The twenty-first century has witnessed the return of the state to the commanding heights of the technology sector. After decades in which globalization dispersed innovation across borders and multinational corporations transcended national loyalties, governments now treat semiconductors, artificial intelligence, and telecommunications infrastructure as matters of high strategy. This shift—from technology as commercial commodity to technology as national asset—defines techno-nationalism: the belief that technological superiority is inseparable from national power, and that achieving it requires state intervention in markets that were once left to private actors.
Defining Techno-Nationalism¶
Techno-nationalism represents a fusion of economic nationalism with technology policy. Its core premises include:
Technology determines power. Advanced manufacturing, computing capability, and innovation capacity increasingly define a nation’s economic competitiveness and military strength. States that lead in frontier technologies—artificial intelligence, quantum computing, advanced semiconductors, biotechnology—will dominate the industries of the future and possess decisive military advantages.
Markets alone cannot ensure supremacy. Unlike classical liberal economics, which trusts comparative advantage and specialization to optimize outcomes, techno-nationalism holds that critical technologies must be developed domestically, even at higher cost. Dependence on foreign suppliers for essential components creates vulnerabilities that efficiency gains cannot justify.
Technology is not neutral. The infrastructure that processes data, manufactures goods, and enables communications embeds values and creates dependencies. Chinese telecommunications equipment may enable surveillance; American platforms may extract data; foreign-controlled supply chains may be severed in crisis. Technology choices are political choices.
The term itself entered policy discourse in the late 1980s, when American concerns about Japanese technological ascendance prompted debates about industrial policy. But contemporary techno-nationalism operates on a far larger scale, driven by the U.S.-China rivalry and enabled by government resources that dwarf earlier interventions.
The Drivers of Techno-Nationalism¶
Three overlapping imperatives propel the techno-nationalist turn:
National Security¶
Military power increasingly depends on technological sophistication. Precision-guided munitions, cyber capabilities, autonomous systems, and space-based assets all require advanced semiconductors, software, and manufacturing capacity. A nation that cannot produce its own chips or develop its own AI systems depends on others for the tools of war.
The security dimension extends beyond weapons to infrastructure. Telecommunications networks carry sensitive communications; cloud systems store critical data; industrial control systems operate essential facilities. Foreign equipment in these systems creates potential backdoors; foreign ownership creates potential leverage. The American campaign against Huawei reflects precisely this concern: that Chinese telecommunications equipment could enable espionage or sabotage.
Supply chain vulnerabilities compound these risks. The COVID-19 pandemic revealed how quickly shortages of essential goods—pharmaceuticals, medical equipment, semiconductors—could emerge when global production concentrated in a few locations. The semiconductor shortage that crippled automotive production demonstrated that technological dependencies have cascading economic effects.
Economic Competitiveness¶
Technology sectors generate disproportionate value. Software, semiconductors, pharmaceuticals, and advanced manufacturing command higher margins, higher wages, and higher growth than commodity industries. Nations that host these sectors capture the economic benefits; those that do not become dependent consumers of others’ innovations.
The dynamics of technology industries reinforce first-mover advantages. Network effects make dominant platforms difficult to displace; learning curves reduce costs for established producers; ecosystems of suppliers and talent cluster around existing hubs. A nation that falls behind in a critical technology may find catch-up impossible without state intervention.
China’s technological rise prompted particular concern. A nation that was assembling consumer electronics in the 1990s now leads in 5G deployment, rivals American AI research, and produces sophisticated military systems. Western assumptions that economic integration would produce political liberalization gave way to recognition that technology transfer had enhanced a strategic competitor.
Geopolitical Competition¶
The U.S.-China rivalry has transformed technology policy from an economic matter into a strategic one. Both powers now explicitly link technological leadership to geopolitical position:
For Washington, maintaining technological superiority is essential to preserving the international order that American power underwrites. If China achieves parity or dominance in AI, quantum computing, or semiconductors, it could challenge American military advantages, set global technology standards, and reshape international institutions to reflect Chinese interests.
