There is no denying that 2020 has been an exciting year in the semiconductor space. We’ve seen a flurry of high-profile, multi-billion dollar acquisitions and the rise of Arm compute in the data center and PC markets. Oh, and how could I forget a U.S.-China trade war being waged over access to semiconductor technologies.

And while it remains unclear whether President-elect Joe Biden’s administration will curtail these efforts, The Wall Street Journal reports that the “tech war” is likely to continue. With that said, the Biden transition team has not responded to a request for comment.

To back up a bit, the Trump administration has, over the last several months, heaped pressure on Chinese companies like telecommunications giant Huawei. That firm has been accused of corporate espionage, intellectual property theft, and has been dogged by questions related to its relationship with the Chinese government.

These efforts culminated in a U.S. Commerce Department decision to require all non-U.S. chipmakers using American equipment, intellectual property, or design software to apply for a license to sell chips to Huawei. A move that, in Huawei rotating CEO Guo Ping's own words, put the company, which owns chipmaker HiSilicon, into survival mode.

Then a week before the Christmas holiday, the Commerce Department doubled down, blacklisting China’s largest semiconductor manufacturer, Semiconductor Manufacturing International Corp. (SMIC), and enacting additional provisions barring the company from acquiring U.S. technologies required to produce 10-nanometer and smaller chip designs. The company’s smallest process node is currently 14 nanometers.

These efforts put Chinese chipmakers at a distinct disadvantage, according to Dell’Oro Group VP Jeff Heynen. While China is, and is expected to remain, the largest importer of global semiconductor shipments, Heynen notes the country’s domestic semiconductor manufacturing is only capable of meeting at most 30% of that demand.

This trade and technology deficit, as Heynen puts it, has led the Chinese government to heavily subsidize semiconductor research and development. And these efforts are paying off. In a little over a year, Dell'Oro reports that SMIC was able to go from manufacturing 28-nanometer chips to 14-nanometer chips, with a 7-nanometer manufacturing process under development.

However, to maintain this progress, Chinese chipmakers like SMIC rely on licensing technologies from Western companies like Intel and Arm. Heynen adds that Chinese companies also rely on electronic design automation software developed by companies like Cadence.

And it's this kind of technology and software that the Trump administration has sought to deny Chinese government-backed companies. The U.S. Commerce Department’s justification for the latest restrictions, leveled against SMIC, were related to alleged ties to the Chinese military.

Throughout his campaign, Biden has focused on supporting U.S. manufacturing.

“If we make smart investments in manufacturing and technology, give our workers and companies the tools they need to compete, use taxpayer dollars to buy American and spark American innovation, stand up to the Chinese government’s abuses, insist on fair trade, and extend opportunity to all Americans, many of the products that are being made abroad could be made here today,“ the President-elect’s campaign website reads.

The Biden’s campaign has also proposed investing $300 billion over the next four years to bolster U.S. jobs and secure the countries global leadership. Much of that funding would be directed into research and development to catch up with China’s massive ramp in investment over the past two decades. And where manufacturing is concerned, it appears that the Biden administration will likely continue efforts to bring semiconductor manufacturing back to the U.S.

The Trump administration has already made some headway in this regard.

In the months that followed the initial Commerce Department decision, the Trump administration entered into talks with Taiwan Semiconductor Manufacturing Co. (TSMC) to build U.S.-based chip fabs. According to The Wall Street Journal, these efforts were fueled by the administrations’ concerns over the U.S. reliance on Taiwan, which, while self-governing, remains embroiled in a decades-long territorial dispute with China, which claims sovereignty over the island nation.

Within short order, TSMC announced plans to build a small chip fab in Arizona. The $12 billion facility will reportedly produce upwards of 20,000 silicon wafers per month using the company's 5-nanometer manufacturing process. The company expects the facility will open some time in 2024, and employ approximately 1,600 people.

According to The Wall Street Journal, the facility will be relatively small when taking into consideration TSMC produced more than 12 million wafers last year.

At the same time, Intel was in active talks with the Trump administration about moving the fabrication of its chips back to the U.S.

Those discussions were followed by a $37 billion proposal by the Semiconductor Industry Association to support the construction of domestic semiconductor fabs, research funding, and aid for states seeking to woo chipmakers. Making things easier for the incoming administration, the proposal has received bipartisan support in congress.

The proposal also comes at a time when Intel has struggled with the yields of its 10-nanometer processor designs and has announced delays to its upcoming 7-nanometer process.

In an open letter to the president-elect, Intel CEO Bob Swan called on the incoming administration to, among other things, protect U.S. technology companies interests, which are threatened by foreign competitors subsidized by their governments.

The Trump administration's trade restrictions have been seen by many as the first step in a tech decoupling between the U.S. and China. The U.S. moves signal a desire to end the reliance on Asia for semiconductor manufacturing, while China scrambles to build up its own home-ground manufacturing capabilities.

And while The Wall Street Journal reports that these efforts have put significant strain on both Huawei and SMIC's ability to source chips, the report notes these efforts could backfire on U.S. technology interests.

The paper’s findings mesh with findings earlier this year from the Boston Consulting Group, which explored the potential consequences of the Trump administration’s efforts to deny Chinese companies access to U.S. intellectual property.

“The U.S. has long been the global semiconductor leader with 45% to 50% share,” the report reads. However, any attempt to restrict access to these technologies could threaten that market dominance and damage U.S. interests, BCG contends.

And the analyst group makes the case that the existing trade war, if allowed to continue, could have a devastating effect on U.S. chipmakers.

“Over the next three to five years, U.S. companies could lose 8 percentage points of global share and 16% of revenues if the U.S. maintains the restrictions enacted with the current entity list,” the report reads.