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

by Chris Miller

Matching new inventions with commercial opportunities was exactly what a startup like Fairchild needed to succeed—and what the chip industry needed to take off.

After a year spent studying Shakespeare, Chang began to worry about his career prospects.

Mechanical engineering seemed safer than English literature, Chang decided, so he transferred to MIT.

“yield”—the share of transistors that actually worked.

Shockley’s Electrons and Holes in Semiconductors, the bible of early semiconductor electronics.

It was engineering and intuition, as much as scientific theorizing,

that turned a Bell Labs patent into a world-changing industry.

He would have to create it, which meant keeping the military at arm’s length so that he—not the Pentagon—set Fairchild’s R&D priorities.

“There are very few research directors anywhere in the world who are really adequate to the job” of assessing Fairchild’s work, Noyce explained confidently, “and they are not often career officers in the Army.”

Now that he was running Fairchild, a company seeded by a trust-fund heir, he had flexibility to treat the military as a customer rather than a boss.

“Venturing is venturing; you want to take the risk.”

Moore later argued that Noyce’s price cuts were as big an innovation as the technology inside Fairchild’s integrated circuits.

viewing the idea of giving away equity as a form of “creeping socialism.”

As with another sphere where the Soviets had caught up to the United States—nuclear weapons—the USSR had a secret weapon: a spy ring.

Behind the bulky, bureaucratic name—the Soviets never excelled at marketing—was

His job gave him a panoramic view of the semiconductor industry, including how each company was performing.

Silicon Valley had a schizophrenic relationship with the government, simultaneously demanding to be left alone and requesting that it help.

Rather than cutting itself off from trade, Silicon Valley offshored even more production to Taiwan and South Korea to regain its competitive advantage.

They set aside their free-market beliefs the moment Japanese competition mounted, claiming the competition was unfair.

A potato farmer like him saw clearly that Japanese competition had turned DRAM chips into a commodity market.

While most of his competitors were fixated on shrinking the size of transistors and capacitors on each chip, Ward realized that if he shrunk the size of the chip itself, Micron could put more chips on each of the circular silicon wafers that it processed.

They tweaked the lithography machines they bought from Perkin Elmer and ASML to make them more accurate than the manufacturers themselves thought possible.

In Silicon Valley, if your employer went bust you could drive down Route 101 to the next chip firm or computer maker.

After a decade of pain, the U.S. chip industry finally scored a win—and it was only possible thanks to the market wisdom of America’s greatest potato farmer.

When it had made money in DRAMs, it did so by being first to the market with a new design, not by being the leader in mass production.

Intel’s new manufacturing method was called “copy exactly.”

Before then, engineers had prided themselves on fine-tuning Intel’s processes.

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.

in 1992,

chip industry, which had emerged out of the Cold War military-industrial complex, had concluded politics no longer mattered. Management gurus promised a future “borderless world” in which profits not power would shape the global business landscape.

However, the manufacturing of EUV wasn’t globalized, it was monopolized. A

He was hired to be a manager, not a visionary.

At staff meetings in the early 1990s,

Grove would sketch an image illustrating his vision of the future of computing: a castle surrounded by a moat. The castle was Intel’s profitability; the moat, defending the castle, was x86.

Intel could sustain high prices because

of the optimized design processes and advanced manufacturing that Grove had honed and bequeathed to his successors.

“It had the technology, it had the people,” one former finance executive at Intel reminisced. “It just didn’t want to take the margin hit.”

“Abandoning today’s ‘commodity’ manufacturing can lock you out of tomorrow’s emerging industry,”

The software capable of laying out these transistors was provided by three American firms, Cadence, Synopsys, and Mentor, which controlled around three-quarters of the market.

Clever design matters more than shrinking transistors.

are produced by only a couple of firms. For DRAM memory chips, the type of semiconductor that defined Silicon Valley’s clash with Japan in the 1980s, an advanced fab can cost $20 billion.

separating the fabrication of semiconductors from their design caused inefficiencies.

Nvidia’s GPUs can render images quickly because, unlike Intel’s microprocessors or other general-purpose CPUs, they’re structured to conduct lots of simple calculations—like shading pixels—simultaneously.

TSMC could therefore coordinate between them, setting standards that most other companies in the chip industry would agree to use.

“TSMC knows it is important to use everyone’s innovation,” Chang declared, “ours, that of the equipment makers, of our customers, and of the IP providers.

Two years later, the company announced it had designed its own application processor, the A4, which it used in the new iPad and the iPhone 4.

For chip firms, its often easier to raise funds in China than on Wall Street.

“Companies did some stuff first and then the government started to notice…. All our deals are market oriented.”

weren’t too daunted by the engineering tasks,” this former consultant reported, but “they felt they were a hundred years behind when it came to economic knowledge and business knowledge.”

Thanks to IBM and other Western consultants, Huawei learned to manage its supply chain, anticipate customer demand, develop top-class marketing, and sell products worldwide.