Amid rising geopolitical tensions, the semiconductor industry has become a central focus of both industrial and security policies. This paper analyzes the policies implemented by major countries, considering both restrictive measures (such as export and investment controls) and public incentives, while assessing their economic impact and implications for the global value chain.
We estimate that global subsidies for the sector will exceed $400 billion over the next decade, ten times the amount allocated between 2005 and 2019. These incentives are expected to drive more than $700 billion in private investment, with over half flowing into the United States. Meanwhile, the US is intensifying export controls to limit China's access to advanced technologies. Heavy-handed government intervention, in the context of high uncertainty surrounding future demand, however, raises concerns regarding the economic sustainability of some of these projects.
