Semiconductors are often described as the beating heart of cutting-edge technology. But while the United States may seek to control China by tightening its grip on chip supply chains—and China may try to catch up with U.S. chipmakers—the reality is far more complicated. Neither side can act swiftly or unilaterally.
That’s because the semiconductor industry is built on a deeply intertwined, cross-border supply network. Every stage of chip production—mining, design, fabrication, packaging, and testing—relies on a global web of cooperation and specialization. Within this web, certain countries and companies hold dominant positions thanks to proprietary technologies, forming what some describe as exclusive spheres of influence.
At the root of it all lies quartz, often referred to as “white sand.” But only ultra-high-purity quartz—at least 99.999% pure—is suitable for semiconductors, as it minimizes defects in circuits. Roughly 90% of this quartz comes from a single source: the Spruce Pine mine in North Carolina.
Once extracted, the quartz is refined into wafers by Japan’s Shin-Etsu Chemical, which then supplies them to major foundries like Taiwan’s TSMC. As of 2023, Shin-Etsu commanded around 30% of the global wafer market, making it the clear industry leader.
TSMC uses these wafers to etch microscopic circuits, employing extreme ultraviolet (EUV) lithography machines made by ASML in the Netherlands. These machines are essential for creating the intricate patterns on advanced chips.
For further processing, TSMC turns to U.S.-based Lam Research, whose etching tools precisely carve through metal and silicon layers. ASML controls about 80% of the global lithography equipment market, while Lam Research holds more than 50% of the etching market.
As chip technology becomes more sophisticated, these monopolies have only become more entrenched. Back in 2003, there were 26 semiconductor foundries capable of producing chips using the 130-nanometer process, then considered cutting-edge. Today, only three companies—TSMC, S. Korea’s Samsung Electronics, and U.S.-based Intel—have the ability to mass-produce chips at the 3-nanometer scale.
Market share data underscores the concentration of power. TSMC holds a commanding 67.1% share of the global foundry market. Samsung follows with 8.1%, and China’s SMIC trails at 5.5%. Together, the three companies account for more than 80% of all contract chip manufacturing worldwide.
According to Kim Joung-ho, professor of electrical and electronic engineering at the Korea Advanced Institute of Science and Technology (KAIST), this dominance is unlikely to fade anytime soon. “These leading firms are investing aggressively in research and development, backed by massive capital,” Kim said. “Once these monopolies are established, they’re extremely difficult to dismantle.”
