AI, Semiconductors, and the Future of American Sovereignty
Introduction
The technologies that underpin the future of warfare, industrial productivity, and global economic leadership—semiconductors and artificial intelligence (AI)—are increasingly dual-use in nature. They are as vital to warcraft as they are to advanced tradecraft in manufacturing and autonomous vehicles to digital commerce. In the midst of epic strife and socioeconomic fracturing, the United States has found the courage to lead the world back on to the rails of prosperity and fair trade through peaceful negotiation and the reindustrialization of our country.
At the epicenter of this revolution lies Intel; America’s only manufacturer capable of producing advanced logic chips. President Trump called for the resignation of Lip-Bu Tan, CEO of Intel, for all the right reasons. While Tan is overwhelmingly and technically qualified to lead Intel, his widely reported investments and past activities remain deeply conflicted with the interests of the United States. Intel needs a leader who bleeds American values and prioritizes Intel’s strategic value to American technology leadership. The Administration should engage with visionary leaders like Pat Gelsinger and Craig Barrett, two American corporate leaders clearly aligned with the need to prioritize national security imperatives and human wellbeing over a corporation’s stock price.
Mr. Barrett’s recent op-ed lays out the winning game plan to stabilize and enhance Intel’s global leadership and also conveyed the following blunt message in a much more eloquent manner than we do: Nothing else matters if Intel Foundry fails. The United States will never regain its footing in leading-edge semiconductor fabrication. Paramount to national security, the United States must fortify a domestic, American-led foundry, with process technology development and high-volume manufacturing on American soil.
TSMC’s and Samsung’s chip production in the United States is cause to celebrate but not cause for the growing, pervasive false sense of security in the markets. Leading edge process technology can and will not be airlifted to the United States if Intel fails. That is a stark impossibility. TSMC process technology is developed in Taiwan; Samsung in Korea. Not in America. Their respective processes are sovereign assets. Ours rests solely with Intel. If Intel 18A fails in Arizona, there is no 14A in Ohio. Process technology advances sequentially. If the clock stops for American leading process technology, it will not restart.
The CCP’s Technological Offensive: Capital as a Vector of Strategic Risk
A recent investigation by the U.S. House Select Committee on the Strategic Competition between the United States and the Chinese Communist Party (CCP) revealed a disturbing trend: American venture capital firms, including Sequoia Capital, GGV Capital, Qualcomm Ventures, GSR Ventures, and Walden International (founded by Lip-Bu Tan, CEO of Intel), have channeled billions of dollars into hundreds of Chinese technology companies that directly support the CCP's military objectives, human rights abuses, and global ambitions to replace American technological leadership. The Committee’s investigation found that Walden, alone, has invested up to $2.2 billion in 140 unique investments.
As a recent investigation by the U.S. House Select Committee on the Strategic Competition between the United States and the Chinese Communist Party (CCP) notes, “artificial intelligence and semiconductor technologies are necessary components of the CCP’s Orwellian surveillance state and human rights abuses” and form the technological base for the People’s Liberation Army’s (PLA) modernization campaigns (Select Committee Report, 2024).
Several American investment firms, including the aforementioned, have channeled billions of dollars into hundreds of Chinese technology companies that directly support the CCP's military objectives, human rights abuses, and global ambitions to replace American technological leadership. The Select Committee’s investigation found that Walden, alone, has invested up to $2.2 billion in 140 unique investments. American capital has flowed not only in the form of dollars but also in the form of intangible support—strategic guidance, technology transfer, talent access, and credibility. As the Select Committee report makes clear, “VC firms act almost as consultants for target companies,” helping them scale, recruit, expand internationally, and even navigate U.S. regulatory headwinds.
The Select Committee’s report evidences a clear and sobering thesis: U.S. investment capital has enabled the growth of China’s AI and semiconductor industries, thereby accelerating the CCP’s efforts to weaponize these sectors.
It is time to pick a lane. In his confirmation hearing testimony, Deputy Secretary Feinberg concurred with Senator Wicker in support of and the need to “significantly grow” the Office of Strategic Capital (OSC), emphasizing that OSC “needs to move faster.” This is a national security priority. DoD must lead the turning of the capital markets tanker away from short-term levered arbitrage and toward industrial base resilience and long duration alpha via organic income growth. In the words of the Select Committee: “Outbound U.S. capital investment in critical sectors has advanced the PRC’s strategic priorities while undercutting U.S. strategy toward the PRC” (Select Committee Report, 2024).
