Why in the News?

In December 2025, the U.S. convened the first Pax Silica Summit to secure supply chains for critical minerals, semiconductors, and AI, moving away from China-centric globalisation. The initiative responds to China’s use of rare earths and technology inputs as strategic leverage. For India, it opens the possibility of becoming a trusted supply-chain partner, though capacity constraints remain.

What is Pax Silica and why has it emerged now?

Pax Silica is the U.S. Department of State’s flagship effort on AI and supply chain security, advancing new economic security consensus among allies and trusted partners.

1. Strategic Framework: Integrates critical minerals, semiconductor manufacturing, AI infrastructure, and logistics into a trusted supply-chain network.
2. Geopolitical Context: Responds to China’s dominance in rare earths and chip manufacturing inputs, and its ability to influence global flows.
3. Supply-Chain Shock Lessons: Incorporates lessons from COVID-19 and trade disruptions that exposed vulnerabilities in concentrated production systems.
4. Normative Shift: Moves away from efficiency-based globalisation towards resilience, trust, and political alignment.

How does Pax Silica seek to restructure global technology supply chains?

1. Coercive Dependency Reduction: Limits over-reliance on single-country control of critical minerals and manufacturing stages.
2. Integrated Value Chains: Connects mining, processing, fabrication, logistics, and AI deployment across aligned economies.
3. Trusted Digital Infrastructure: Promotes secure, interoperable systems for AI and data-intensive technologies.
4. Selective Coalition Model: Operates through functional partnerships rather than universal multilateral institutions.

Who are the key participants and what capabilities do they bring?

1. United States: Anchors advanced semiconductor design, AI platforms, and strategic coordination.
2. Japan: Contributes precision manufacturing, materials engineering, and chip equipment expertise.
3. Australia: Supplies lithium and other critical minerals essential for batteries and advanced electronics.
4. Netherlands: Hosts ASML, a global leader in advanced semiconductor lithography.
5. South Korea: Provides manufacturing strength in memory chips and advanced fabrication.
6. Israel: Leads in AI software, defence technologies, and cybersecurity.
7. United Kingdom: Houses the world’s third-largest AI market and innovation ecosystem.
8. Middle East Funds: Enable capital deployment through Qatar and UAE sovereign investment vehicles.
9. Observer Economies: OECD and Taiwan participate without full membership, indicating graded engagement.

Why is China central to the Pax Silica calculus?

1. Rare Earth Dominance: Controls a significant share of global REE processing and magnet manufacturing.
2. Export Controls: Uses trade restrictions as a strategic tool, impacting electronics and automotive industries.
3. Manufacturing Centrality: Retains scale advantages in downstream electronics assembly.
4. Strategic Leverage: Demonstrates capacity to weaponise supply chains during political disputes.

What is India’s current position in the Pax Silica ecosystem?

1. Digital Infrastructure Strength: Possesses large-scale digital public infrastructure and a growing AI market.
2. Semiconductor Constraints: Lacks mature fabrication capacity and advanced chip manufacturing ecosystems.
3. Human Capital Advantage: Hosts a large pool of engineers and returning AI researchers trained abroad.
4. Policy Initiatives: Has launched semiconductor and AI missions with participation from domestic conglomerates.
5. Collaborative Links: Engages with Israeli firms for chip fabrication plants and U.S. firms like Micron for assembly and testing.

What challenges does India face in joining Pax Silica?

1. Capability Gap: Risks being perceived primarily as a market rather than a technology contributor.
2. Expectation Management: Faces a “participation gap” between allied expectations and domestic capacities.
3. Policy Autonomy: Must balance strategic alignment with flexibility in industrial and trade policy.
4. Regulatory Exposure: May face pressure to adjust export controls, subsidies, and government procurement norms.
5. Asymmetric Benefits: Risks uneven gains if domestic ecosystem development lags behind integration.

Conclusion

Pax Silica reflects the consolidation of technology, security, and geopolitics into a single policy domain. For India, participation offers an opportunity to embed itself in trusted global supply chains, but only if accompanied by accelerated domestic capacity-building. Strategic engagement must prioritise ecosystem development, policy autonomy, and long-term technological self-reliance rather than symbolic alignment.

PYQ Relevance

[UPSC 2024] “The West is fostering India as an alternative to reduce dependence on China’s supply chain and as a strategic ally to counter China’s political and economic dominance.” Explain this statement with examples.

Linkage: The West is promoting India to diversify supply chains away from China, particularly in semiconductors and critical technologies. This also positions India as a strategic partner to counter China’s growing political and economic influence.

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