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

by Chris Miller

In 2020, as the world lurched between lockdowns driven by a virus whose diameter measured around one hundred nanometers—billionths of a meter—TSMC’s most advanced facility, Fab 18, was carving microscopic mazes of tiny transistors, etching shapes smaller than half the size of a coronavirus, a hundredth the size of a mitochondria.

When Bell Labs held a press conference in June 1948 to announce that its scientists had invented the transistor, it wasn’t easy to understand why these wired blocks of germanium merited a special announcement. The New York Times buried the story on page 46. Time magazine did better, reporting the invention under the headline “Little Brain Cell.” Yet even Shockley, who never underestimated his own importance, couldn’t have imagined that soon thousands, millions, and billions of these transistors would be employed at microscopic scale to replace human brains in the task of computing.

Kilby called his invention an “integrated circuit,” but it became known colloquially as a “chip,” because each integrated circuit was made from a piece of silicon “chipped” off a circular silicon wafer.

“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.”

If only TI had found a way to market its own branded devices earlier, Haggerty later lamented, TI “would have been the Sony of consumer electronics.”

The U.S. military lost the war in Vietnam, but the chip industry won the peace that followed, binding the rest of Asia, from Singapore to Taiwan to Japan, more closely to the U.S. via rapidly expanding investment links and supply chains.

Grove described his management philosophy in his bestselling book Only the Paranoid Survive: “Fear of competition, fear of bankruptcy, fear of being wrong and fear of losing can all be powerful motivators.” After a long day of work, it was fear that kept Grove flipping through his correspondence or on the phone with subordinates, worried he’d missed news of product delays or unhappy customers.

“If we got kicked out and the board brought in a new CEO, what do you think he would do?” Grove asked Moore, who wanted to keep producing DRAM chips. “He would get us out of memories,” Moore admitted sheepishly.

“Disruptive innovation” sounded attractive in Clayton Christensen’s theory, but it was gut-wrenching in practice, a time of “gnashing of teeth,” Grove remembered, and “bickering and arguments.” The disruption was obvious. The innovation would take years to pay off, if it ever did.

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 was pulling peasants from the countryside and giving them good jobs at manufacturing plants.

A fixation on profit margins seeped deep into the firm—its hiring decisions, its product road maps, and its R&D processes. The company’s leaders were simply more focused on engineering the company’s balance sheet than its transistors.

The largest analog chipmaker today is Texas Instruments, which failed to establish an Intel-style monopoly in the PC, data center, or smartphone ecosystems but remains a medium-sized, highly profitable chipmaker with a vast catalog of analog chips and sensors.

So the text etched onto the back of each iPhone—“Designed by Apple in California. Assembled in China”—is highly misleading. The iPhone’s most irreplaceable components are indeed designed in California and assembled in China. But they can only be made in Taiwan.

For Frits van Houts, who took over leadership of ASML’s EUV business in 2013, the most crucial input into an EUV lithography system wasn’t any individual component, but the company’s own skill in supply chain management.

The final product—chips—work so reliably because they only have a single component: a block of silicon topped with other metals. There are no moving parts in a chip, unless you count the electrons zipping around inside. Producing advanced semiconductors, however, has relied on some of the most complex machinery ever made. ASML’s EUV lithography tool is the most expensive mass-produced machine tool in history, so complex it’s impossible to use without extensive training from ASML personnel, who remain on-site for the tool’s entire life span.