Beyond market forces, Intel's resurgence is significantly propped up by US government support. Viewing domestic chip manufacturing as a national security imperative, the government can influence hyperscalers to commit to buying from Intel, guaranteeing demand for its new fabs.

It's a common error to conflate the CHIPS Act and the October 2022 chip controls. The CHIPS Act was a legislative effort for domestic manufacturing resilience. The executive export controls were a separate national security policy focused on denying China access to high-end compute for military applications.

Counterintuitively, Thompson argues against cutting China off from Taiwan's semiconductor manufacturing (TSMC). A China dependent on Taiwan is less likely to act aggressively toward it. Creating a situation where the U.S. relies on Taiwan while China does not increases the risk of conflict, as China's optimal move could become disabling that key U.S. asset.

It's naive to expect private companies to reverse the offshoring of chip manufacturing, a trend they initiated to maximize profits. Pat Gelsinger argues that markets don't price in long-term geopolitical risk, making substantial, long-term government industrial policy essential to bring supply chains back.

Policymakers are not treating all memory chips equally. A bifurcated strategy is emerging: strict controls and allied partnerships for high-end AI chips (HBM), versus more flexible options like differentiated licensing for lower-end commodity memory used in consumer goods and autos.

Banning chip sales to China reduces its reliance on Taiwan's TSMC, lowering the economic cost of an invasion. Resuming sales re-establishes this crucial economic link, creating a powerful disincentive for conflict and acting as a geopolitical stabilizer, despite seeming counterintuitive to gaining a direct AI advantage.

The US is allowing Nvidia to sell advanced chips to China again. The strategic calculus has shifted from simple resource hoarding to geopolitics: keeping China dependent on Taiwan's TSMC makes an invasion less likely, as it would destroy the very supply chain China needs for its AI ambitions.

A zero-tolerance policy on selling advanced AI chips to China might be strategically shortsighted. Allowing some sales could build a degree of dependence within China's ecosystem. This dependence then becomes a powerful point of leverage that the U.S. could exploit in a future crisis, a weapon it wouldn't have if China were forced into total self-sufficiency from the start.

The effectiveness of US export controls on advanced AI chips stems from a deep technological gap. According to China's own projections, it won't be able to domestically produce chips as powerful as those the US is restricting until 2028, creating a significant and lasting strategic advantage for democracies.