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

by Chris Miller

Texas Instruments never handed out blank checks like this. Chang knew he’d need a lot of money, because his business plan was based on a radical idea. If it worked, it would upend the electronics industry, placing him—and Taiwan—in control of the world’s most advanced technology. As early as the mid-1970s, while still at TI, Chang had toyed with the idea of creating a semiconductor company that would manufacture chips designed by customers. At the time, chip firms like TI, Intel, and Motorola mostly manufactured chips they had designed in-house. Chang pitched this new business model to fellow TI executives in March 1976. “The low cost of computing power,” he explained to his TI colleagues, “will open up a wealth of applications that are not now served by semiconductors,” creating new sources of demand for chips, which would soon be used in everything from phones to cars to dishwashers. The firms that made these goods lacked the expertise to produce semiconductors, so they’d prefer to outsource fabrication to a specialist, he reasoned. Moreover, as technology advanced and transistors shrank, the cost of manufacturing equipment and R&D would rise. Only companies that produced large volumes of chips would be cost-competitive. TI’s other executives weren’t convinced. At the time, in 1976, there weren’t any “fabless” companies that designed chips but lacked their own fabs, though Chang predicted such companies would soon emerge.