Author: Aayushi Gupta
DeepSeek R1’s development underscores the complexities of the US efforts to contain AI technology. Despite America’s dominance in AI — reinforced by tightening export controls and compute restrictions — China successfully built a competitor to OpenAI’s ChatGPT. This breakthrough highlights a larger reality: Innovation is hard to contain in a world of global research, shared software, and interconnected hardware.
Much like AI, semiconductors — the backbone of technological power — also expose the limits of traditional sovereignty. Drawing from traditional views on sovereignty, technological sovereignty is often equated with the ability to build capabilities independently and achieve self-sufficiency without external influence. However, breakthroughs like DeepSeek R1 reveal the complexity of today’s landscape. For countries like India, still playing catch-up, this raises an important question: Is self-sufficiency a realistic or even desirable goal in the semiconductor race — or does true technological sovereignty demand a new, more pragmatic definition in a globally interconnected industry?
Traditional Sovereignty versus Technological Sovereignty
Traditional sovereignty focuses on territorial control and political autonomy, often seen as building domestic technological capabilities to avoid reliance on other nations. However, the modern technology landscape shows that complete autonomy is unrealistic. The semiconductor industry, for example, relies on a complex web of interdependencies.
Consider the Tata-Taiwan PSMC Partnership in India to launch India’s first AI-enabled semiconductor fabrication plant (fab) to address growing demand in markets such as computing, automotive, and data storage. This collaboration is viewed as a ‘win-win’: PSMC gains early access to India’s rapidly growing market, while India takes a step toward self-reliance in semiconductor manufacturing. This example demonstrates how nations strengthen supply chain resilience by leveraging each other’s strengths. Even as advanced nations like Taiwan invest heavily in domestic production, semiconductor value chains remain deeply interdependent. Simply building domestic capacity does not guarantee technological sovereignty—in fact, excessive reliance on local production may undermine resilience in a globalized industry.
The Global Chessboard of Semiconductor Politics
The semiconductor industry offers a revealing lens into the complexities of technological sovereignty today. The global semiconductor supply chain is highly intricate and geographically dispersed, with different nations and regions playing specialized roles.
The world’s most advanced semiconductor manufacturing is concentrated in Taiwan, mainly through Taiwan Semiconductor Manufacturing Company (TSMC). This has turned semiconductors into a geopolitical flashpoint, prompting other nations to scramble for domestic production capabilities. Meanwhile, the Netherlands, home to Advanced Semiconductor Materials Lithography (ASML), holds a near monopoly on the advanced lithography equipment essential for leading-edge chips. Major chip exporters like Taiwan and South Korea depend on the United States and Europe for semiconductor designs and raw materials, while China, a top exporter of final electronic goods, relies significantly on supplies from the Netherlands, Japan, and the United States. These country-specific roles create deep interdependencies across raw materials, specialized manufacturing equipment, silicon wafers, and final chip production.
Governments worldwide recognize that semiconductors are no longer just economic assets but strategic weapons—critical to national security and the future of AI, defense, and computing power. In response, policy initiatives such as the US CHIPS and Science Act and the EU CHIPS Act are designed to boost local production and reduce reliance on foreign semiconductors. Simultaneously, China’s aggressive push for self-reliance through its ‘Made in China 2025’ policy seeks to reduce its dependency and foster domestic innovation.
Additionally, export controls have emerged as powerful geopolitical tools, reshaping the semiconductor landscape. The US has imposed strict controls on advanced chips and manufacturing equipment targeting China, including the 2024 measures on advanced computing items and the 2022 de facto ban on cutting-edge AI chip hardware. This anti-access strategy enables the US to strengthen its technological capabilities while limiting those of its rivals.
India’s Semiconductor Ecosystem
This analysis highlights a key policy challenge: balancing self-sufficiency with strategic interdependence in an era where complete technological autonomy is unrealistic.
India’s semiconductor ecosystem reflects this tension, combining a robust research and development sector with a nascent but growing manufacturing base. Recognizing the strategic importance of semiconductors today, the Indian government launched ambitious initiatives, most notably the Indian Semiconductor Mission (ISM) in 2021. Under this mission, the government has committed 76,000 crores to the Semicon India program, underscoring its commitment to advancing the sector. Key projects are now in motion, such as the recent Tata-PSMC fabrication plant in Gujarat, which broke ground in March 2024, with the first phase scheduled to produce the first batch of chips by 2026.
