Executive Summary
This paper analyzes why governments and semiconductor firms cooperate with or resist US export controls on China. It argues that security alignment with the US is the primary factor driving cooperation, more so than economic interests. Through case studies of South Korea, Taiwan, Germany, and the Netherlands, the analysis shows that stronger security ties lead to higher cooperation. The paper introduces the 'Business Security Dilemma' to explain how firms navigate the pressures of great power competition.
Why It Matters
This document is crucial for defense and geopolitical analysts as it explains how security alliances, rather than purely economic factors, dictate corporate and governmental responses to economic statecraft in critical sectors like semiconductors, directly impacting strategic competition.
Key Takeaways
- Security alignment with the US is the primary driver for cooperation with US export controls on semiconductors, outweighing economic interests.
- Governments and firms in South Korea and Chinese Taiwan show higher cooperation due to stronger security ties with the US.
- The concept of the 'Business Security Dilemma' helps explain how firms navigate great power competition pressures.
- US weaponization of semiconductors is a key aspect of economic statecraft in the US-China rivalry.
Strategic Relevance
This analysis provides a framework for understanding the effectiveness of economic statecraft in great power competition, particularly how security alliances influence the behavior of critical industries and third-party states. It highlights the strategic importance of semiconductors and the complex interplay between economic and security policies.