Introduction

Techno-nationalism represents a governance approach linking a nation-state's technology prowess with its national security, economic prosperity, and socio-political stability. This strategy emphasizes domestic control over critical technologies to advance national interests while reducing dependence on foreign sources. The rise of techno-nationalist policies has intensified global competition over emerging technologies such as semiconductors, artificial intelligence, and quantum computing, fundamentally reshaping international technology trade through export controls, investment screening, and supply chain restructuring.¹²

What is techno-nationalism?

Techno-nationalism links a nation's technological capabilities directly to national security and economic competitiveness, treating technology sectors as matters of strategic importance rather than purely commercial concerns. The approach encompasses both a belief that national innovation systems and research and development efforts drive growth and prosperity, and that controlling key technologies is central to geopolitical power. Unlike conventional protectionism focused primarily on shielding domestic industries, techno-nationalism marks a paradigm shift away from laissez-faire economics and open markets toward managed trade as a necessary response to external threats.¹²

How techno-nationalism works

Export controls and restricted entity lists prevent rivals from acquiring advanced technologies deemed strategically important. Governments maintain lists of companies prohibited from accessing certain technologies based on national security concerns. For example, the United States expanded its restricted entity list to include over 100 Chinese technology companies by 2020¹.
Foreign direct product rules extend extraterritorial reach by subjecting any technology using specific national software or components to export controls regardless of where it is manufactured. This closes loopholes that previously allowed suppliers to manipulate value thresholds by dispersing production locations.¹²
Strategic decoupling and reshoring initiatives relocate manufacturing capacity from foreign locations to domestic soil to reduce dependence on external suppliers. For example, these policies have reversed decades of offshoring that reduced US semiconductor manufacturing share from nearly 40% to approximately 12%1].²
Tech-alliances and techno-diplomacy build coalitions with aligned nations to coordinate technology policies and create unified approaches to technology governance. For example, the United States working with Japan and the Netherlands to jointly restrict exports of advanced semiconductor production equipment to China.¹²³
Innovation mercantilism deploys massive government funding to incentivize domestic research and development and production ecosystems. For example, the US CHIPS and Science Act allocated US$52 billion in subsidies, tax credits, and research incentives for semiconductor production.¹²
Investment screening mechanisms block foreign acquisitions of domestic technology firms in sensitive sectors to prevent technology transfer to strategic competitors.¹

How does it affect trade in technology

Export restrictions fragment global technology markets: Governments impose export bans and sanctions to prevent rivals from accessing strategic capabilities. For example, the United States closed the "foreign direct product rule" loophole in 2020, making any semiconductor manufactured anywhere in the world using US software or technology subject to American export controls. This effectively cut off Chinese telecommunications giant Huawei from acquiring advanced semiconductors from Taiwan Semiconductor Manufacturing Company (TSMC), forcing the company to halt production of its flagship Kirin chips and abandon 5G technology in new phone models. Washington recently expanded licensing requirements from 10-nanometer chips to 14-nanometer technology and is considering extending controls to much older 28-nanometer chips, upending the "in-China-for-China" strategy that allowed foreign companies to sell trailing-edge technologies to Chinese manufacturers.¹²³
Manufacturing capacity undergoes geographic reorientation: Techno-nationalism triggers supply chain restructuring as countries seek to reduce dependence on foreign suppliers in critical technology sectors. For example, major semiconductor manufacturers including TSMC, Samsung, and Intel announced investments totaling over US$49 billion to build new fabrication plants in the United States between 2020 and 2021. The fast spread of digital technologies throughout the world is reshaping production, requiring policymakers to adjust infrastructural, regulatory, and industrial policies to maximize contributions to economic diversification and structural transformation. China simultaneously pursued its own US$1.4 trillion digital infrastructure plan to localize semiconductor manufacturing and reduce reliance on foreign technology.¹²⁴
Technology alliances create preferential trade blocs: Countries align with specific partners while erecting barriers against others. For example, the United States promoting international partnerships that have "alignment in policies towards nonmarket economies". The United States and Japan agreed to jointly invest US$4.5 billion in 6G development, while Japan partnered with TSMC on a research center focusing on advanced 3D integrated circuit technologies. These techno-diplomatic initiatives establish ring-fenced ecosystems where allied nations receive preferential access to cutting-edge technologies while excluding strategic competitors.¹
Market access becomes conditional on geopolitical alignment: Technology trade increasingly depends on national security considerations rather than economic efficiency. Multinational companies that accept funding under industrial policy legislation such as the CHIPS Act find it increasingly difficult to resist government China policies, while potentially facing reprisals from Beijing if China achieves domestic semiconductor self-sufficiency. Export controls represent a major departure from the traditional economic consensus that trade is mutually beneficial, with governments now willing to accept economic costs to achieve national security objectives.²³
Rules-based trading order faces fundamental challenges: Leading global semiconductor companies lobbied strongly for techno-nationalist legislation despite potential economic pitfalls. For example, a coalition including Qualcomm, Nvidia, Intel, Apple, and Microsoft supported the CHIPS Act and this rare consensus represents a reaction to external threats including widening US-China geopolitical rivalry, failures in global supply chains caused by the COVID-19 pandemic, Russia's invasion of Ukraine, and new geopolitics of energy and food security. Any attempt to reshore and ring-fence semiconductor fabrication solely for geopolitical reasons runs against efficiency, likely producing higher costs, supply and demand imbalances, and human capital shortages.²

Conclusion

Techno-nationalism has transformed technology trade from a market-driven process into a strategically managed domain where national security considerations shape commercial flows. Through export controls, investment screening, industrial subsidies, and alliance-building, governments now actively intervene in technology markets to secure domestic capabilities and limit rival access to critical technologies. This shift fragments global supply chains, creates preferential trading blocs based on geopolitical alignment, and requires policymakers to navigate tensions between national security objectives and economic efficiency.