Despite these findings and bipartisan consensus on these threats along with SCOTUS’s definitive ruling, the U.S. Department of Commerce has condoned the extension of time period for China’s divestment of TikTok U.S. and has also authorized the sale by NVIDIA of semiconductor chips to China. Many highly skilled, patriotic minded professional tradespeople in the semiconductor and digital infrastructure industries find themselves lost in the conflict between evidence and action. Many Americans understand and appreciate the efforts of the United States Government to ensure functioning and orderly capital markets. A collapse in the stock price of NVIDIA, now approximately eight percent of the S&P 500, would not be digested in isolation and could trigger an implosion in global capital markets. We now stand in a moment in history where market cap is weighed against the preservation of our Republic for which our Nation stands.
The Cost of Real Economic Capital
To quickly touch on how we got here: Since abandoning the gold standard in the 1970s and the advent of the Eurodollar banking and capital markets, the financial economy has increasingly decoupled from the real economy, with speculation, arbitrage, and share buybacks masquerading as prosperity, all to the detriment the foundations of real wage growth, industrial productivity and manufacturing resilience.
Almost overnight, we are trying to reverse the fallout of several decades of sacrificing our defense capabilities and undermining our domestic industrial manufacturing base. We have neglected the importance of real productivity and wage growth and instead continue binging on free refills of debt-fueled, deficit expansion and cheap, cheaply made, goods for which we pay our adversaries in Dollars.
The problem is not merely one of policy—it is systemic. The current structure of the U.S. economy rewards capital for short-term asset appreciation while penalizing long-term investment in physical production. The result is a cost of capital regime that inhibits the expansion of domestic manufacturing, technical training, and job creation.
The antidote is not austerity—but a conscious reallocation of capital toward entrepreneurs, builders, manufacturers, and real asset operators. The U.S. government must lower the cost of productive credit, take risks to reshore industry, and build economic infrastructure that empowers the American workforce.
Real prosperity is not speculative—it’s built. It is forged in fabs, tooling shops, foundries, and data infrastructure. It is sustained by wages, training, and long-term returns—not meme stocks and debt-fueled dividends.
Semiconductor Sovereignty Starts in America
Preservation of technology leadership and semiconductor sovereignty requires two critical components: (1) leading edge process technology development and (2) high-volume manufacturing capacity. After decades of offshoring, today, only one United States-based foundry, Intel Foundry, has a shot to sustain participation in the race for next‑generation node development. As detailed by Chris Miller in Chip War, America sacrificed process leadership for external cost efficiency.
Meanwhile, multi-tiered and multi-cultural innovation hubs like TSMC have risen to global leadership while anchoring robust ecosystems across design, fabrication, packaging, and supply chain. In short, Taiwan spent the last few decades amassing what Howard Yu (Inc.com) aptly describes as “quiet power”: TSMC’s near-zero visibility dominance by serving top-tier clients including Apple and Nvidia. TSMC’s leap into the trillion-dollar club signals more than dominance of operational scale—it cements Taiwan as the fortress of innovation.
Process Innovation Pulls the Ecosystem
Location, location, location. Domicile of chip process technology development dictates the location of talent, suppliers and startups. TSMC’s massive ecosystem emerged from Taiwan’s control and design of the node roadmap. Intel, and correspondingly, America’s semiconductor ecosystem now pays the price of having siloed its innovation.
If the United States cedes any more of its position in process technology development and volume manufacturing, our economy and national security effectively depend on foreign sovereigns and their technological innovation ecosystems.
Nationwide Risk = Strategic Weakness
The United States now waltzes with a generational risk of global scale. America’s chip dependence now extends to its strategic industries. Geopolitical disruption threatens access to Taiwanese or South Korean fabs, a severing of access to sovereign platforms for AI, biotech, space systems, and military infrastructure. Here’s a paybook to consider:
|
Objective |
Action Steps |
|
Anchor process-node R&D in the United States |
Prioritize domestic process technology development (<= 2 nm) through targeted government support and aligned private capital |
|
Empower a United States Foundry Champion |
Restructure and recapitalize Intel Foundry with aligned, long-duration capital in the interest of national security and American leadership in chip process development |
|
Create ecosystem clusters |
Mandate suppliers, startups, and research partners to co-locate near United States foundry operations |
|
Revalue advanced manufacturing trades |
Amplify and accelerate tradecraft curriculums and apprenticeship programs to offer high school graduates an immediate path to certification and high skilled employment positions |
Salvaging Intel’s next node (14A and beyond) is a national security priority. If United States-based process innovation cannot scale, we lose. Period.
