The US-China Tech War: Where Does Turkey Stand?

Turkey: Making the Best of the Sino-US tech war?

Given the fuzzy nature of Turkey’s foreign-policy orientation for more than a decade now, it is not easy to grasp how Ankara per­ceives the ongoing tech war between China and the United States. Turkey has long been a US ally and member of NATO, but the fact that the alliance declared China to be a “stra­tegic competitor” at its 2022 Madrid Summit seems to have made little impact on the Turkish government. Ankara sees China’s rise as offering opportunities rather than posing an explicit threat, and it con­tinues to embrace groupings such as the Shanghai Cooperation Organization (SCO) and the BRICS+, of which China is a leading member. This geopolitical ambivalence is also reflected in how Turkey views the Sino-US tech war.

Turkey has ambitions of its own regard­ing the cutting-edge technologies of the 21st century, as is evidenced by the coun­try’s advances in drone technology, the launch of the domestic EV brand Togg and the first “Made-in-Turkey” quantum com­puter. Nevertheless, Turkey cannot easily be included among the leaders of the global innovation sphere. In fact, it is lagging even in its own neighbourhood, as the Middle East is home to innovation leaders such as Israel and emerging tech hubs like the United Arab Emirates. Turkey seems par­ticu­larly vulnerable in AI and 5G technol­ogies, while its manufacturing capacity for advanced (5 nanometre) semiconductors is practically non-existent. So far, the broader context of US-Chinese geopolitical rivalry has not helped ameliorate any of these vulnerabilities.

Had it maintained its traditional pro-Western foreign-policy line, Turkey could have benefited significantly from the on­going Sino-US dispute. Since the COVID pandemic, Western multi-nationals have been stepping up the promotion of “friend-shoring” or “near-shoring” policies with the aim of diversifying their China portfolio. This so-called “China plus One” strategy has already turned Asian countries like India, Malaysia and Vietnam into alternative in­vest­ment destinations for high-tech manu­facturing. Although Turkey enjoys such advantages as geographical proximity to Europe and a large pool of skilled but rela­tively cheap labour, it has been unable to reap the spoils of the Sino-US Tech War for political reasons.

Indeed, the AI rules introduced by the Biden administration in January 2025 clearly show that Turkey is not a “winner” in the ongoing Sino-US tech war. This new framework restricts the flow of America’s most advanced industrial chips to a list of just 18 trusted US allies, which include Germany, France, Australia and Japan. Tur­key’s absence from the list is most probably related to Ankara’s geopolitical ambivalence between Beijing/Moscow and Washing­ton. Grouped in the so-called Tier 2 countries, Turkey may face restrictions in the future when importing high-end chips produced by American companies such as NVIDIA.

At the same time, the insignificant role that Turkey plays in global technology supply chains has spared the country the harshest US treatment. The sanctions related to advanced semiconductors are a case in point. While the Turkish defence industry is known to have experimented with chip innovation – most notably through its “Çakıl” and “Yonca” projects – the design and manufacture of 5–7 nano­metre chips remain years beyond Turkey’s current capabilities. As there is no Turkish equivalent of the Dutch ASML company, which is the world’s leading supplier of semiconductor machinery, or Taiwan’s TSMC, the largest semiconductor foundry on the globe, it was able to bypass the sanc­tions imposed by Washington over the sale and manufacturing of sensitive chips. This means that, unlike American allies that have a strong presence in the semiconduc­tor value chain (such as Japan and South Korea), Turkey is not under any specific pres­sure to take sides in the technology rivalry between China and the US. Simi­larly, Turkish companies are not faced with shrinking markets or declining profits owing to the geopolitical tension. But the Turkish industry’s total reliance on the global chip market is a problem in and of itself – one that renders Turkey vulnerable to the potential of the Sino-US Tech War to disrupt supply chains and cause price fluc­tuations on global markets.

Moving into the Chinese tech ecosystem?

Given the developments of the past five years, it is valid to question what role Turkey will play in the Chinese technology ecosystem in the future.

Back in 2020, when the Turkish government announced its purchase of a “Chi­nese vaccine” to alleviate the impact of the raging COVID pandemic, many at home and abroad were shocked by the decision. Some pointed to Ankara’s “Eurasian” lean­ings as the reason for this move, while others sensationalised the dangers of buy­ing “cheap and low quality” Chinese goods. Since then, however, Turkey’s growing col­laboration with China in the tech field has ceased to surprise. As of 2025, Turkey is host­ing the manufacturing plants of some of China’s biggest tech companies, among them Xiaomi and OPPO. The Chi­nese tech giant Alibaba is a major shareholder in Tur­key’s biggest e-commerce com­pany, Trend­yol, and Huawei is likely to build the coun­try’s 5G network in 2026. Chinese smart phone brands and TikTok are very popular among Turkish teenagers, while their parents are becoming increasingly fond of Chinese automobiles, the annual sales of which have grown exponentially in Turkey in recent years. And even though Turkey has its own EV brand, the Togg is not ex­pected to rival its international com­petitors – particularly those from China – in terms of price and/or quality anytime soon.

Turkey is keen to develop its own “local and national” (yerli ve milli) technologies of the 21st century – a line heavily promoted by the Turkish government. But since it is not among the global innovation leaders, it has to reach cooperation deals with other countries. Such agreements are often aimed at securing easier access to cutting-edge technologies while maintaining affordable price arrangements. Not surprisingly, heavi­ly subsidised Chinese companies offer a series of advantages in this area.

