Home Bookend - Where reading meets review Chip War: The Fight for the World’s Most Critical Technology – Chris Miller  

Chip War: The Fight for the World’s Most Critical Technology – Chris Miller  

by Venky

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Chris Miller does to the domain of Semi-Conductor technology what Daniel Yergin and Vaclav Smil have done and keep doing to the world of Oil and Gas, and Energy, respectively. Chip War is a vital and indispensable addition to any bookshelf boasting an enviable collection of geopolitical and economics works. Fifty-four rapturously concise chapters provide a masterclass in elaborating the warp and weft of a technology that today possesses the potential to make or mar the futures and fortunes of global economies.

Miller’s training as a historian finds complete expression in this extraordinary work that traces the history of semiconductors. In 1957, eight young, aspiring scientists had enough of the autocratic and almost dictatorial working eccentricities of Nobel Laureate William Shockley and decided to abandon Shockley Semiconductors in pursuit of greener pastures. Now famously, but then infamously known as “the traitorous eight”, the renegades formed their own semiconductor company. With the charismatic MIT graduate Robert Noyce leading the corporation named Fairchild Semiconductors, the motley crew would go on to transform the fortunes of the global semi-conductor and computing industry.

While Gordon Moore would attain immortality with his now household Moore’s Law, the likes of Julius Blank, Victor Grinich, Jean Hoerni, Eugene Kleiner, Jay Last, and Sheldon Roberts would leave trailing in their wake, folklore of legendary proportions. The semiconductor industry received a further spur with the arrival of a Hungarian immigrant, Andy Grove, and a Taiwanese student Morris Chang. A common thread that wove the future leaders of Intel and Taiwan Semi-Conductor Manufacturing Company being displacement by fighting as young boys during World War II.

Today semiconductors are produced through supply chains termed by Miller as involving a ‘bewildering’ degree of complexity. A typical semiconductor chip can have its design blueprint emanating from a Japanese owned UK company (Arm). The design itself may be a product of research involving a team of engineers in California and Israel. The completed design would be dispatched to Taiwan which procures specialised gases and ultra-pure silicon wafers from Japan. The precision tools that work on the design are manufactured by just five companies in the world: three American, one Dutch and one Japanese. The manufactured chip is tested in Southeast Asia before finally assembled in a cell phone or a laptop in China.

The initial customer base for semiconductors was the US government. However today Apple alone devours more semiconductors than the US government. In the year 2020 alone, Apple sold iPhone 12s in numbers that stood upwards of 100 million. Each iPhone had at its heart an A14 processor chip encompassing within its confines an unbelievable 11.8 billion tiny transistors. Fab 18 at Morris Chang’s TSMC fabricated over 1 quintillion transistors (1 followed by 18 zeroes) for barely a dozen chips in an iPhone.

Rattled by the enormous strides made by USA in the realm of semiconductors, USSR during the Cold War era, attempted to replicate the success of its rival by adopting a copycat strategy. Under the stewardship of Khruschev, the Russian Government built a “green city” of Zelenograd. The Russian strategy was fundamental and astoundingly reductionist. Spy and reverse engineer the US chip sector. But as Miller writes, a CIA analysis unearthed the fact that the Soviet copies of Intel and Motorola chips were inevitably half a decade behind in terms of breakthrough technology!

The book also contains accounts of lost opportunities and game changing success stories. Intel CEO Paul Otellini rejected a contract to build chips for the iPhone, baulking at the potential costs. This turned out to be one of the biggest errors in the storied history of Intel. On the other hand, ASML, a lithography equipment maker and a spin-off from Philips in 1984, established a dominating position in the highly technical chip manufacturing machine segment. The lasers in ASML’s most cutting-edge machines alone require a jaw-dropping 457,329 component parts, while the machine itself costs a mind numbing $300 million.

The semiconductor story would be incomplete without a mention of China. The Chinese Government places an absolute premium on the semiconductor industry. In 2016 Chinese President Xi Jinping declared: “However great its size, however great its market capitalisation, if an Internet enterprise critically relies on the outside world for core components, the ‘vital gate’ of the supply chain is grasped in the hands of others.” During the COVID-19 pandemic, when the entire city of Wuhan was mercilessly locked down, the semiconductor manufacturing facility of YMTC was kept open.  “Trains passing through Wuhan carried special passenger cars specifically for YMTC employees, letting them enter Wuhan despite the lockdown”.

Chinese enterprises such as Huawei, YMTC, and CXMT also represent a clear and present danger to the United States. Each of these companies may well be dangerous access points for the Chinese government to steal, spy, and blackmail.

The Unites States recently tightened restrictions on the export of advanced chips and chipmaking equipment to China. The US Commerce Department targets target state-of-the-art AI chips and chipmaking tools with a view to effectively curbing China’s ability to develop its semiconductor industry. The regulations tighten controls to cover slightly less powerful chips than those under the previous rules in addition to expanding the list of manufacturing equipment. The rules also blacklist more Chinese chip companies.

Another area of concern would be the excessive reliance on TSMC and Taiwan, especially in an age where there is an alarming lack of stability in the South China sea. Today, TSMC produces 90 percent of the world’s most advanced processor chips, while Taiwanese companies produce over a third of the new computing power the world adds each year. Any disruption to the manufacturing process in Taiwan would spell catastrophe to not just the United States but to a plethora of industries across the globe. Dishwashers, microwaves, coffeemakers, and many more household appliances revolve around chips.

The world’s production of smartphones would fall by far more than half. Almost every graphics processing unit (GPU) chip that powers artificial intelligence (AI) applications in data centers are made in Taiwan. Replacing chipmaking capacity in Taiwan would result in several trillion dollars of losses to global manufacturing. Agile to such a calamitous possibility, the United States has goaded TSMC in building a manufacturing facility in Arizona and allocated billions of dollars to incentivize companies to establish similar manufacturing facilities in the United States.

Chip War is a phenomenal exposition of one of the most seminal geopolitical and geoeconomic aspects engaging the world’s collective interest in this day and age.

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