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

by Chris Miller

China now spends more money each year importing chips than it spends on oil.

Last year, the chip industry produced more transistors than the combined quantity of all goods produced by all other companies, in all other industries, in all human history. Nothing else comes close.

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.

Fairchild was the first semiconductor firm to offshore assembly in Asia, but Texas Instruments, Motorola, and others quickly followed.

Sony’s research director, the famed physicist Makoto Kikuchi, told an American journalist that Japan had fewer geniuses than America, a country with “outstanding elites.” But America also had “a long tail” of people “with less than normal intelligence,” Kikuchi argued, explaining why Japan was better at mass manufacturing.

“Potato chips, computer chips, what’s the difference?” one Reagan Administration economist was widely quoted as saying. “They’re all chips. A hundred dollars of one or a hundred dollars of the other is still a hundred.”

By the early 1980s, Grove was Intel’s president, in charge of day-to-day operations, though Moore still played a major role. 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.

On the outside, Andy Grove was living the American dream: a once-destitute refugee transformed into a tech titan. Inside this Silicon Valley success story was a Hungarian exile scarred by a childhood spent hiding from the Soviet and Nazi armies marching down Budapest streets.

While waiting to see if his bet on PCs would work, Grove applied his paranoia with a ruthlessness Silicon Valley had rarely seen. Workdays started at 8 a.m. sharp and anyone who signed in late was criticized publicly. Disagreements between employees were resolved via a tactic Grove called “constructive confrontation.” His go-to management technique, quipped his deputy Craig Barrett, was “grabbing someone and slamming them over the head with a sledgehammer.”

Intel’s dilemma could have been easily diagnosed by the Harvard professor who’d advised Andy Grove. Everyone at Intel knew Clayton Christensen and his concept of “the innovator’s dilemma.”

The company’s engineers realized the best approach was to shoot a tiny ball of tin measuring thirty-millionths of a meter wide moving through a vacuum at a speed of around two hundred miles per hour. The tin is then struck twice with a laser, the first pulse to warm it up, the second to blast it into a plasma with a temperature around half a million degrees, many times hotter than the surface of the sun. This process of blasting tin is then repeated fifty thousand times per second to produce EUV light in the quantities necessary to fabricate chips. Jay Lathrop’s lithography process had relied on a simple bulb for a light source.

It took Trumpf a decade to master these challenges and produce lasers with sufficient power and reliability. Each one required exactly 457,329 component parts.

Ultimately, Zeiss created mirrors that were the smoothest objects ever made, with impurities that were almost imperceptibly small. If the mirrors in an EUV system were scaled to the size of Germany, the company said, their biggest irregularities would be a tenth of a millimeter.

During most years of the 2000s and 2010s, China spent more money importing semiconductors than oil.

When it came to artificial intelligence, the country was one of the world’s two AI Superpowers, according to a widely discussed book by Kai-Fu Lee, former head of Google China.

Huawei coupled this with a militaristic ethos that the company celebrates as “wolf-culture.” Calligraphy on the wall of one of the company’s research lab reads “Sacrifice is a soldier’s highest cause. Victory is a soldier’s greatest contribution,”

Andy Grove wrote a bestseller about the benefits of paranoia.

Nearly every chip in the world uses software from at least one of three U.S.-based companies, Cadence, Synopsys, and Mentor (the latter of which is owned by Germany’s Siemens but based in Oregon). Excluding the chips Intel builds in-house, all the most advanced logic chips are fabricated by just two companies, Samsung and TSMC, both located in countries that rely on the U.S. military for their security. Moreover, making advanced processors requires EUV lithography machines produced by just one company, the Netherlands’ ASML, which in turn relies on its San Diego subsidiary, Cymer (which it purchased in 2013), to supply the irreplaceable light sources in its EUV lithography tools.