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

by Chris Miller

Political leaders in the U.S., Europe, and Japan hadn’t thought much about semiconductors in decades. Like the rest of us, they thought “tech” meant search engines or social media, not silicon wafers. When Joe Biden and Angela Merkel asked why their country’s car factories were shuttered, the answer was shrouded behind semiconductor supply chains of bewildering complexity.

Chips from Taiwan provide 37 percent of the world’s new computing power each year. Two Korean companies produce 44 percent of the world’s memory chips. The Dutch company ASML builds 100 percent of the world’s extreme ultraviolet lithography machines, without which cutting-edge chips are simply impossible to make. OPEC’s 40 percent share of world oil production looks unimpressive by comparison. The

World War II was a conflict of industrial attrition. The United States wanted it that way: an industrial war was a struggle America would win.

The size of transistors and their energy consumption was shrinking, while the computing power that could be packed on a square inch of silicon roughly doubled every two years. No other technology moved so quickly—so there was no other sector in which stealing last year’s design was such a hopeless strategy.

“Our plan is to lead the public with new products rather than ask them what kind of products they want,” Morita declared. “The public does not know what is possible, but we do.”

U.S. strategy required letting Japan acquire advanced technology and build cutting-edge businesses. “A people with their history won’t be content to make transistor radios,”

But in Silicon Valley, unions were weak, and Sporck was committed to keeping it that way. He and his colleagues at Fairchild were “dead set” against unions,

Assembly workers in Hong Kong seemed twice as fast as Americans, Fairchild executives thought, and more “willing to tolerate monotonous work,” one executive reported.

The city’s 25-cent hourly wages were only a tenth of American wages but were among the highest in Asia. In the mid-1960s, Taiwanese workers made 19 cents an hour, Malaysians 15 cents, Singaporeans 11 cents, and South Koreans only a dime.

Managers like Sporck had no game plan for globalization. He’d just as happily have kept building factories in Maine or California had they cost the same. But Asia had millions of peasant farmers looking for factory jobs, keeping wages low and guaranteeing they’d stay low for some time.