US forges ‘Pax Silica’ alliance to counter China in AI and semiconductor race

Australia, the United Kingdom, Israel, South Korea, Japan, and Singapore have accepted the “Pax Silica” strategic initiative proposed by the US. This initiative includes a commitment to “create a secure, prosperous, and innovation-focused silicon supply chain, from critical minerals and energy inputs to advanced manufacturing, semiconductors, artificial intelligence infrastructure, and logistics.”

According to an analysis in AsiaTimes, the Netherlands and the United Arab Emirates (UAE) also attended the Pax Silica Summit in Washington on December 12 but did not sign the Pax Silica Declaration.

Taiwan was invited as a special guest. Canada and the EU reportedly participated in discussions regarding supply chain issues. India was notably absent from the summit.

Pax Silica formalizes the semiconductor and artificial intelligence alliance established by the US under the Trump and Biden administrations. From Washington’s perspective, it also defines the “practical limits of self-sufficiency” that the initiative aims to achieve, serving as the first line of defense in the world’s new geostrategic competition.

The official website of the US Department of State states, “Pax Silica is the State Department’s flagship effort on AI and supply chain security, building a new economic security consensus among allies and trusted partners.”

According to Under Secretary for Economic Affairs Jacob Helberg, “If the 20th century ran on oil and steel, the 21st century runs on computers and the minerals that power them. This historic declaration heralds a new economic security consensus that enables like-minded partners to build tomorrow’s AI ecosystem.”

The Pax Silica Fact Sheet states the following:

“Pax Silica aims to reduce coercive dependencies, protect the materials and talent that form the foundation of AI, and ensure that like-minded countries can develop and deploy transformative technologies at scale.

Pax Silica is a positive-sum partnership. Its purpose is not to isolate others, but to coordinate with partners who want to remain competitive and prosperous.”

However, although the Pax Silica Declaration does not explicitly name China, it clearly targets the country.

The declaration points to the importance of addressing “non-market practices that undermine innovation and fair competition.” Emphasizing the significance of private investment, Pax Silica notes that coordination is necessary to “protect these investments from market distortions of overcapacity and unfair dumping practices and to preserve a level playing field for innovation and growth.”

The declaration states, “We understand the importance of cooperation in the implementation of our respective policies to protect sensitive technologies and critical infrastructure from undue access, influence, or control.”

In comments reported by Politico, Under Secretary Helberg explicitly targeted China and its Belt and Road Initiative, stating:

“This is an industrial policy for the economic security coalition, and it’s a game-changer because there is no group today where we can come together on the AI economy and how we’re going to compete with China in the AI space. By aligning our economic security approaches, we can begin to move in concert to basically block China’s Belt and Road Initiative, which is designed to grow its export-oriented model, by blocking China’s ability to buy up ports, major highways, transportation, and logistics corridors.”

Arguing that the Pax Silica group will assume a role for AI similar to the one the G7 played in the industrial age, the under secretary asserted, “This commits us to a process where we’re going to be cooperating on aligning our export controls, screening foreign investments, combating anti-damping, but with a very proactive agenda to secure the chokepoints in the global supply chain system.”

According to the Fact Sheet, the initiative responds to the “growing demand from partners to deepen economic and technological cooperation with the US.” This implies that the US is asking its partners not to engage in a similar relationship with China.

Referencing Pax Romana and Pax Americana, the declaration says, “Pax Silica is a new kind of international grouping and partnership, bringing together the countries that are home to the world’s most advanced technology companies to unlock the economic potential of the new AI age.”

Pax Silica does not say anything new about the Taiwan issue and offers no concrete proposals regarding the supply of rare earth elements, but it does offer some relief to partner countries uneasy about US protectionism:

“We believe that true economic security requires reducing over-dependencies and forging new connections with trusted partners and suppliers committed to fair market practices. At the same time, we will seek to ensure trusted partners have access to all the technological breakthroughs that are shaping the AI economy.”

For Japan and South Korea, key component suppliers, joining Pax Silica is both a way to please a potential Trump administration and a green light for their own national semiconductor projects.

On the day the Pax Silica Summit was held in Washington, the Japanese press reported that about 20 more companies were considering investing in Rapidus, a new chip foundry being built near Sapporo on the northern island of Hokkaido.

Rapidus is a Japanese venture established to catch up with TSMC, a cutting-edge semiconductor contract manufacturing company, aiming to begin mass production at the 2-nanometer node in 2027 and at 1.4 nm shortly thereafter.

Founded in 2022, Rapidus was initially backed by Sony, Toyota and its semiconductor manufacturer Denso, NAND flash memory producer Kioxia, national telecom operator NTT, telecom equipment manufacturer NEC, investment firm Softbank, Japan’s largest bank Mitsubishi UFJ, and the Japanese government. Rapidus is collaborating with IBM to commercialize IBM’s 2 nm process technology.

Since then, 22 new investors have emerged, including Honda, Fujitsu, Canon, Fujifilm, Seiko Epson, Ushio, Kyocera, JX Advanced Metals, Dai Nippon Printing, Hokkaido Electric Power, Nippon Express, Nohmi Bosai (fire prevention), Argo Graphics (digital design and manufacturing process technology), Nagase Sangyo (specialty chemicals and functional materials), seven commercial banks, and the Development Bank of Japan. Additionally, Organo is building and will own the water treatment facilities within the plant.

Rapidus has thus transformed into a comprehensive public-private national industry project.

In South Korea, the government has announced an “AI Age Semiconductor Development Strategy,” which includes plans to build 10 new semiconductor factories and increase the country’s fabless (design-only) semiconductor sector tenfold.

This strategy was publicly announced on December 10 by Minister of Trade, Industry, and Resources Kim Jung-kwan during the “Artificial Intelligence (AI) Age K-Semiconductor Vision and Development Strategy Briefing,” chaired by President Lee Jae Myung.

As reported by Business Korea, the strategy aims to “move beyond [South Korea’s] current semiconductor industry structure centered on memory semiconductors and develop system semiconductors, including fabless and foundry, while also enhancing competitiveness in materials, components, and equipment to leap forward as the world’s second-largest semiconductor powerhouse.”

While Pax Silica can be seen as an American strategy, it also provides a platform for the industrial policies of Japan and South Korea, which do not want to cede technological leadership to China and seek to maximize the benefits of their partnership with the US.