STRATEGIC ADAPTATIONS TO THE US–CHINA TRADE WAR: SEMICONDUCTOR DYNAMICS, TECHNOLOGICAL BALKANISATION, AND POLICY RECOMMENDATIONS FOR DEVELOPING ECONOMIES (WITH A FOCUS ON UZBEKISTAN)

Abstract

In this article, the authors will look at strategic counter-arguments to the US-China trade war, specifically the semiconductor industry, as the epicenter of technological competition, and the phenomenon of “technological balkanisation” the gradual separation of the global technology into two parallel and somewhat incompatible ecosystems, with the United States and China at their respective poles. The article examines the structural significance of semiconductors for economy and national security, identifies the key players, (US export control measures, Chinese state-led self-sufficiency campaign, and the global gatekeepers NVIDIA, TSMC, and ASML), and reviews the “strategic pause” under the Busan Accord (2025-2026), which postponed the semiconductor tariffs until 2027. It highlights a paradoxical interdependence between a shortage of advanced nodes chips in China and its expected dominance of mature nodes chips by early 2026, increasing supply chain fragility. The article then explores the economic losses and innovation inefficiencies of technological balkanisation, such as lost R&D duplication, lost economies of scale, and higher compliance costs. Lastly, it puts these global trends into actionable policy advice for developing economies, especially Uzbekistan. The suggested measures are: diversifying trading and investment partners, strengthening capacities in the intermediate technology supply chains of the global economy (assembly, testing, packaging, materials processing); improving capacities in institutions, regulations and infrastructure connectivity; and creating a comprehensive National Strategy for economic resilience. The author concludes that the US-China trade war has significant potential to disrupt the world, but it also helps those countries that are more agile to reorient themselves in the new configurations of global value chains.

Keywords: Semiconductors; technological balkanisation; strategic pause; maturenode chips; parallel ecosystems; Uzbekistan; economic resilience; global value chains.