Aug 25 — When the world’s most advanced semiconductor manufacturer, Taiwan Semiconductor Manufacturing Company (TSMC), quietly announced that it would cease using Chinese-made equipment in its cutting-edge two-nanometre production lines, the decision did not just reverberate across the technology sector.
It symbolised the sharpened fault lines of Cold War II — a confrontation not defined by nuclear warheads and ideology, but by microchips, supply chains, and digital arteries of power.
On the surface, the United States and China have presented the illusion of a truce, extending tariff freezes and hinting at a newfound stability in their dyadic relationship.
This gives an impression that, unlike Washington’s harsh imposition of forty-five per cent tariffs on India for refusing to halt its purchase of Russian oil, Beijing has managed to negotiate a smoother landing. But beneath this veneer, the embers of a strategic rivalry are glowing ever hotter.
The semiconductor ecosystem is today’s equivalent of Cold War nuclear strategy.
Whoever controls the finest lithography machines, the most efficient foundries, and the securest supply chains holds the commanding heights of the global economy.
The United States has moved decisively to block China’s advance in this space.
The Biden administration, through its CHIPS and Science Act, and now the Trump administration in its second term, have pressed allies to tighten controls.
Dutch lithography giant ASML has been barred from exporting its most advanced extreme ultraviolet technology to China.
Japanese firms producing speciality chemicals and South Korean companies at the heart of memory chips have been pressured to limit exposure.
For TSMC, whose two-nanometre technology is slated to dominate the next decade of computing power, cutting Chinese suppliers was not merely a business decision — it was survival. Washington’s message has been blunt: align with us, or risk exclusion from the largest markets and most lucrative alliances.
This tightening ring around China has profound implications for Asean. Malaysia, which supplies about thirteen per cent of US motherboards and circuits, is particularly vulnerable. Vietnam, Thailand, and Singapore are also deepening their stakes in semiconductor packaging, testing, and design.
If any Asean country is accused of serving as a trans-shipment hub for Chinese components disguised for re-export, punitive tariffs could descend swiftly.
The precedent is already set: India’s punishment for Russian oil imports shows Washington’s willingness to weaponise tariffs against even strategic partners. For Asean, a tariff of forty-five per cent on electronics exports would cripple growth and devastate supply chains.
Nor is this contest limited to chips. The US has moved to bar China from participation in submarine cable projects that carry the world’s data flows. By controlling the infrastructure of information, Washington aims to prevent Beijing from probing or undermining the structural integrity of global communications.
This extends the Chip War into the realm of cyber-sovereignty and digital connectivity — areas where Asean has quietly tried to build bridges but may soon face stark choices.
The Cold War of the twentieth century pitted Washington and Moscow in a nuclear stalemate, buffered by ideological blocs. Cold War II is structurally tighter, technologically deeper, and economically riskier.
Unlike the Soviet Union, China is integrated into global trade and supply chains. Every restriction thus carries cascading effects across allies, partners, and neutral states.
This is precisely why Asean cannot assume that “business as usual” will hold. The global chip industry’s bipolarisation will test Asean’s cherished principle of centrality. Unlike during Cold War I, where neutrality allowed room for manoeuvre, Asean’s economies are now deeply enmeshed in the very technologies at the heart of the US–China confrontation.
Prime Minister Anwar Ibrahim has so far walked this tightrope with dexterity. As Malaysia’s leader and concurrently as Asean Chair, he has engaged both Washington and Beijing without succumbing to pressure from either.
He has underscored Malaysia’s role as a “trusted node” in the semiconductor supply chain while reinforcing economic ties with China as its largest trading partner.
This tightening ring around China has profound implications for Asean. Malaysia, which supplies about thirteen per cent of US motherboards and circuits, is particularly vulnerable. Vietnam, Thailand, and Singapore are also deepening their stakes in semiconductor packaging, testing, and design.
But balance must not depend on a single individual. Institutional resilience, diversified trade architecture, and Asean-wide policy coordination are needed to withstand shocks.
The challenge ahead is to build a collective Asean posture that can cushion tariff blows, expand intra-regional trade, and prevent any member state from becoming the “weak link” that triggers punitive responses.
The implications of TSMC’s shift are sobering for Asean.
The first lesson is the need to diversify and fortify regional supply chains. No single market can guarantee security, so Asean must deepen its own digital economy agreements, harmonise supply chain security standards, and scale up indigenous capacity.
The second lesson is to resist the temptation of short-term gains through opaque trans-shipment practices.
Routing Chinese components into US markets may appear profitable, but such tactics risk catastrophic retaliation through tariffs and sanctions. Transparency and traceability in supply chains are no longer optional.
The third lesson lies in collective diplomacy. Just as the Helsinki Process offered Europe a forum to manage Cold War tensions, Asean must leverage its summits — particularly the East Asia Summit — to press for cooperative frameworks on technology governance and minimal tariff regimes.
TSMC’s decision to exclude Chinese tools from its most advanced production lines is not a mere corporate adjustment; it is a marker of the world we now inhabit.
The contest over chips is the frontline of Cold War II. For Asean, the danger lies not in choosing sides prematurely but in mismanaging exposure.
The task for leaders, scholars, and policymakers is to recognise that vigilance and balance are no longer virtues but necessities.
Prime Minister Anwar has demonstrated what quiet equilibrium looks like. It is now Asean’s duty to institutionalise this posture, ensuring that the region survives — and even thrives — in a world where silicon has replaced steel as the backbone of power.
* Phar Kim Beng, PhD is the Professor of Asean Studies at International Islamic University of Malaysia and Director of Institute of Internationalisation and Asean Studies (IINTAS).
** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