For Beijing, technological self-reliance is necessary to escape what it perceives as American containment. American sanctions on Huawei and ZTE, export controls on semiconductor equipment, and restrictions on Chinese investment in American technology companies all demonstrated that dependence on Western technology creates vulnerability. Geoeconomic leverage can be wielded against China only if China remains dependent.
Other powers draw similar conclusions. The European Union pursues digital-sovereignty and strategic-autonomy partly to reduce dependence on both American platforms and Chinese hardware. India, Japan, South Korea, and others navigate between the technology superpowers while developing domestic capabilities.
Key Manifestations¶
Techno-nationalism has produced major policy initiatives across leading economies:
The United States: CHIPS Act and Export Controls¶
American techno-nationalism combines massive subsidies with aggressive restrictions. The CHIPS and Science Act of 2022 allocated $52 billion for domestic semiconductor manufacturing and research, representing the largest American industrial policy intervention in decades. Additional provisions support science research, workforce development, and technology commercialization.
Simultaneously, Washington has imposed sweeping export controls targeting China. Restrictions on advanced semiconductor manufacturing equipment—particularly the extreme ultraviolet lithography machines produced by ASML in the Netherlands—aim to prevent China from manufacturing cutting-edge chips domestically. Controls on AI chips, supercomputer components, and related technologies further constrain Chinese capabilities.
The American approach seeks to maintain a technological lead by both advancing domestic capacity and impeding competitors. This “run faster, trip the other guy” strategy marks a departure from the open technology trade that characterized the post-Cold War era.
China: Made in China 2025 and Beyond¶
China has pursued technological self-reliance more systematically and for longer than any other major economy. The Made in China 2025 initiative, announced in 2015, set explicit targets for domestic production of semiconductors, robotics, aerospace equipment, and other advanced technologies. State subsidies, directed credit, technology transfer requirements, and procurement preferences all support domestic champions.
American pressure has intensified rather than abandoned these efforts. Following Huawei’s effective exclusion from Western chip supplies, China accelerated semiconductor investment. The 2020 “dual circulation” strategy prioritizes domestic demand and production while maintaining international engagement where possible. Massive state funds—hundreds of billions of dollars—flow to semiconductor fabrication, AI research, and other priority sectors.
China’s approach reflects both ambition and vulnerability. The ambition is to lead the industries of the future and reduce dependence on American technology. The vulnerability is that China still relies on foreign equipment, software, and intellectual property for the most advanced technologies. The race between Chinese catch-up efforts and American containment measures will shape the global technology landscape for decades.
The European Union: Sovereignty Through Regulation and Investment¶
European techno-nationalism takes a distinctive form, emphasizing regulatory power alongside industrial investment. Lacking domestic technology giants comparable to American or Chinese firms, the EU leverages its market size to shape global standards—the “Brussels effect” whereby European regulations become de facto global requirements.
GDPR established global norms for data protection; the Digital Markets Act and Digital Services Act impose obligations on large platforms; the AI Act creates the world’s first comprehensive artificial intelligence regulatory framework. These instruments assert European values and create compliance burdens that advantage firms willing to meet European standards.
The EU also pursues direct investment through initiatives like the European Chips Act, which mobilizes public and private resources to increase European semiconductor production. GAIA-X aims to create federated European cloud infrastructure reducing dependence on American hyperscalers. The Important Projects of Common European Interest (IPCEI) framework enables state aid for strategic sectors.
European techno-nationalism reflects the continent’s position: unable to match American or Chinese scale, yet unwilling to accept permanent dependence. The strategy combines standard-setting, investment, and alliance-building with like-minded partners.
