Apple, Intel and US statism versus China’s: Will global domination pivot on silicon chips?

While the pact is preliminary, reports of it gave Intel’s stock a far bigger boost than Apple’s on Friday. A broker’s role is said to have been played by the federal government, which owns a tenth of Intel’s equity.

Taken last August for $8.9 billion, this stake was portrayed as a natural outcome of a subsidy granted to the chipmaker under a ‘small yard, high fence’ policy aimed at autarky in fields like semiconductors. Even so, it marked a closer embrace of what was once snubbed as statism and is now called industrial policy.

Some onlookers suspect this statist turn was thrust upon America by China’s designs on Taiwan, whose TSMC makes chips on contract for the tech world’s who’s who, ranging from Nvidia and AMD to Intel and Apple.

A squeeze of rare-earths supply by Beijing is one thing; a chips embargo could be quite another. Likewise, a ‘once inside’ chipmaker grabbing a bailout raises no eyebrows, but what explains Apple’s decision?

With its iPhones made in Asia, Apple has gained much from globalization, but it can hardly shrug off White House calls to onshore what it can. Last July, the company struck a supply deal with MP Materials, a rare-earth producer, soon after the US Defense Department invested $400 million in it. A nudge from above was apparent in that move too.

For Apple watchers, the irony of all this is how the brand first achieved fame—as a voice against central authority. Back in the 1980s, it positioned itself as a decentralizer of digital power, selling devices designed to resist any form of thought police.

This, coupled with its rise from a garage as a private venture, went with America’s self-image as a nation of individual agency. Apple’s success was not just an ode to free enterprise, but also an oblique rebuke to the statist claim that centrally directed—rather than market determined—allocation of resources could yield a vibrant economy.

By the 1990s, the Soviet Union’s centralized model of the Cold War era had caved in, marking the triumph of free-market economics. China’s export-led ascent, aided by investments from US firms like Apple, did not go unnoticed—but was broadly attributed to Beijing’s adoption of market forces. In fact, the ‘Chinese characteristics’ of its socialism were widely viewed as a reference to capitalism.

Yet, today, it is the US that labours under the shadow of Orwellian ‘doublethink,’ as seen in the state’s heavy hand in business affairs, be it trade flows or factory nodes.

In 1991, we remixed India’s economy in favour of market competition. What cues should we take from today’s world?

As China and the US prepare for a summit, the former wants the latter to quit backing Taiwan’s autonomy, lift its import tariffs and ease chip-export curbs in lieu of access to Chinese rare earths, while America seeks a bilateral trade balance that evokes eyerolls from economists.

It is true that Beijing deployed a statist catapult for exports, just as tech superiority based on AI advances and silicon heft could spell a strategic edge in various theatres of war. But White House envy of central planning is not evidence of it being the better economic model.

While we watch this geo-rivalry play out, we must resist viewing it through the reductive prism of silicon wafers. Let’s think different. Think economics.