A Holistic View of Semiconductor Supply Chain Vulnerabilities
To repeat, we must not permit Intel to fail in its mission of maintaining leadership in advanced node, leading edge process technology. That being said, much of the policy and media focus has centered on advanced-node chips—those produced at 5nm and below, predominantly in Taiwan by TSMC. While this is a critical chokepoint, it is not the only one. The broader semiconductor supply chain is a deeply interconnected and capital-intensive system, with several critical leverage points, including design software, materials, equipment, fabrication, packaging, and test infrastructure.
Put simply, “From outer space for communication satellites to medical devices, and IOT devices, semiconductors have become integral to daily life. Without a secure supply chain of chips, we are truly jeopardizing the engine of our society." — Justin Weinstein, Principal Engineer & Member of the Technical Staff, GlobalFoundries
Understanding this system holistically is essential to crafting an effective industrial strategy. Rebuilding U.S. resilience requires investment not only in leading-edge fabs, but in the full spectrum of supporting infrastructure—including the frequently overlooked industrial manufacturing base and mature-node ecosystem built around legacy chip fabrication.
In public discourse around AI infrastructure, attention tends to focus on cutting-edge chips—NVIDIA H100s, 3nm chiplets, and trillion-parameter model training clusters. However, mature-node semiconductor fabs—often manufacturing at >14nm—remain vital to AI deployment, power systems, industrial controls, and defense platforms.
AI runs on the latest and greatest chips, but it relies on the old ones for essential functionality. These mature-node fabs are the backbone of analog, power management, and RF components that support edge AI, robotics, sensor systems, electric vehicles, and secure communications.
A 2024 U.S. Department of Commerce report confirms that “at least two thirds of respondents’ products likely contain chips manufactured by PRC-based foundries,” yet visibility into the origins of those chips remains dangerously low. “44 percent of surveyed companies were unable to determine whether their products contained any chips manufactured by PRC-based foundries…China is expected to account for almost half of all new capacity to manufacture mature-node semiconductors” over the next 3 to 5 years, and “continued capacity expansion in China prevents foundries outside of China from making the necessary investments” (BIS, 2024).
These practices, fueled by PRC subsidies, have introduced downward pricing pressure that “threatens the competitive position of market-driven firms” and risks flooding the market with artificially cheap chips (BIS, 2024). If AI systems are the engines of innovation, these older chips are the brakes, steering, and fuel lines. No one notices them until they fail—and when they do, the entire system collapses.
Most of the global mature-node capacity today is offshore—in China, Taiwan and Japan. A geopolitical disruption in East Asia could paralyze entire sectors of the U.S. economy and defense industrial base not only through advanced chip shortages, but through the absence of “supporting silicon.”
The Strategic Foundation: Rebuilding America’s Industrial Manufacturing Base
The ability to lead in semiconductors and artificial intelligence is not merely a function of intellectual property, venture capital, or digital infrastructure. It is inseparably tied to America’s industrial manufacturing base. From wafer fabrication tools to vacuum systems, from materials synthesis to advanced packaging—AI and semiconductors are physical technologies, and they require physical manufacturing.
Over the past three decades, the U.S. has ceded significant portions of its manufacturing footprint—particularly in complex, capital-intensive, and precision-driven sectors. This offshoring, once seen as economically efficient, has now become a strategic liability.
We cannot decouple digital innovation from physical capacity. We have seen how fragile the value chain is when one component breaks—whether it’s etch equipment, gas delivery, or power distribution systems. Failure to re-establish the industrial base to support these systems here at home will cede the future of AI and semiconductors to our adversaries.
Manufacturing as the Missing Middle Layer
For decades, U.S. policy and investment have focused heavily on two ends of the spectrum: upstream R&D and downstream consumer technology. But the “missing middle”—industrial-scale production, tooling, materials, and systems integration—has been underfunded, underprioritized, and increasingly outsourced to East Asia.
This middle layer is where semiconductor scale-up happens. It’s where AI infrastructure becomes durable and deployable. And it’s where economic resilience is either built—or lost.
Without domestic capability in:
the U.S. cannot maintain a sovereign AI stack. Nor can it respond rapidly to supply chain disruptions or geopolitical maneuvers.
From Passive Policy to Industrial Strategy
Congressional appropriations to enhance U.S. leadership in AI infrastructure offers a historic opportunity—but only if aligned with private capital that comprehends the industrial logic of AI and semiconductors. Industrial strategy must now become an investing strategy.
The goal is not to recreate the past—it is to build a next-generation industrial manufacturing base, one that is leaner, digitally integrated, export-capable, and aligned with strategic national interests. Instead of moonshots, capital must prioritize American companies that modernize and scale U.S.-based manufacturing, semiconductor tooling, ethical AI deployment at the edge and in infrastructure and the prioritization of apprenticeship in advance and critical industries.
