“If the 20th century ran on oil and steel, the 21st century runs on compute and the minerals that feed it,” declared Jacob Helberg, U.S. Undersecretary for Economic Affairs, as America launched a chip supply chain alliance to “build the AI ecosystem of tomorrow — from energy and critical minerals to high-end manufacturing and models”.
Signed by nine countries — Australia, Greece, Israel, Japan, Qatar, South Korea, Singapore, the UAE, and the U.K. — in mid-December, ‘Pax Silica’ seeks to map a new geography of computing power. [Non-signatory participants include Canada, the EU, the Netherlands, OECD countries, and Taiwan.]
For decades, the semiconductor supply chain was governed by the cold, borderless logic of competitive advantage and cheap labour. Chips were designed in California, printed in the Netherlands, fabricated in Taiwan and South Korea, and assembled in the vast factories of mainland China.
Pax Silica signals a definitive end to this era of efficiency. By formalising a coalition that includes Australia’s mines to Singapore’s logistics and Japan’s chemical manufacturing and precision machinery, the U.S. is attempting to build a ‘closed-loop’ ecosystem.
The implied goal is to insulate the AI development from China’s dominance as Beijing is rapidly advancing domestic chip-making capacity.
This closed-loop approach marks a profound shift in American strategy. Rather than seeking a sprawling consensus among all Indo-Pacific partners — many of whom have deeply entangled trade ties with Beijing — Washington is prioritising politically aligned states that are technologically aligned and willing to buy American tech and integrating with America’s economic security protocols.
Under this initiative, members are expected to synchronise semiconductor design, launch joint ventures in AI research, and align their investments in rare earths — raw materials that underpin the hardware for AI development. Pax Silica seems like a functional successor to the Indo-Pacific Economic Framework (IPEF), but with a sharper focus on the supply chain for chip-making. The IPEF was launched during the Biden administration to boost economic cooperation in the Indo-Pacific region with a focus on trade, supply chain, clean energy and fair economy. India was part of the 14-member country group, but maintained an observer status in trade.
However, the ‘Pax’ is already proving to be a flexibility test. Despite the initial exclusion of New Delhi, the strategic map is being redrawn as the newly appointed U.S. Ambassador to India signalled a pivot, indicating that Washington intends to formally invite India to join Pax Silica as early as February. This move suggests that for this alliance to achieve true global scale, India must be member country.
The Indian paradox
What India brings to the table is not just its burgeoning market, but its unique role as the talent powerhouse. With its immense pool of engineering talent and dominance in software services, India is the logical site for the labour-intensive ‘design-to-delivery’ pipeline of the AI age — a fact that India’s IT minister Ashwini Vaishnaw pointed out at the World Economic Forum in Davos, Switzerland.
The country’s demographic dividend and its status as a data-rich democracy make it a key pillar for a Western-led tech bloc. Yet, New Delhi’s journey toward the ‘Silicon Curtain’ is complicated by its own pragmatic foreign policy. Even as it prepares to join a U.S.-led security architecture aimed at countering Chinese influence, New Delhi is simultaneously signalling a tactical thaw with Beijing.
After years of frosty relations following border skirmishes, the Indian government is reportedly considering easing restrictions on Chinese investments.
This creates a paradoxical landscape. India may soon sit at the Pax Silica table to help secure a supply chain away from China, while at the same moment opening its own domestic doors to Chinese firms to bolster its industrial growth. For India, the goal is not total decoupling, but rather a “re-balancing” where it can leverage Western security ties while maintaining the economic benefits of its proximity to the world’s factory.
History’s echoes
History suggests that techno-nationalist alliances are a double-edged sword. The most direct ancestor of Pax Silica is COCOM (Coordinating Committee for Multilateral Export Controls), the Cold War-era body designed to keep Western technology out of Soviet hands. While COCOM succeeded in maintaining a “technology gap” that eventually helped the West win the Cold War, it also forced the Eastern Bloc into a state of costly, often clumsy, indigenous duplication. It created two parallel technological universes that rarely intersected.
Compare this to more constructive past alliances, such as the post-war European Coal and Steel Community. That alliance sought to lower barriers and harmonise standards to spur growth and make war “not only unthinkable but materially impossible” through economic integration.
Pax Silica, by contrast, feels more defensive, like the British or Dutch East India Companies of the 17th century, which sought to secure trade routes and resources for a specific group of players while aggressively excluding rivals.
The inherent risk of this alliance is that it may inadvertently create an exclusive club of “trusted” nations, driving those left on the outside closer to Beijing’s orbit.
Beijing’s Perception
China, for its part, has already been promoting its own technology cooperation through groupings like the BRICS and the Shanghai Cooperation Organisation, stressing a model of “non-interference” that contrasts with Washington’s “values-based” trade.
Beijing’s official reaction to Pax Silica has been a mixture of measured calls for “market principles” and sharper warnings from state media about “decoupling.” If China perceives this as a containment effort, it may respond by deepening its own dominance over the processing of critical minerals, potentially creating a “resource wall” that Pax Silica members will find difficult to scale.
Perhaps, it is this eventuality that will make the U.S.’s case to purchase Greenland stronger as the arctic island is naturally endowed with critical minerals.
For the signatories of Pax Silica, the gamble is that the sheer economic gravity of their combined markets will be enough to set the rules for the AI century. But a “Pax” maintained by exclusion and walls is often a precursor to a long and expensive era of friction.
Silicon may be the “new oil”, but unlike oil, it is a product of human ingenuity that requires a global, frictionless exchange of ideas to remain cutting-edge. As Washington prepares to expand its inner circle to include New Delhi in February, it must decide whether Pax Silica is a bridge to a new era of secure prosperity, or merely a very expensive fortress.
Published – January 25, 2026 01:40 am IST
