Semiconductors: The Backbone of Cyber Power

Semiconductors enable the computing power that drives everything from commercial applications to military operations. Advanced chips are critical for AI, autonomous systems, and national security infrastructure. As nations race to secure technological dominance, control over semiconductor production becomes a central element of cyber deterrence.

The production of semiconductors is extraordinarily complex and relies on a global supply chain. No single country is self-sufficient in this domain. Manufacturing processes demand rare metals, precision tools, and expertise spanning Japan, the Netherlands, South Korea, Taiwan, and the United States. Companies like TSMC (Taiwan), Intel (United States), and Samsung (South Korea) dominate the field, with TSMC leading in advanced chip production. Advanced Semiconductor Materials Lithography (ASML), a Dutch company, monopolizes the production of extreme ultraviolet (EUV) lithography machines, critical for fabricating cutting-edge chips.

The Strategic Importance of Semiconductors

Semiconductors are more than just a commercial product—they are a strategic resource that nations leverage to project power in cyberspace. The United States has long recognized the importance of staying ahead in chip technology, aiming to maintain at least a two-generation lead over adversaries like China. This lead is not just about technological superiority but is also about cyber deterrence.

Cyber deterrence relies on the ability to defend, retaliate, or disrupt an adversary’s cyber capabilities. Advanced semiconductors provide the computational power necessary for AI-driven cybersecurity systems, intelligence gathering, and offensive cyber operations. For example, autonomous systems in modern warfare require sophisticated chips to function effectively. If a nation lacks access to such technology, its cyber capabilities are significantly weakened.

China’s Vulnerability and Response

China, despite being the second-largest economy and a global manufacturing powerhouse, has a surprising weakness in the semiconductor supply chain. It spends more on importing chips than oil and relies heavily on foreign suppliers, including its geopolitical rivals. This dependency creates a critical vulnerability in its cyber and AI ambitions.

Recognizing this weakness, China launched massive initiatives to achieve self-sufficiency in semiconductor production. However, the barriers to entry are steep. Manufacturing cutting-edge chips requires material purity at a level of 99.99999 percent, and even a minor defect can render a chip unusable. The complexity of the global supply chain further complicates China’s efforts. For instance, ASML’s EUV lithography machines, essential for advanced chip production, are legally restricted from being sold to China under export control agreements led by the United States.

China’s strategy focuses on targeting chokepoints in the supply chain while ramping up domestic production of less advanced chips. Success in this endeavor would significantly alter the balance of power in cyberspace, enabling China to compete more effectively in AI and cyber operations. However, for now, its reliance on foreign technology remains a significant deterrent.

US Strategy: Strengthening Deterrence Through Dominance

The United States took proactive steps to secure its dominance in semiconductor technology as part of its cyber deterrence strategy. Legislation like the 2022 CHIPS and Science Act provides billions in subsidies to bolster domestic chip production. The US also works to integrate government, industry, and academia to address challenges in manpower, education, and research and development.

The American approach to cyber deterrence is twofold. First, it seeks to maintain its technological edge by investing in leading-edge chips while ensuring a robust supply of legacy nodes for essential systems. Second, it actively restricts access to critical technologies for adversaries. For instance, since 2018, the export of EUV lithography machines to China has been prohibited, a move aimed at stalling China’s progress in advanced semiconductor manufacturing.

This strategy aligns with the broader geopolitical framework, where supply chain control becomes a tool for exerting influence. By leveraging its dominance in semiconductors, the US can deny adversaries the tools they need to compete in AI-driven cyber capabilities, thereby strengthening its cyber deterrence posture.

The Role of AI and Advanced Chips in Cyber Deterrence

AI is a cornerstone of cyber operations, from defensive systems that identify and mitigate threats to offensive tools that exploit vulnerabilities in adversarial networks. The power of AI is directly tied to the availability of advanced chips, which enable greater computational efficiency and data processing.

In the AI arms race, semiconductors are the critical enabler. Nations with access to advanced chips can train larger models, process more data, and deploy more sophisticated algorithms. Conversely, those lacking access are at a significant disadvantage. This dynamic emphasizes the importance of securing semiconductor supply chains as part of national cyber deterrence strategies.

Geopolitics and the Future of Cyber Deterrence

The geopolitical implications of semiconductor dominance extend beyond cyber operations. Control over the chip supply chain influences alliances, trade policies, and even the balance of power in global governance. Governments increasingly push nations and companies to choose sides, creating a polarized landscape.

The US and its allies currently hold a strong position, but the race is far from over. As China invests heavily in self-sufficiency, the stakes in the semiconductor arms race continue to rise. The future of cyber deterrence will depend on the ability of nations to secure their supply chains, innovate in chip technology, and adapt to the rapidly evolving landscape of AI and cybersecurity.

