📗 Chip War, by Chris Miller

Like most I have been aware in the last few years of the rise of TSMC, chip shortages during Covid, and the sabre-rattling by China and the US over Taiwan. But I’ve only had a surface-level understanding, so it was a pleasure to discover this book which was awarded FT business book of the year for 2022. It’s written by Chris Miller an International History professor at Tufts and geopolitical consultant.

Enjoy the notes!


  • Each iPhone has a dozen semiconductors. Different chips for the battery, bluetooth, WiFi, cellular network connections, audio, the camera, accelerometers.
  • Apple makes none of them. Buys most off-the-shelf, eg memory chips from Japan’s Kioxia, radio frequency chips from California’s Skyworks. Designs the most advanced chips, but they can only be made in one building in one country: TSMC’s factory in Taiwan.
  • “This book will make the case that semiconductors have defined the world we live in, determining the shape of international politics, the structure of the world economy, and the balance of military power.”

Cold war chips

  • Akio Morita (Sony founder) in his early 20s in 1945 developing heat-seeking missiles.
  • Need for computation in war. Bomber crews were entering wind speed & altitude with knobs to help focus the sight of the plane. However not effective: “When deployed in the skies above Germany, though, only 20% of American bombs fell within one thousand feet of their target”. So quantity won the war (and more steel production), not quality of targeting
  • Mechanical computers -> vacuum tubes (very unreliable, lights attracting bugs hence ‘debugging’). ENIAC state of the art in 1945
  • Shockley invented the transistor
  • Jack Kilby at TI: “proved that resistors and capacitors could exist on the same piece of semiconductor material. His circuit consisted of a sliver of germanium with five components linked by wires. Along with Bob Noyce, he is considered the inventor of the integrated circuit (IC).”
September 12, 1958. Successful Test of the First Integrated Circuit. Source: Computer History Museum
  • The ‘treacherous 8’ who left Shockley Semiconductor (in which they had no stock, all owned by an East coast billionaire) and founded Fairchild Semiconductor, considered to be the birth of Silicon Valley
The “Treacherous 8” who left Shockley Semiconductor to start Fairchild
  • “The computers that guided the Apollo spacecraft and the Minuteman II missile provided the initial liftoff for America’s integrated circuit industry” in the late 50s early 60s
  • Morris Chang (founder of TSMC) working at TI at the time, improving manufacturing. Chinese-American.  
  • Andy Grove was a production engineer at Fairchild. Escaped Communist-controlled Hungary aged 20 and went to the US.

The circuitry of the American world

  • Intense copying & espionage attempts from soviets 
  • 1962 Japanese PM Ikeda meets Charles de Gaulle and gives him a Sony transistor radio. De Gaulle after says he behaved like a “transistor salesman” 
  • By 1964 Japan were producing more transistors than the US. But focused on consumer goods from Sony & Sharp while the US were producing more advanced computers. 
  • Ikeda promised to double Japan’s GDP in 10 years, he did it in 8. 
  • Fairchild, TI, Motorola and others started to move assembly to Asia (Hong Kong, Malaysia) in 60s for cheaper labor and no unions
  • Chiang Kai-shek running Taiwan in 60s, still claiming to rule all of China (where Mao was in power). Worried about China acquiring atomic weapons and designed strategy to integrate economically with the US. 
  • Pushed TI to open operations in Taiwan, where TI still has operations today
  • 68 Noyce & Moore left Fairchild to found Intel
  • “at his parents’ fiftieth wedding anniversary party in 1972, Bob Noyce interrupted the festivities, held up a silicon wafer, and declared to his family: ‘this is going to change the world'” first (public) generalised logic chip (standardised logic chip coupled with memory chip for different software) 
  • Argument that semiconductors helped ‘keep the piece’ after Vietnam binding the rest of Asia to the US economically

Leadership lost?

  • The 80s were a hellish decade for the entire US semiconductor industry
  • HP tested Japenese DRAM chips (Toshiba & NEC) and found them more reliable than US ones (Intel, TI). Lower cost of capital in Japan
  • Sony walkman came out 1979, 385M sold
  • Industrial espionage from Hitachi, Mitsibishi, Toshiba
  • “photolithography or optical lithography is a general term used for techniques that use light to produce minutely patterned thin films of suitable materials over a substrate, such as a silicon wafer, to protect selected areas of it during subsequent etching, deposition, or implantation operations” 
  • US firms like GCA leading in early 70s, but by 1986 Japan was supplying over 70% of the advanced lithography equipment
  • Lobbying efforts from semi industry to get government & defence help 
  • “The Japan That Can Say No” from Morita (Sony) and an author named Ishiara. Showed America’s vulnerable position depending on Japanese manufacturing

America resurgent

  • Micron backed by Jack Simplot a billionaire from potato production! Chips & chips 🍟
  • Cut costs aggressively and became a competitive DRAM manufacturer against Toshiba, Fujitsu
  • 80s Grove restructured Intel and got it out of the DRAM business (with coaching from Christensen) to focus on microprocessors, “only the paranoid survive”. Federico Faggin manufacturing breakthroughs.
  • Lee Byung-chul (Samsung founder) got them into chips in 83. Government firmly behind him. Silicon Valley firms were struggling so sold IP to Korean firms
  • Soviets at least 10 years behind in chipmaking capacity. “War Hero Status Possible for Computer Chip” NYT
  • 1990 Japan financial markets crash. Japanese firms missed the rise of the PC. Sony diversified into chips for image sensing. 

