Of Silicon and Strategy: Has Washington’s Chips Policy Overstepped Logic?

By Moira Jones, Washington Bureau Chief, World Media | UK/US – 23 May 2025

In the post-global economy silicon is as strategically critical as steel was to empires of the past, the United States is attempting to reforge global technology supply chains. For all the headlines heralding semiconductor independence and AI supremacy, one must ask: is Washington’s chips strategy coherent?

An Arsenal of Ambitions

At the heart of the campaign lies the CHIPS and Science Act, an industrial policy spearheaded by the Biden administration and continued under the Trump administration.. The Act pledges over $280 billion to revitalise domestic chip manufacturing and reduce dependency on Taiwan.

The policy was written for autonomy, recent manoeuvres mark change.

A Diplomatic Nod to Silicon Arabia

In a surprising twist, Nvidia’s CEO Jensen Huang accompanied former President Trump on his Middle East tour in May, clinching an agreement to sell 18,000 Blackwell AI chips to Saudi Arabia and another 500,000 to the UAE. The chips, some of the world’s most advanced, are earmarked for sovereign AI infrastructure.

These sales—once restricted—present a new national security paradigm, preceeding rationale was used to choke off supply to China.

The China Paradox

The U.S. has placed a tight chokehold on Beijing. Fresh export curbs this year ban the sale of AI accelerators and advanced lithography tools to Chinese firms, citing concerns over military and surveillance usage. American tech giants must obtain export licences, and any workaround via third-party countries is a red flag. Still, it happens.

“The restrictions are a failure—they’re not slowing China, and they’re hurting us,” Jensen Huang told the Financial Times, warning that the policy may accelerate China’s self-sufficiency. China has poured nearly $50 billion into its National Integrated Circuit Industry Investment Fund III, and is fast-tracking domestic replacements for tools once sourced from the West.

Strategic Logic—or Strategic Panic?

The deeper issue lies in the philosophical tension at the heart of U.S. policy. Washington is working from the existing policy intended to create autonomy and control:

1. Maintain technological dominance through control of high-end chips.

2. Exploit foreign markets to fund its domestic R&D and keep firms like Nvidia at the forefront.

   
   

But even Jensen says these aims clash.

Selling AI chips to the Middle East—nations with their own geopolitical entanglements—may bring short-term strategic alignment and profit, but it raises long-term questions. What safeguards are in place? How do these sales square with efforts to limit China’s digital reach?

Moreover, the AI Diffusion Rule, introduced earlier this year, grades countries by trustworthiness—but in practice, the rubric appears more political than principled.

The View from Europe

Across the Atlantic, policymakers in Brussels and London are watching closely. A Whitehall official remarked, “The CHIPS Act is a masterclass in American industrial strategy—but its foreign policy coherence is wanting.”

The concern is that Washington, in racing to contain China, may end up exporting powerful capabilities elsewhere without fully reckoning with the long-term consequences.

Conclusion: Strategy Without Symmetry?

In 1941, the U.S. denied Japan access to steel and oil—escalating tensions that led to war. Today, Washington is curbing China’s access to chips, while selectively empowering other autocracies.

The world now trades in bits, not bullets—but the geopolitical stakes are no less real. The United States may wish to control the future of AI, but without consistency, the very foundations of its technological leadership risk eroding—one chip deal at a time.