The Semiconductor Wars¶
No industry better illustrates techno-nationalism than semiconductors. Chips are the essential substrate of the digital economy—without them, nothing runs. Yet semiconductor production has concentrated remarkably: Taiwan Semiconductor Manufacturing Company (TSMC) fabricates the vast majority of advanced chips; ASML’s lithography machines are essential for cutting-edge manufacturing; a handful of American and European firms supply design tools and specialized equipment.
This concentration creates profound vulnerabilities:
Taiwan’s centrality means that a Chinese invasion or blockade could sever access to advanced chips for the entire world. American and European efforts to build domestic fabrication capacity respond partly to this geopolitical risk.
Chokepoint leverage enables weaponized-interdependence. American controls on semiconductor equipment exports to China exploit the bottlenecks in the supply chain; China’s dominance in rare earth processing creates reciprocal leverage.
Investment requirements are staggering. A single advanced fabrication facility costs $20 billion or more and takes years to construct. Only massive state support can alter the geography of semiconductor production at meaningful scale.
The semiconductor contest has become the central arena of U.S.-China technological competition. American restrictions aim to freeze Chinese chip capabilities at current levels; Chinese investments aim to achieve independence regardless of cost; Taiwan, the Netherlands, Japan, and South Korea navigate between the great powers while protecting their own positions.
Risks of Fragmentation¶
Techno-nationalism carries significant risks:
Economic inefficiency results from duplicating supply chains, subsidizing uncompetitive industries, and forgoing specialization gains. If every major economy builds its own semiconductor fabs, chip costs rise and innovation may slow. The efficiency of globalized production enabled lower prices and faster development; reversing that integration imposes real costs.
Innovation constraints may emerge from fragmented ecosystems. Science and technology advance through global collaboration; researchers, firms, and ideas cross borders. Walls between technology blocs limit the flow of knowledge. Chinese AI researchers cut off from American collaboration, American firms denied Chinese manufacturing, European startups excluded from American venture capital—all represent potential innovation losses.
Standards proliferation threatens interoperability. If American, Chinese, and European technology systems diverge, devices and services may not work across borders. The specter of a “splinternet”—fragmented digital systems organized by political bloc—becomes more plausible.
Alliance tensions arise when techno-nationalist measures impose costs on partners. American pressure on the Netherlands to restrict ASML sales to China strains relations; European digital regulations burden American firms; technology nationalism can become protectionism directed at allies as well as adversaries.
Escalation dynamics may produce spiraling restrictions. Each new export control invites retaliation; each subsidy prompts competitive response. The U.S.-China technology rivalry already shows signs of such dynamics, with restrictions begetting counter-restrictions in an expanding contest.
The Future of Techno-Nationalism¶
Techno-nationalism appears likely to intensify rather than abate. Several factors point in this direction:
The technologies at stake—AI, quantum computing, biotechnology—are becoming more strategically significant, not less. Their military applications, economic value, and societal implications ensure continued state attention.
Great power competition shows no signs of easing. The structural rivalry between the United States and China provides the context in which technology policy is made; absent accommodation between the powers, technology will remain contested terrain.
Domestic political coalitions support industrial policy. Workers in manufacturing regions, firms receiving subsidies, and security establishments advocating self-reliance all favor techno-nationalist policies. The political economy of technology nationalism creates its own momentum.
Yet countervailing forces may limit fragmentation. Economic interdependence remains deep; complete decoupling would impose enormous costs. Allied coordination may channel techno-nationalism into managed competition rather than chaotic fragmentation. And the practical difficulties of achieving self-reliance—the cost, complexity, and time required—may temper ambitions.
The emerging order will likely feature neither the globalized openness of the 1990s nor the autarkic blocs of the 1930s, but something in between: managed interdependence within alliance networks, selective decoupling from rivals, and continued competition over the technologies that will define power in the decades ahead. Techno-nationalism has become a permanent feature of international politics, reshaping how states understand security, prosperity, and sovereignty in a world where power flows through silicon as surely as it once flowed through steel.