This chapter explores the implications of the US–China policy conflict on the global semiconductor value chain. The ongoing policy conflict between the US and China is causing significant disruptions in the global semiconductor industry. Firms are forced to navigate these adverse conditions, with outcomes varying greatly depending on their geographical location, strategic decisions and specific role within the global value chain. This chapter investigates this complex scenario, utilizing qualitative data, guided by established business theory models. The analysis delves into the conflict’s implications for multinational enterprises’ decision-making, competitive factors for China and the US, industry governance and industry upgrading. The results suggest a challenging near-term outlook for Chinese firms contrasted with potential growth for non-Chinese foundries. This situation is predicted to evolve, with China possibly surfacing as a significant competitor and a trend toward regionalization in the long run. In the short term, the industry could face disruption in innovation and collaboration. However, the pressures could also stimulate competitiveness and encourage supply chain diversification in the long term. This investigation, while insightful, recognizes its limitations. Its focus is narrowed to a few case studies and leans heavily on qualitative data. Moreover, the volatile nature of the industry and geopolitical landscape can impact the longevity of the findings. Future research could further elaborate on the long-term implications and potential strategies to counter the emerging challenges.