Goldberg said.<\/p>\n\n\n\n Some defense industry groups raised the alarm over an initial version Schumer\u2019s legislation, arguing it was overly broad and that the implementation period was too short.<\/p>\n\n\n\n Schumer and the other senators behind the legislation, including Republican Roger Wicker of Mississippi, significantly revised the language before Congress passed the defense bill last month.<\/p>\n\n\n\n \u201cThere\u2019s no question that when Chinese-owned companies do the manufacturing, there is a security risk which allows them to gain sensitive information that they have no business knowing,\u201d Wicker told Defense News. \u201cI don\u2019t think that\u2019s subject to debate. The only question has been the practicality of getting that done in a short time frame.\u201d<\/p>\n\n\n\n The version that became law expands implementation from two to five years, only bans Chinese semiconductors from critical systems, and allows the Pentagon and other agencies to issue waivers. It also requires the Pentagon and several other departments to \u201cestablish a microelectronics traceability and diversification initiative\u201d with industry.<\/p>\n\n\n\n![\"\"](\"\/wp-content\/uploads\/2026\/08\/GettyImages-1245424429.jpg.jpg\")
\u2018Quasi-containment\u2019<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2026\/08\/GettyImages-1244450028.jpg.jpg\")
Suspicions of sabotage<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2026\/08\/GettyImages-1231762387.jpg.jpg\")