America cannot win the 21st-century technological race on services and software alone. It must once again become a country that builds what it invents.
Rebalancing Trade to Rebuild the American Industrial Base
For the United States to lead in semiconductors and AI infrastructure, it must first reclaim its position as the world’s premier industrial power. Trade policy—too long guided by abstractions of efficiency and consumer pricing—must now be retooled to serve a national strategy of industrial renewal.
The past four decades of globalization hollowed out America’s manufacturing capacity. In the pursuit of “free trade,” the U.S. offshored not only assembly lines, but critical capabilities: process engineering, industrial automation, high-precision machining, and advanced materials manufacturing. These were not just jobs—they were the muscle memory of industrial leadership, and we let it atrophy.
The National Interest Demands Industrial Repatriation
AI and semiconductor technologies are not abstract goods. They are physical products that require complex, capital-intensive manufacturing ecosystems. Rebuilding these ecosystems means making things in America again—at scale, with precision, and with purpose. We must stop pretending that we can dominate the future while outsourcing the tools to build it. America can’t lead in AI or semiconductors if it doesn’t weld, machine, or fabricate the critical systems that power them.
Trade must be subordinated to this strategic imperative. That means correcting decades of trade imbalance, decoupling from adversarial supply chains, and reasserting domestic production as the centerpiece of American economic power.
Let’s leverage trade policy to advance American industrial base resilience:
If we cannot build, we will not prosper. Every link in the chain that supports AI infrastructure should be mapped, and where possible, the essential nodes should be brought home. Where domestic capability doesn’t yet exist, we must create it—not outsource it.
The Advent of American Industrial Sovereignty and Strategic Capital
The world is entering a new industrial era. It will be led not by countries that merely consume or code—but by those who build. America has the talent, capital, and ingenuity to lead this resurgence.
What we need now is the political will and investment focus to match. That means aligning trade policy with national purpose—not GDP abstractions. It means rejecting the false bargain of cheap imports for hollowed-out factories. And it means recognizing that manufacturing is strategy, not a marketing gimmick.
The U.S. must rehabilitate the short sightedness of public and private capital channels to de-couple from China. More specifically, we must stop pretending our socioeconomic model is compatible with that of an authoritarian communist regime. Our capital market participants must stop and think about their fellow countrymen who risk their lives so others can charge fees for deflecting financial risk into hardworking Americans’ 401Ks. Bridgewater just sold $1.4 billion worth of Chinese stock holdings. Perhaps some participants are starting to get the message. At the end of the day, America must lead with its industrial base, and let the financial cart return to its rightful place behind the horse. Anything else will lead us further down the road of impairment to national security and corrosion of economic resilience.
Conclusion
Our Republic must take the risks and socio-economic body shots necessary to resuscitate our industrial base. Hopefully, our elected representatives agree saving democracy is worth the risk. Now is the time for American capital to flee fragile, extractive finance and navigate into the essential layers of the real economy—where human wellbeing, technology, and economic security converge.
The United States cannot defend democracy, power its economy, or wage 21st-century competition on a 20th-century capital strategy. We must build—not just the next big app—but the full stack of resilient, sovereign infrastructure that underlies the AI era. We must collaborate with other aligned sovereigns to sustain a fully integrated, American-led, domestic, leading-edge foundry to secure technological sovereignty. If we rely on foreign companies to secure our digital future, we fall.
The Department of Defense is finding its cadence and is well positioned to lead capital formation and inter-agency collaboration to address national security demand signals on an economically viable path. Congress must legislate to restrict outbound investment to PLA-linked or blacklisted firms, codifying investment controls in critical technology sectors, and dramatically scaling domestic industrial capacity at both the advanced and mature-node levels. Collaboration of capital, policy and industrial innovation is not easy. It has rarely been accomplished, and if it has, it has transpired after conflict, with major winners and major losers in tow. Let’s stop doing it that way. This time, let’s strive for a multilateral solution to effect global equilibrium and a prosperous future.
Intel and other bellwether companies are laying off our most critical AI infrastructure: tenured, highly skilled and experienced people. Foundry operations require technical talent—precision technicians, systems integration specialists, fabrication experts, and tool engineers. Reestablishing integrity, dignity and scaled collaboration is essential to position the United States for a successful outcome in a race it cannot afford to lose.
We must not forsake what we have at hand, and we must focus on “quick wins”. This is neither a commercial pitch nor a political debate—it is a national security imperative. Let’s treat it as such.
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Nvidia ($NVDA) accounts for ~8% of the S&P 500, highest since 1981.