Ruling Chips: Power and U.S. Dominance in High-Tech

Yan Xu, University of Chicago

There has been much talk about American economic decline, yet for the past twenty years the U.S. has maintained steadfast dominance in the global integrated circuit (IC) industry, the foundation of information technologies. American firms have not only kept a tight grip on half of the global market share but also reaped most of the profits. This paper tries to solve this puzzle through an examination of the IC industry’s evolution since the late 1970s, especially the dynamics between the U.S. and East Asia, the two most important regions of the industry. Whereas existing accounts in comparative political economy emphasize the dynamism of U.S. capitalism especially vibrant entrepreneurship in Silicon Valley, I argue that American power over the IC industry through control of access to market and technology and most importantly influence over intellectual property rules played a crucial role in sustaining U.S. dominance. This power helped the U.S. fend off Japan’s challenge to its industry leadership in the 1980s and induced other East Asian countries—South Korea and Taiwan in particular—to develop in a way that is complementary to U.S. competitiveness. Thus, U.S. dominance has not diminished with the rise of East Asia in IC. I also assess U.S. power with the growing role of China in the IC industry. I argue that while market power of the U.S. has been eclipsed, its overall power in shaping the industry has not reduced thanks to its centrality in the production networks of the global IC industry.

No extended abstract or paper available

 Presented in Session 100. Innovation, Law, and Value in Global Capitalism