Yet, despite these investments, India remains a consumer rather than a producer in the global semiconductor value chain compared to established hubs like Taiwan and South Korea. India is home to an estimated 20% of the world’s chip design talent, a strength further proven by major companies like Intel, Texas Instruments, NVIDIA, and Qualcomm having significant design and research centres in the country. However, strong design capabilities alone do not eliminate the critical need for advanced manufacturing. Without local fabrication plants, India remains dependent on foreign nations for chips and raw materials, reinforcing the reality that some level of interdependence is unavoidable.
Adding another layer to this debate is the role of big tech in shaping semiconductor policies and supply chain control. While building indigenous capabilities to reduce foreign dependence is important, India must also consider whether isolating itself from established global players would slow its progress. A balanced approach may be needed, that maintains self-sufficiency while also leveraging international collaborations.
The Semiconductor Paradox: Self-sufficiency versus Sovereignty
The push for self-sufficiency in semiconductor manufacturing is driven by three key factors: national security, economic stability, and supply chain resilience. Nations worry about national security since control over advanced chips is vital for military systems and critical infrastructure. Economic stability is another motivator, as supply chain disruptions can have widespread effects. Building domestic manufacturing capacity is seen as a way to boost resilience against such disruptions and ensure a steady supply of essential components.
However, self-sufficiency does not equate to true technological sovereignty. Even if a country builds advanced fabrication plants, it may still rely on foreign intellectual property and design tools. For example, the United States leads in the design phase of semiconductor production, and many manufacturers worldwide depend on American Electronic Design Automation (EDA) tools and chip designs. This reliance means that domestically produced chips can still be influenced by foreign entities.
A critical dependency in the semiconductor supply chain is access to cutting-edge manufacturing equipment. Advanced lithography machines, essential for producing leading-edge chips, are exclusively made by ASML in the Netherlands. Depending on a few foreign suppliers for this equipment creates a major vulnerability. Additionally, access to essential raw materials like silicon, germanium, gallium, and various specialized chemicals is vital. Disruptions in the supply of these materials, whether due to geopolitical events or trade restrictions, can impact production even for countries with domestic manufacturing capacity.
True technological sovereignty requires a highly skilled workforce spanning the entire value chain, from research and development to manufacturing and maintenance. Additionally, geopolitical pressures and export controls play a crucial role in this landscape. The US imposed export restrictions on China to limit its technological advancement. Despite these measures, the Chinese industry built DeepSeek R1, which might suggest resilience to these external pressures and a win for self-sufficiency. However, reports indicate that DeepSeek may have relied on a significant number of Nvidia A100 chips acquired before the stricter controls took effect and potentially leveraged cloud computing services for essential computational power. This reinforces the idea that achieving self-sufficiency alone does not guarantee true technological sovereignty. Multiple factors must align for a nation to attain long-term control over its semiconductor ecosystem.
Conclusion
Technological sovereignty today is not about isolation but strategic control. While developing domestic production in key areas like semiconductors is important for control and resilience, it alone does not guarantee true sovereignty. The globally distributed nature of modern technology means that nations remain interconnected and interdependent, making rigid domestic capacity an impractical goal. Instead, technological sovereignty today should be seen as the ability to leverage global resources and partnerships while nurturing domestic innovation.
For India, this requires a pragmatic, targeted approach rather than an unrealistic push for total independence. Rather than competing directly with established semiconductor giants, India should focus on carving out high-impact niches where it already has strengths or competitive advantages. By capitalizing on its expertise in chip design and strengthening its base in assembly, testing, and packaging (as seen in the HCLTech and Foxconn joint venture), India can benefit from its skilled workforce and strategic location. Additionally, India can focus on legacy nodes, compound semiconductors, and silicon photonics– areas with lower strategic barriers but significant strategic value.
Global partnerships remain critical to this strategy. Active international collaborations with leaders such as Taiwan (PSMC) for advanced manufacturing, the US (Micron, Synopsys), Japan (Renesas), and the Netherlands (ASML) for essential equipment and materials are crucial. These alliances not only facilitate technology transfer but also strengthen India’s role in the semiconductor supply chain. By strategically developing domestic capabilities and integrating into the global semiconductor ecosystem, India can move beyond the binary choice of dependence or self-sufficiency.
