The Aakhya Weekly #176 | From Oil to Silicon: The New Order of Semiconductor Power
In Focus: The Rise of Pax Silica and India’s Strategic Moment
For much of modern history, global power has rested on control over tangible resources. Empires rose and fell on their command of trade routes, industrial capacity, and energy supplies. In the twentieth century, oil emerged as the defining strategic commodity, shaping alliances, conflicts, and economic hierarchies. From the geopolitics of the Middle East to the architecture of post-war globalisation, hydrocarbons underwrote what came to be known as Pax Americana. Today, however, the foundations of power are shifting. The resource that increasingly determines national strength, economic resilience, and strategic autonomy is not oil, but silicon.
Semiconductors have quietly become the backbone of modern civilisation. They are embedded in nearly every system that defines contemporary life, from smartphones and data centres to power grids, defence platforms, electric vehicles, and medical devices. What makes chips uniquely powerful is not just their ubiquity, but their role as enabling technologies. Artificial intelligence, advanced manufacturing, digital governance, clean energy transitions, and modern warfare all depend on reliable access to increasingly sophisticated semiconductors. Without them, the ambitions of the twenty-first-century economy remain largely theoretical.
Pax Silica and the New Logic of Power
The growing centrality of chips marks the emergence of a new global order, Pax Silica. Unlike earlier eras anchored in territorial control or energy dominance, Pax Silica is shaped by control over compute, silicon, critical minerals, and the energy systems that sustain them. It is not a formal alliance in the traditional sense, but a convergence of interests among a small group of technologically advanced and geopolitically aligned countries that increasingly treat these inputs as shared strategic assets rather than purely commercial goods.
At the heart of this emerging order is a US-led strategic alignment involving key semiconductor and technology stakeholders, including Japan, South Korea, Singapore, the Netherlands, the United Kingdom, Israel, Australia, and energy- and capital-rich partners such as the UAE. Together, these countries span the most critical nodes of the semiconductor value chain from advanced chip design and fabrication to equipment manufacturing, logistics, critical minerals, cybersecurity, and energy security. Much like earlier global orders defined by maritime supremacy or oil security, Pax Silica is built around coordinated control over the technologies that underpin both economic and military power.
Historical parallels help illuminate the magnitude of this shift. Pax Britannica was sustained by naval dominance and industrial capacity, allowing Britain to shape global trade and finance without direct territorial expansion. Pax Americana, which followed the devastation of World War II, combined military alliances, institutional leadership, and the dollar’s global role with secure access to energy resources. Oil shaped strategic thinking through doctrines of energy security, strategic reserves, and geopolitical intervention. Semiconductors now play a similar role, but with far greater complexity, deeper interdependence, and far fewer substitutes.
Unlike oil, which is extracted, transported, and traded as a relatively uniform commodity, semiconductors are the product of highly intricate ecosystems. They require cutting-edge research, capital-intensive manufacturing, ultra-precise equipment, and deeply specialised skills. Advanced chip fabrication alone demands investments running into tens of billions of dollars, uninterrupted power and water supply, extreme process control, and years of accumulated know-how. These high barriers to entry have resulted in an unusually concentrated global value chain, with critical choke points controlled by a handful of firms and countries. In this environment, chips have ceased to be ordinary commercial goods and have become strategic assets.
The implications of this concentration have become impossible to ignore. Pandemic-era semiconductor shortages exposed the fragility and opaqueness of global supply chains, affecting industries far removed from electronics. More recently, export controls, technology denial regimes, and licensing restrictions have demonstrated how access to chips can be used as an instrument of statecraft. Advanced semiconductors now determine not only economic competitiveness, but also military capability, surveillance capacity, and technological sovereignty. Silicon is no longer neutral; it is leverage.
This recognition has pushed semiconductor policy from the margins of economic planning to the centre of national strategy. Governments across advanced economies are intervening through subsidies, incentives, and regulatory frameworks to secure domestic or allied production capacity. In an era of intensifying geopolitical competition, the logic is increasingly explicit: dependence is vulnerability. The emerging Pax Silica alignment reflects this logic, with each participant contributing a distinct and strategically valuable capability to reduce collective risk.
The United States provides strategic direction, market scale, and leadership in advanced chip design and computing architectures. Japan and South Korea bring decades of experience in high-volume, high-quality semiconductor manufacturing. The Netherlands’ irreplaceable position through its control over extreme ultraviolet lithography equipment, without which advanced chips cannot be produced. Singapore plays a critical role through advanced packaging capabilities, logistics infrastructure, and control over key maritime chokepoints, including proximity to the Malacca Strait. Australia supplies several critical minerals essential for chip manufacturing, while the United Kingdom and Israel contribute strengths in supply-chain security, cybersecurity, and advanced research. The UAE adds financial capital and increasingly, energy security, both of which are indispensable for sustaining semiconductor ecosystems at scale.
India’s Place in a Silicon-Centric World
Within this tightly aligned but still evolving order, the question for India is unavoidable: where does it fit?
India is often described as a late entrant in the semiconductor race, but this characterisation misses a crucial point. India is already deeply embedded in the global chip ecosystem, albeit in less visible ways. It is a major hub for semiconductor design, verification, and embedded systems engineering, hosting large R&D operations for global technology firms. Close to 20% of the world’s chip design talent operates from India, giving the country influence over architectures, standards, and system-level innovation. In a Pax Silica world, this design capability is a strategic asset, not a peripheral one.
At the same time, India’s constraints are real and structural. Advanced fabrication is among the most capital- and infrastructure-intensive activities globally. It requires reliable power, vast quantities of ultra-pure water, precise logistics, and a mature supplier ecosystem. India continues to face challenges on these fronts, particularly as water stress and energy reliability become more acute. The technology gap in cutting-edge fabrication is another hurdle, built over decades by incumbent players and unlikely to be bridged through financial incentives alone.
Understanding India’s realistic options requires distinguishing between different segments of the semiconductor value chain. Fabrication attracts the most attention, but it is also the most expensive and technologically demanding. Assembly, testing, marking, and packaging, often referred to as ATMP or OSAT, offer lower entry barriers and play an increasingly important role as chips become more specialised. Design leadership, meanwhile, remains upstream and strategically influential, shaping how chips are integrated across electric mobility, renewable energy, telecommunications, and defence sectors.
India’s strategic opportunity lies not in attempting to dominate every segment simultaneously, but in positioning itself as a credible and trusted balancer within the Pax Silica ecosystem. Strengthening design leadership, scaling advanced packaging capabilities, and selectively supporting fabrication where economic and strategic logic align can deliver far greater long-term value than chasing symbolic manufacturing milestones. In a fragmented global landscape, countries that enhance resilience across the system, rather than mirroring it, will wield disproportionate influence.
Pax Silica does not reward speed or scale alone. It rewards coherence, sequencing, and strategic clarity. The recent White House statement has stated that the announced grouping is the initial smaller grouping, which will expand; however, for India, our success will depend on aligning industrial policy with talent development, infrastructure planning, and diplomatic positioning. The goal need not be technological autarky, but strategic relevance, in the hope that it reduces critical dependencies while deepening integration into trusted global networks.
As silicon replaces oil as the foundation of power, the contours of global influence are being quietly redrawn. India’s role in this new order will not be determined by how quickly it builds fabs, but by how intelligently it embeds itself into the architectures of the future. In the age of Pax Silica, balance may matter more than dominance.
Top Stories of the Week
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