When Industrial Policy Turns Geopolitical
From semiconductors to sovereign stakes, governments are reshaping markets in the name of strategic competition. A commentay by Andrea Colli
Last December, Jensen Huang, chief executive of Nvidia, was named the Financial Times “Person of the Year”. The accolade rightly recognised the success of an entrepreneur in one of today’s most strategic industries: semiconductors for artificial intelligence.
Less attention, however, was paid to a related development.
Days earlier, the Trump administration had allowed Nvidia to sell its advanced H200 chips to China, albeit with restrictions.
Officially, the aim was to slow the rapid technological progress of Chinese producers—while curbing a thriving black market. Yet the concession did not come for free. The world’s most influential businessman agreed to hand over 25 per cent of revenues to his own government.
A few months earlier, Washington had persuaded Intel’s management to convert a 10 per cent stake into a package of federal subsidies under the Chips Act introduced by the Biden administration to boost domestic semiconductor production.
These two symbolic episodes illustrate how public intervention has moved away from its traditional redistributive and market-correcting role. It is increasingly evolving into something closer to a “political economy”—more precisely, a geopolitical economy—serving competition among great powers.
The key shift lies less in the underlying philosophy than in the scale and direction of its impact: on industrial sectors, on companies, on corporate strategies, and ultimately on the behaviour of entrepreneurs themselves.
In essence, governments have resumed direct interference in global market dynamics, which had been largely liberalised after the end of the Cold War. They are doing so along two main lines.
First, through targeted interventions aimed at specific sectors and firms.
These include regulatory practices designed to restrict corporate freedom of action in order to place strategic assets under tighter political control. Such measures affect both domestic companies—through restrictions on the sale of sensitive products or on foreign ownership—and foreign investors.
In some cases, they go as far as the expropriation of “enemy assets”, as seen in the Dutch semiconductor company Nexperia, where the Dutch government intervened at the expense of a Chinese shareholder.
Governments are also distorting global value chains—for instance through Chinese restrictions on the supply of rare earths—and tightening oversight through public bodies such as the US Committee on Foreign Investment.
In some instances, even companies deemed “manipulable” are targeted, as in the case of ASML, whose commercial freedom has been constrained by both The Hague and Washington.
Second, there is a growing use of direct intervention mechanisms: golden powers, state control over strategic companies, and even the creation of sovereign funds designed to build public holdings capable of becoming reference shareholders in key industries—as controversially proposed in the United States.
These are complemented by the (more or less forced) formation of public-private partnerships aimed at fostering national champions in strategic sectors.
Beyond the sheer proliferation of such initiatives, what stands out is their increasing breadth.
Once largely confined to economies such as China—where industrial policy has long been aligned with geopolitical strategy—these practices are now spreading across advanced economies. Even established incumbents, reluctant to cede leadership in the global order, are adopting them with growing frequency.
A previous version of this article was published by Il Sole 24 Ore
IEP@BU does not express opinions of its own. The opinions expressed in this publication are those of the authors. Any errors or omissions are the responsibility of the authors.