Conclusion

Semiconductors are not just a technological marvel—they are a strategic weapon in the cyber domain. As nations compete for supremacy, control over chip production and supply chains will play a pivotal role in shaping cyber deterrence strategies. The US, with its technological edge and integrated approach, aims to maintain its dominance, while China’s efforts to overcome its vulnerabilities will redefine the global order. In this high-stakes competition, the invisible hand of the market is guided by the visible hand of governments, ensuring that semiconductors remain at the heart of cyber power.

Adam Harris, PhD, is a career cyber professional who both practices the profession and teaches at the university level. The views expressed are his own.    

Cyber Deterrence in the Age of Semiconductors was originally published on Global Security Review.

The recent passage of the Framework Convention on Artificial Intelligence by the Council of Europe marks a significant turning point in the quest for effective and long-lasting control of AI. The document is a statement about how European states will harness AI, a relatively new and powerful technology, to empower humanity while limiting its abuses.

The March 2024 adoption of a US-led United Nations General Assembly resolution on seizing the opportunities of safe, secure, and trustworthy artificial intelligence systems for sustainable development also highlights the common ground the United States shares with Europe and democracies around the world. While the US differs in some important areas with Europe, the significant agreement is valuable. This convention provides a foundation for others to build on.

Although new technologies often appear benign at first glance, there are many ways AI, in particular, can negatively impact the values held dear by so many around the world. From facial recognition systems interfering with privacy to machine learning that amplifies injustice, the potential cost of AI’s misuse is high.

Until now, there was not an effort at global governance of AI. This fostered a string of national laws that lack the capacity to address the transnational nature of AI adequately. A system of fractured development silos creates a wide gap wherein technological advancement is prioritized over ethics.

There are a few AI regulatory developments  around the world for AI management worthy of note. First, the US House of Representatives debated the Digital Services Oversight and Safety Act of 2022 (H.R.6796) and the Algorithmic Accountability Act of 2023 (H.R. 5628). The AI Disclosure Act of 2023 (H.R. 3831) was also introduced before the House of Representatives.

Canada saw the introduction of the Artificial Intelligence Data Act (AIDA). The European Parliament began discussing the EU Artificial Intelligence Act in 2023, which represents a shift toward “hard law.” China is also addressing the issue and undertook the Interim Administrative Measures for the Management of Generative AI Services, which was enacted in 2023.

Recently, the United States passed the 2024 National Defense Authorization Act, which included a five-year implementation plan to adopt AI applications to accelerate decision advantage for both business efficacy as well as warfighting capability.

China also released the Global AI Governance Initiative, “calling for all countries under the principles of extensive consultation, joint contribution, and shared benefits to enhance exchanges and cooperation, work together to prevent risks, and develop an AI governance framework based on broad consensus, to make AI technologies more secure, reliable, controllable, and equitable.”

The Council of Europe’s Framework Convention, discussed above, provides a comprehensive legal structure to protect human rights, democracy, and the rule of law, besides promoting innovation. This strikes a balance where the use of technology should not be limited but society must ensure that development is in the right direction—with most of the technologies promoting ethical usage.

The Convention offers a set of guidelines for the advancement of AI that include respecting human dignity and upholding the idea that one should not infringe upon the rights and liberties of others. There is a significant urge to pursue explainability, which requires an explanation for each decision an AI makes and highlights how these systems have the power to significantly impact people’s lives in fields like criminal justice and healthcare. Additionally, the Convention calls for fairness in the creation of AI by considering prejudice in learning systems.

The Convention clearly aspires to international cooperation, which is important because it is a central element of the liberal international order. Numerous states agreed to the treaty, realizing that artificial intelligence is not a local problem. Such collaboration is required since artificial intelligence affects all states, and its advantages and disadvantages can only be addressed jointly. The agreement’s openness to other parties is crucial because it enables people from different backgrounds and cultures to voice their thoughts, enhancing and leveling the playing field.

As AI advances, concerns will grow about the agreement’s direction, applicability, and resource allocation. It implies that ethically right deeds now might turn unethical as technology develops, highlighting the necessity of a progressive framework for a code of ethics.

Since the development of AI must be accompanied by its ethical application, the Convention on Artificial Intelligence represents an important accomplishment in European regulation of the technology. Therefore, this treaty serves as a guide for how human rights, accountability, and openness should be upheld when integrating AI into society. The journey has only just begun. However, the political will and spirit to act, observe, and adopt the proper approach to governance can serve to achieve the benefits of AI.

Nevertheless, it will probably be difficult to put these rules and policies into foolproof practice. It will certainly be a work in progress. The European Council is certainly providing a road map for managing global mutual technology advancement concerns.

Huma Rehman is Director of Research at the Islamabad Policy Institute (IPI) and a Defense & Foreign Affairs Analyst. The views expressed are her own.   

Paving the Ethical Route for AI was originally published on Global Security Review.