Chip War: The Fight for the World’s Most Critical Technology by Chris Miller
My rating: 5 of 5 stars
One of the most important books of 2022, and most certainly one of the best. Author Chris Miller has produced a history of the semiconductor industry that brings us to the present, and helps to frame some of the most critical national security issues facing the U.S. (and China) in a crisp, readable book.
The development of the semiconductor industry occurred in the United States, with some true giants of business with loads of brainpower leading a wave of technological innovation that changed the world. How that industry has developed over the years, and most importantly, where it is today is the journey the author takes us on. How has so much of the actual production of chips been moved away from the U.S. to Korea and Taiwan? This book provides that roadmap.
The story of the early development of the industry was fascinating. Those business and technology giants include Gordon Moore, Andy Grove, Bob Joyce, William Shockley (later infamous for his racial theories) and maybe most importantly Morris Chang. The companies developed? Fairchild Semiconductor, Intel, Texas Instruments, Sony, Samsung, and maybe most importantly the Taiwan Semiconductor Manufacturing Company. That early development was seeded, in part, by the U.S. military, who came to understand from their Vietnam experience, that “dumb” bombs frequently missed their target. (See the failure of bombing interdiction of the Ho Chi Minh trail) As the military started to seek “smart weapons” they started funding some of the research that brought us chip technology. As part of this development Gordon Moore, a true visionary, ultimately came to theorize that the number of components that could fit on a silicon chip would double every year. (Eventually he modified this, in 1975, to a doubling every two years) This theory became known as “Moore’s Law” and has driven chip development ever since, and in its way has brought us to the manufacturing conundrum facing the U.S. today.
With the U.S. military having some success in creating precision guided munitions the Soviet Union saw the potential and understood that it needed to get into the technology race. But they were hopelessly behind, and Soviet Marshall Nikolai Ogarkov knew it.
“By traditional metrics like numbers of tanks or troops, the Soviet Union had a clear advantage in the 1980’s. Ogarkov saw things differently: quality was overtaking quantity. He was fixated on the threat posed by America’s precision weapons. Combined with better surveillance and communication tools, the ability to strike targets accurately hundreds or even thousands of miles away was producing a ‘military-technical revolution,’ Ogarkov argued to anyone who’d listen. The days of vacuum tune-guided Sparrow missiles missing 90 percent of their targets in the skies over Vietnam were long gone. The Soviet Union had many more tanks than the United States, but Ogarkov realized his tanks would soon be many times more vulnerable in a fight with the U.S.”
Chip War by Chris Miller pg. 146
The Soviets deployed the usual tactics, looking to simply “copy” U.S. chip technology through industrial espionage. The Soviets, like many to come, simply tripped over Moore’s Law. As they stole and created chip technology the U.S. was moving to newer, better technology. Loading ever more transistors onto silicon in accordance with the forecast by Gordon Moore the U.S. simply outran the Soviets. Marshall Ogarkov’s fears were confirmed by the U.S. invasion of Iraq, a Soviet military client. Some Soviet experts expected a longer drawn out war, but U.S. weapons systems made short work of the Iraqi defenses.
“‘It is the triumph of silicon over steel’ declared a New York Times headline. ‘War Hero Status Possible for the Computer Chip,’ read another.”
Chip War by Chris Miller pg. 154
The overwhelming superiority of U.S. technology made Soviet conventional advantage much less intimidating, creating a dynamic that required ever escalating investment by the Soviets to keep (catch) up. They simply could not do so.
While military applications were a major factor in the start of the U.S. semiconductor industry the companies at the forefront of that development realized that civilian use was the future. Carver Mead, a Caltech professor, was prescient in 1972.
“‘In the next ten years,’ Mead predicted in 1972, ‘every facet of our society will be automated to some degree.’ He envisioned a ‘tiny computer deep down inside of our telephone, or our washing machine, or our car,’ as these silicon chips became pervasive and inexpensive.”
Chip War by Chris Miller pg. 71
The mass market drove the economics, and with that market developing the major companies moved from military to civilian use, seeing the ability to generate huge revenues.
Miller gives us a very understandable view of the development of the industry, with a critically important view of how chip manufacturing developed, and why “fabs” are located where they are. This brings us to the present day, and the challenges facing the two superpowers as they compete for semiconductor supremacy. This history shows us some tremendous innovation in the U.S. along with some major missteps that drove some key manufacturing out of the U.S. Former Texas Instruments executive Morris Chang had the idea to fabricate chips based on the design of others. That key idea was rejected by key folks in the U.S. industry, with even Gordon Moore telling Chang that:
“Morris, you’ve had a lot of good ideas in your time. … This isn’t one of them.”
Chip War by Chris Miller pg. 167
The government of Taiwan, looking to create a chip industry, brought Morris Chang in to help create that industry. Chang has succeeded beyond any reasonable expectations at the time of his creation of TSMC (Taiwan Semiconductor Manufacturing Company) in Taiwan, and the idea of separating chip design from chip manufacturing took off, making TSMC a chip giant, and creating a worldwide system of chip supply that exists today. That system brings us to the main battle lines between China and the U.S. today, which is where the real value of this book comes in.
Morris Chang’s idea of separating chip design from chip manufacturing enabled TSMC to begin manufacturing chips for many companies. For some, like myself, not familiar with the how and why of chip manufacturing, adopting an industrial policy in the U.S. that drove such manufacturing back to the U.S. should be an achievable goal for the government. This book shows us why simple solutions are not so simple.
Chang’s concept, and the eventual dominant role for TSMC in chip manufacturing, started with Chang’s insight, but has really been driven by massive government support and the complexity of chip manufacturing. Moore’s law, and how that has made chip manufacturing ever more expensive and complex, has made the creation of “chip fabs” ever more difficult due to that expense. Reliance on TSMC became natural, and has led to a real dominance for that company in creating chips designed by others, including Apple. Miller gives us a view of that complexity through the difficulty of lithography necessary for chip manufacturing.
With Taiwan dominating chip manufacturing, and with China facing the same issues of cost and complexity as the U.S. in trying to create chip manufacturing onshore, the competition between the countries is heating up. The Chinese saber-rattling on Taiwan is not simply a territorial issue, but one with significant geopolitical and economic ramifications for the world. Those issues are explored expertly by Chris Miller in this book, and constitute possibly the greatest national security issue facing the United States. The chip shortage recently experienced by the U.S. is a small indication of how impactful on our economy these advanced chips are. A couple of important facts. China imported, by dollar volume, more chips than oil in 2020. TSMC has over 50% share of the worldwide chip market.
When President Biden indicated that the U.S. would militarily intervene in the event of a Chinese invasion of Taiwan, although walked back, we got to understand the importance of Taiwan to the U.S. and the world economy.
What is the future? This book gives a look at what has become the major national security issue of our day. As China becomes more aggressive in the neighborhood the changes are profound, including accelerated military spending by Japan. If you read one book this year this should be high on the list.
The Wall Street Journal look at the “chip race” between the U.S. and China.
Chips are the new oil also at the Wall Street Journal.
Intel CEO on the time needed to “rebalance” chip supply chains.
Bill Manzi.com 