Despite its apparent immateriality, AI is actually deeply rooted in complex and vulnerable physical supply chains.
As researcher Ludovica Favarotto highlights in a new ISPI paper, in a world marked by increasing tensions between the United States and China, Washington has launched Pax Silica, an ambitious initiative promoted by the Trump 2.0 administration to build a resilient, American-led technological ecosystem.
Through strategic alliances, massive shared investments, and a modern form of state capitalism, the United States aims to reduce dependence on Beijing and consolidate its leadership in AI.
AI and its material foundations
AI is redefining the 21st century in almost every field: from the global economy to defense programs, and industrial competitiveness.
The figures speak clearly: the global AI market is expected to reach $335 billion this year and, with a steady annual growth rate of 25.38%, could reach $1.3 trillion by 2032.
Yet behind advanced models and sophisticated platforms lies a concrete and often overlooked reality: AI depends entirely on physical infrastructures, critical minerals, silicon, and microchips distributed along fragmented supply chains worldwide.
This material dependence, Favarotto emphasizes, turns supply chain security into a strategic issue of primary importance.
The decline of US leadership and the race against Beijing
Over the past twenty years, the United States has progressively ceded leading positions to China in sectors now considered vital not only for the tech industry but also for national security.
Faced with this power shift, the race for AI dominance has become an absolute priority for Washington, beyond differences between Republican and Democratic administrations.
Pax Silica, launched in December 2025 by the State Department as a flagship project, represents the concrete and structured response to this challenge.
As the paper highlights, the initiative aims to build a reliable ecosystem covering the entire supply chain – from silicon to critical minerals, from microchips to digital infrastructures – involving selected allies based on their strategic role in the production chain.
The name itself, from Latin, evokes the essential raw material for semiconductors and underlines the holistic and integrated approach of the entire project.
The participants
Promoted by Under Secretary of State for Economic Affairs Jacob Helberg, Pax Silica started with a declaration of intent signed by eight countries during a summit in Washington: Australia, Greece, Japan, South Korea, the United Kingdom, Singapore, Israel, and the United Arab Emirates.
By May of this year, the number of signatories had already increased with the addition of Finland, India, Norway, Qatar, Sweden, and the Philippines.
Canada, Taiwan, the OECD, and the European Union also participated in the Washington summit with observer/invitee status.
Vision and objectives
The declaration outlines close cooperation along the entire AI supply chain, through purchase agreements, coordinated responses, and alignment of investment policies.
The concrete goal is to eliminate bottlenecks, reduce excessive dependence on single suppliers, and strengthen every segment of the technological architecture.
As scholar Rahul Nath Choudhury points out, today every government is trying to reorganize its supply chains to protect them from geopolitical risks. It is not enough to possess resources: industrial skills and integrated production capacities are needed.
Financial instruments
In March, Favarotto recalls, the Trump administration announced two crucial collateral initiatives.
The first is the creation of a consortium bringing together leading private investors, including SoftBank, Temasek, and Mubadala, as well as sovereign wealth funds from Singapore, the United Arab Emirates, Qatar, and Sweden.
The goal is ambitious: to raise over $1 trillion, with an initial American contribution of $250 million serving as leverage to attract private capital.
The second initiative consists of creating a $250 million fund allocated by the State Department and Congress to support the extraction and processing of critical minerals, semiconductor production, and infrastructure.
Both measures follow Secretary of State Marco Rubio’s “Trade Not Aid” philosophy, turning aid into commercial opportunities for American companies. Together, the consortium and fund create an interconnected mechanism for capital mobilization and risk reduction.
The three strategic pillars
Pax Silica is structured around three well-defined pillars. The first is to decisively focus on the technological frontier, concentrating efforts on microchips and advanced materials that enable the most powerful AI models.
Washington no longer just aims to slow down adversaries but wants to consolidate its leadership and expand markets, fully aware of the extreme vulnerability of the semiconductor supply chain, especially regarding Taiwan.
The second pillar introduces a clear hierarchy: the closest allies are fully integrated into the technological architecture, becoming “capacity nodes” with deep interdependencies in technology, finance, and security.
The third pillar strengthens the central role of the United States as the political, monetary, and regulatory supervisor of the entire ecosystem.
Through co-investments, risk-sharing, and insurance mechanisms, the initiative combines a containment logic towards China with an active phase of building new production capacities.
The EU as a hesitant observer
The European Union participates in Pax Silica only as an observer, in line with the American preference for bilateral relations with individual European states rather than with Brussels.
Nevertheless, Europe boasts important excellences such as ASML, the world leader in lithography machinery, and the imec research center in Belgium.
Brussels has also launched in recent years the Chips Act, the “AI Continent” Plan, and the “AI Factories,” but remains fragmented and dependent on external suppliers in the most advanced phases.
Currently, the EU is considering joining, with ongoing negotiations, but at the same time is preparing its own “Digital Sovereignty Plan” and measures like Chips Act 2.0.
This dual approach is already generating tensions with Washington, which has repeatedly postponed the presentation of the European package.
Opportunities and risks
For participants, Pax Silica promises privileged access to financing, technological cooperation, and cost-sharing of capital-intensive projects.
However, membership also implies a clear long-term strategic alignment that pushes distancing from Beijing. For many Indo-Pacific countries, this creates a delicate balance, given China’s economic weight as a trading partner.
The initiative thus risks reinforcing a bipolar order: those left out may be marginalized from investment flows, while Global South countries could gravitate further towards China, expanding its influence.
Towards a “silicon curtain”?
Pax Silica, concludes the ISPI paper, represents a paradigm shift: economic security is now inseparable from national security, and control of technological supply chains determines who will dominate the century.
As Under Secretary Helberg stated, if the 20th century was fueled by oil and steel, the 21st will be driven by innovation and the critical minerals that make it possible.
As Favarotto emphasizes, the initiative marks the opening of a true “silicon curtain.” Its success will depend on Washington’s ability to manage inevitable tensions, tariffs, export controls, and resistance generated by a hierarchical structure.
