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

by Chris Miller

Yet DARPA and the U.S. government have found it harder than ever to shape the future of the chip industry. DARPA’s budget is a couple billion dollars per year, less than the R&D budgets of most of the industry’s biggest firms. Of course, DARPA spends a lot more on far-out research ideas, whereas companies like Intel and Qualcomm spend most of their money on projects that are only a couple years from fruition. However, the U.S. government in general buys a smaller share of the world’s chips than ever before. The U.S. government bought almost all the early integrated circuits that Fairchild and Texas Instruments produced in the early 1960s. By the 1970s, that number had fallen to 10−15 percent. Now it’s around 2 percent of the U.S. chip market. As a buyer of chips, Apple CEO Tim Cook has more influence on the industry than any Pentagon official today. Making semiconductors is so expensive that even the Pentagon can’t afford to do it in-house. The National Security Agency used to have a chip fab at its headquarters in Maryland’s Fort Meade. In the 2000s, however, the government decided it was too expensive to keep upgrading per the cadence dictated by Moore’s Law. Today even designing a leading-edge chip—which can cost several hundred million dollars—is too expensive for all but the most important projects. Both the U.S. military and the government’s spy agencies outsource the production of their chips to “trusted foundries.”