With regard to technology transfers, Ankara perceives China to be a more forth­coming partner than the US or European countries. This was apparent in 2013 when a Chinese defence company was awarded an air missile deal in an official Turkish tender because of its relatively favourable attitude towards technology sharing. How­ever, the agreement was later cancelled owing to strong protests from Turkey’s NATO partners. Nonetheless, Chinese com­panies’ promises of technology transfers remain an important criterion for Turkish decision-makers. In September 2024, more than a decade after the cancelled air missile deal, it was precisely such a promise that prompted Ankara to embrace the investment by China’s EV giant, BYD.

Turkey’s incremental move towards Beijing’s innovation ecosystem is most evident in the country’s automotive sector. When the Turkish auto manufacturing industry was launched in the mid-20th cen­tury, the main investors were major Ameri­can and European companies such as Ford, Mercedes, Renault and Fiat. By the 1990s this portfolio had expanded to include Japanese and South Korean companies. Since then, however, foreign investment in the Turkish automotive sector has stalled. Today the industry is faced with dual chal­lenges: the technological shift away from the production of combustion engine cars towards EVs and the rise of China as a global powerhouse in the automotive indus­try. BYD’s US$1 billion investment may be miniscule compared with that of major Western brands in Turkey; but if other Chinese car companies follow in BYD’s footsteps, the country’s move towards China’s technology ecosystem is likely to be expedited.

The BYD investment is also important within the context of the Sino-US tech war as the EV market has become a major battle­ground between China and Western countries. Chinese EVs face both 100 per cent tariffs in the US and countervailing duties in the EU. In this restricted environment, the EU-Turkey Customs Union agree­ment – along with Turkey’s geographical proximity to Europe – will give Chinese companies access to the EU car market. And amid the growing rivalry across the globe over lithium batteries and their precious ingredients, this investment will likely reinforce Turkey’s dependence on China-centred supply chains, which are shaped by automotive giants like CATL and BYD.

Another sign that Turkey is moving closer to the Chinese technology ecosystem is Huawei’s growing role in the country’s telecommunications infrastructure. While the Chinese giant has been the primary target of US measures against China since 2019, the data privacy issues and espionage charges brought against the company have not caused any public controversies in Tur­key. Turkish parliamentary deputies do not shy away from visiting Huawei headquarters during their China trips and engineering students of the prestigious Istanbul Tech­nical University work at Huawei’s Research and Development Centre. More important, Huawei’s role in Turkey’s telecommuni­cations infrastructure includes partnerships with the country’s biggest mobile operators, Turkcell and Türk Telekom. While the offi­cial tender to launch Turkey’s 5G network is not yet closed, Huawei is likely to remain the biggest technology provider in this sphere. It remains to be seen if Turkey’s Huawei-installed 5G network will prove a problem for the country’s NATO partners.

Finally, the launch of China’s large lan­guage model DeepSeek may have an impact on Turkey’s choices in the field of AI as this much cheaper version of ChatGPT is tech­no­logically on a par with its American counterpart. More important, compared with its US rival, it is far easier for developing countries to replicate and build on DeepSeek’s open source model. Going for­ward, it cannot be ruled out that DeepSeek will inspire Turkish engineers to follow China’s lead in the AI field.

Outlook

Under the new Trump administration, Sino-US geopolitical tensions are likely to esca­late further and thereby generate new vul­nerabilities for third countries. Given the prospect of more sanctions and tariffs, it is possible that decoupling in the technology sphere will intensify and reshape the global playing field of innovation, leaving little room for manoeuvre for countries like Tur­key. But since Turkey is geographically close to Europe, has the status of EU can­didate and belongs to the Customs Union, Brussels’ decisions in the tech domain may be even more significant for Ankara. If new and effective policies were to be imple­mented in the EU, Turkey’s incremental move towards the Chinese technological ecosystem would be neither a predestined phenomenon nor a foregone conclusion.

The newly elected US government under Donald Trump has created a tumultuous geopolitical environment so far in 2025, with adverse effects on both Transatlantic ties and the prospects for economic growth and security in Europe. In order to stay resilient and minimize risks in this turbu­lent world, Turkey and the EU should step up their cooperation in the scientific and technological domains. This would also allow the two parties to avoid the pitfalls of US and Chinese leadership in the Fourth Industrial Revolution. Ankara and Brussels already have several existing mechanisms at their disposal to boost R&D funding and academic exchanges, such as the Horizon and Erasmus programmes. Such schemes have been crucial in forging ties between the Turkish and European scientific talent pools, as well as helping kick-start innovative tech companies in both Europe and Turkey.

Decision-makers in Germany and other major EU countries should draw up policies to initiate cooperation with Turkey – par­ticularly in the fields of AI, 5G and semi­conductors – in order to halt that coun­try’s move towards China’s tech ecosystem. Failure to do so may result in Chinese tech companies gaining undue leverage in the Turkish market, which has close ties to the EU through the Customs Union Agreement. Furthermore, China’s growing role in the Turkish tech industry could, in the long run, whittle away at the influence of Euro­pean norms and values with regard to the digital space in Turkey. Despite the coun­try’s democratic backsliding, Turkish tech regulations remain largely inspired by EU legislation; but that situation could change with the growing significance of Chinese tech companies in Turkey. And if that were to happen, the Chinese model might win over more Turkish policymakers to the authoritarian outlook of Beijing, which prioritizes state goals over individual rights and privacy.