Integrated circuits, integrated world?

  • 1985 Taiwanese minister to Morris Chang (who was still at TI): “We want to promote a semiconductor industry in Taiwan. Tell me how much money you need”. 
  • Chang had fled China 40 years earlier, and never visited. “He was arguably more Texan than Taiwanese” 
  • Had “Gutenberg for semiconductor” idea: to create a semiconductor company that would manufacture chips designed by customers. Promised never to design chips ie compete with his customers
  • Bought production technology from Dutch firm Philipps for 27.5% of the company, Intel and TI turned him down
  • 1987 Huawei founding. Started as import/export of cheap telecoms equipment. 
  • 2000 founding of Semiconductor Manufacturing International Corporation in China by Richard Chang. Raised >50% of funding from US investors. Strategy to imitate TSMC
  • Samsung entered foundry business in 2005
  • Lithography wars. Getting the best type of beam to shoot at sillicon wafers. Canon, Nikon joined by dutch company ASML (spun out of Philipps) as leaders. 
  • Extreme ultraviolet lithography. Wavelength of 14.5nm. Light gets absorbed by air & glass so special mirror used to focus the light. Dust can make a chip unusable, so uses a fine membrane. 
Erik Loopstra and Vadim Banine – Extreme ultraviolet lithography explainer (European Patent Office)
  • ASML ended up being a monopoly in the most advanced machines: EUV lithography
  • 1990 Apple and two partners establish ARM in Cambridge England, to design chips on RISC principles that Intel had rejected 
  • Intel stayed on x86 instruction set used for PC & server chips. Otellini (Intel CEO) prediction that iPhone would stay niche. First iPhone used Samsung chips

Offshoring innovation?

  • AMD founded by Jerry Sanders (ex-Fairchild) in 1969. They were running fabs but every new generation of tech improvement made fabs more expensive
  • With the prominent exception of Intel all US companies stopped their fabs for logic chips
  • Jacobs founding Qualcomm in 1985 based on the idea that phone call data could be passed through different frequencies (frequency-hopping) and using algos to process the data. Qualcomm has designed specialised chips for this processing (chips built by Samsung or TSMC) 
  • NVIDIA, US co, founded in 1993. Focused on designing (but not manufacturing) GPUs for gaming, then AI. Also built CUDA – software abstraction to program GPUs – only compatible with its GPUs. 
  • GlobalFoundries launched in 2009.  “Created by the divestiture of the manufacturing arm of AMD, the company was privately owned by Mubadala Investment Company, the sovereign wealth fund of the United Arab Emirates, until an IPO in October 2021”
    • But had to drop out of EUV manufacturing (7nm) as pockets not deep enough. Only TSMC, Intel and Samsung now do EUV
  • “Designed by Apple in California. Assembled in China.” is misleading, as the iPhone’s most irreplaceable components can only be made in Taiwan (at TSMC)
  • Intel invested $4b in ASML in 2012 (following prior investments in EUV tech led by Grove) 
  • ASML’s EUV lithography tool is the most expensive mass-produced. “Replicating just the laser in an EUV system requires perfectly identifying and assembling 457,329 parts”.
(c) Jeffrey L Ward, picture from Chip War

China’s challenge

  • Huge worry in China about being reliant on foreign technology for computing.
    • Chips: Xi specifically noting “Microsoft’s Windows operating system can only be paired with Intel chips”
    • Across entire semi supply chain (chip design, IP, tools, fabs) China have 6% market share, US 39%, SK 16%, Taiwan 12%
  • “During most of the 2000s and 2010s, China spent more money importing semiconductors than oil”
  • In 2010s IBM, AMD, ARM sold chip technology / licenses to China
  • “Our fundamental problem is that our #1 customer is our #1 competitor” – US semi exec
  • Chinese government-linked funds buying / investing in foreign chip companies (Lattice in the US, Imagination in the UK). $250B fund for homegrown chipmakers
  • Huawei today is in top 3 providers of equipment on cell towers alongside Finland’s Nokia and Sweden’s Ericsson

The chip choke

  • The assault on Huawei. Trump administration pressured all allies to ban Huawei. May 2022, the US Commerce Department declared it would not enable the sale of US-produced goods, and goods made with US-produced technology, to Huawei.
  • The Netherlands banned the sale of ASML’s EUV machines to Chinese firms
  • Alibaba, Tencent, SMIC have no such sanctions
  • So far China has done nothing, “weaponized interdependence”
  • Today chips use either x86 architecture (dominated by Intel and AMD), or Arm architecture (Arm is UK based). New open-source instruction set architecture called RISC-V.
  • TSMC has new facilities in Japan Arizona and Singapore. Discussion about trying to force them to roll out improvements there at same time as in Taiwan.
  • Unlikely China would take over TSMC forcefully as too many inputs needed from other countries to run the factories: materials, software. But could exert pressure to ensure Chinese firms get equal treatment of orders. Over time could exert pressure to block US orders.


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