Chip War: The Fight for the World's Most Critical Technology

by Chris Miller

In the 1930s, Barr and Sarant were integrated into an espionage ring led by Julius Rosenberg, the infamous Cold War spy.

During the 1940s, Barr and Sarant worked on classified radars and other military systems at Western Electric and Sperry Gyroscope, two leading American technology firms. Unlike others in the Rosenberg ring, Barr and Sarant didn’t possess nuclear weapons secrets, but they had gained intimate knowledge about the electronics in new weapons systems. In the late 1940s, as the FBI began unraveling the KGB’s spy networks in the U.S., Rosenberg was tried and sentenced to death by electrocution alongside his wife, Ethel. Before the FBI could catch them, Sarant and Barr fled the country,

eventually reaching the Soviet Union. When they arrived, they told KGB handlers they wanted to build the world’s most advanced computers. Barr and Sarant weren’t experts in computers, but nor was anyone else in ...

much admired credential, and their aura gave them access to resources. In the late 1950s, Barr and Sarant began building their first computer, called UM—the Russian word for “mind.” Their work attracted the attention of Shokin...

and they partnered with him to convince Khrushchev that the USSR needed an entire city devoted to producing semiconductors, with its own researchers, engineers, labs, and production facilities. Even before the towns on the ...

Valley—a term that wasn’t coined until 1971—Barr and Sarant had dreamt up their own version in a Moscow suburb. To convince Khrushchev to fund this new city of science, Shokin arranged for the Soviet leader to v...

in Leningrad. Behind the bulky, bureaucratic name—the Soviets never excelled at marketing—was an institute at the cutting edge of Soviet electronics. The Design Bureau spent weeks preparing for Khrushchev’s visit, holding...

went according to plan. On May 4, 1962, Khrushchev arrived. To welcome the Soviet leader, Sarant dressed in a dark suit matching the color of his bushy eyebrows and carefully trimmed mustache. Barr stood nervously to Sarant’s...

in the lead, the two former spies showed Khrushchev the accomplishments of Soviet microelectronics. Khrushchev tested a tiny radio that fit in his ear and toyed with a simple computer that could print out his name. Semico...

government, aircraft—even “for the creation of a nuclear missile shield,” Sarant confidently told Khrushchev. Then he and Barr led Khrushchev to an easel with pictures of a futuristic city devoted exclusively to pr...

two-story skyscraper at its center. Khrushchev was enamored of grand projects, especially those that he could claim credit for, so he enthusiastically endorsed the idea of building a Soviet city for semiconductors...

full support. Several months later, the Soviet government approved plans to build a semiconductor city in the outskirts of Moscow. “Microelectronics is a mechanical brain,” Khrushchev explained to his fellow Soviet leaders. “It is our future.” The USSR soon broke ground on the city of Zelenograd, the Russian word for “green city”—and, indeed, it was designed to be a scientific paradise. Shokin wanted it to be a perfect scientific settlement, with research ...

semiconductor engineer could need. Near the center was a university, the Moscow Institute of Electronic Technology, with a brick façade modeled on English and American college campuses. From the outside, it se...

Soviet leaders never comprehended how the “copy it” strategy condemned them to backwardness. The entire Soviet semiconductor sector functioned like a defense contractor—secretive, top-down, oriented toward military systems, fulfilling

orders with little scope for creativity. The copying process was “tightly controlled” by Minister Shokin, one of his subordinates remembered. Copying was literally hardwired into the Soviet semiconductor industry, with some chipmaking machinery using inches rather than centimeters to better

replicate American designs, even though the rest of the USSR used the metric system. Thanks to the “copy it” strategy, the USSR started several years behind the U.S....

United States has been busy

creating lawyers,” Morita lectured, while Japan has “been busier creating engineers.” Moreover, American executives were too focused on “this year’s profit,” in contrast to Japanese management, which was “long range.” American labor relations were hierarchical and “old style,” without enough

training or motivation for shop-floor employees. Americans should stop complaining about Japan’s success, Morita believed. It was time to tell his American f...

The year after China produced its first integrated circuit, Mao plunged the country into the Cultural Revolution, arguing that

expertise was a source of privilege that undermined socialist equality. Mao’s partisans waged war on the country’s educational system. Thousands of scientists and experts were sent to work as farmers in destitute villages. Many others were simply killed. Chairman Mao’s “Brilliant

Directive issued on July 21, 1968” insisted that “it is essential to shorten the length of schooling, revolutionize education, put proletarian politics in command…. Students should be selected from among worker...

return to production after a few years study.” The idea of building advanced industries with poorly educated employees was absurd. Even more so was Mao’s effort to keep out foreign technology and ideas. U.S. restr...

equipment, but Mao added his own self-imposed embargo. He wanted complete self-reliance and accused his political rivals of trying to infect China’s chip industry with foreign parts, even though China couldn’t produce ma...

support for “the earth-shaking mass movement for the… independent and self-reliant development of the electronic industry.” Mao wasn’t simply skeptical of foreign chips; at times he worried that al...

His political rival L...

had endorsed the idea that “modern electronic technology” would “bring about a big leap forward for our industry” and would “make China the first newly industrialized socialist power with first-rate electronic technology.” Ma...

the idea. It was “reactionary,” one of Mao’s supporters argued, to see electronics as the future, when it was obvious that “only the iron and steel industry should play a leading role” in building a socialist utopia in China. In the 1960...

industry, downplaying its importance and cutting its ties with foreign technology. Most of China’s scientists resented the chairman for ruining their research—and their lives—by sending them to live on peasant farms to study proletarian politics rather than semiconductor engineering. One leading Chinese expert in optics who was sent to the countryside survived rural reeducation on a diet of rough grains, boiled cabbage, and an occasional grilled snake, ...

fields, Maoists exhorted the country’s workers that “all people must make semiconductors,” as if every member of the Chinese proletariat could forge chips at home. One tiny speck of Chinese territory escaped the horrors of th...

Kong was still governed temporarily by the British. As most Chinese were meticulously memorizing the quotations of their crazed chairman, Hong Kong workers were diligently assembling silicon components at Fairchild’s ...

in Taiwan, multiple U.S. chip firms had facilities employing thousands of workers in jobs that were low-paying by California’s standards but far better than peasant farming. Just as Mao was sending China’s small set of skilled workers to the countryside for socialist reeducation, the chip industry in Taiwan, South Korea, and across Southeast Asia ...

During the decade in which China had descended

into revolutionary chaos, Intel had invented microprocessors, while Japan had grabbed a large share of the global DRAM market. China accomplished nothing beyond harassing its smartest citizens. By the mid-1970s, therefore, its chip industry was in a disastrous state.

When a delegation of prominent American physicists was being assembled to visit China in 1975, Bardeen was asked to join. With the Cultural Revolution winding down, China’s

leaders were trying to set aside their revolutionary fervor and befriend the Americans. At the time of Bardeen’s visit, Mao was ill; he would die the next year. Bardeen’s delegation reminded the Chinese of the technology that friendship with America could provide. This visit was a sign of how

much had changed since the depths of the Cultural Revolution. A decade earlier, the Nobel Prize winner would have been denounced as a counterrevolutionary agent and not welcomed by China’s leading research institutes in Beijing, Sha...

remained. The Americans were told that Chinese scientists didn’t publish their research because they opposed “self-glorification.” Bardeen knew something about scientists obsessed with self-glorification from his work with Sh...

transistor. The example of Shockley—a brilliant scientist but a failed businessman—demonstrated that the link between capitalism and self-glorification wasn’t as straightforward as Maoist doctrine suggested. Bardeen told his wife that...

and hierarchical. The political minders who watched over China’s semiconductor scientists certainly had no parallel in Silicon Valley. Bardeen and his colleagues left China impressed with the country’s scientists, but Chi...

Asia’s electronics revolution had completely passed by mainland China. Silicon Valley chip firms employed thousands of workers, often ethnic Chinese, in plants from Hong Kong to Taiwan, Penang to Singapore. But the People’s Republic had spent the 1960s denouncing capitalists while its neighbors were trying desperately to attract them. A study in 1979 found that China had hardly any commercially viable semiconductor production and only fifteen hu...

replaced, after a few years, by Deng Xiaoping, who promised a policy of “Four Modernizations” to transform China. Soon China’s government declared that “science and technolo...

“the formula of ‘the first machine imported, the second machine imported, and the third machine imported’ ” and replace it with “ ‘the first machine imported, the second made in China, and the third machine exported.’ ” This “Made in China” obsession was hardwired into the Communist Party’s

worldview, but the country was hopelessly behind in semiconductor technology—something that neither Mao’s mass mobilization nor Deng’s diktat could easily change.

The government’s insistence that chips were strategically important caused China’s officials to try to control chipmaking, embroiling the sector in bureaucracy. When rising entrepreneurs like Huawei’s Ren Zhengfei began building electronics businesses in the late 1980s, they had no choice but to rely on foreign chips. China’s electronics assembly industry was built on a foundation of foreign silicon, imported from the United States, Japan, and increasingly Taiwan—which the Communist Party still considered part of “China,”

but which remained outside its control.

Richard Chang just wanted to “share God’s love with the

Chinese.” The Bible didn’t say much about semiconductors, but Chang had a missionary’s zeal to bring advanced chipmaking to China. A devout Christian, the Nanjing-born, Taiwan-raised, Texas-trained semiconductor engineer convinced Beijing’s rulers in 2000 to give him vast subsidies to build a semiconductor foundry in Shanghai. The facility was designed exactly to his specifications, even including a church, thanks to special permission from China’s normally atheist government. The country’s leaders were willing to compromise on their opposition to religion if Chang could finally bring them modern semiconductor fabrication. Yet even with the full-fledged support of the government, Chang still felt like David as he struggled with the semiconductor industry’s goliaths, especially Taiwan’s TSMC.

By the end of the 2000s SMIC was only a couple years behind the world’s technology leaders. The company seemed on track to become a top-notch foundry, perhaps eventually capable of threatening TSMC. Richard Chang soon

won contracts to build chips for industry leaders like his former employer, Texas Instruments. SMIC listed its shares on the New York Stock Exchange in 2004.