A review by inquiry_from_an_anti_library
Chip War: The Fight for the World's Most Critical Technology by Chris Miller

adventurous hopeful informative inspiring reflective tense fast-paced

5.0

Is This An Overview?

Electronics have become ubiquitous and they run on integrated circuits, referred to as chips.  Chips have become a strategic product for consumer markets and military power.  Access to chips and control of chip production gives states the ability to defend their interests.  Chip development was accelerated due to a need for miliary applications, but then the military became dependent on consumer markets to fund R&D that would enable military applications. 

Chip manufacturing is complex and requires a global supply chain network to obtain the components, tools, and resources needed for production.  Few firms are capable of providing something needed within the production chain.  A global division of labor that spread the costs of production.  The complex and concentrated network was the result of a series of private and public decisions.  To obtain favorable political influence, and to enable profits. 

 

What Is The Division Of Labor In Chip Production?

There are many different types of firms that enable the production of chips.  From the resources, tools, software, design, manufacturing, the final assembly with product that needed the chip.  No matter where on the supply chain a firm is, they have contacts in Silicon Valley.  Silicon Valley created a supply chain network that made it practically impossible to produce chips with input from Silicon Valley.  Other states have to rely on Silicon Valley for tools, software, and customers.  R&D efforts in Silicon Valley are paid by the large consumer market of America.  Other states have entered chip production industry through subsidizing firms, but they still have Silicon Valley connections.

The science behind transistors has been clearer than how to manufacture them reliably.  A division of labor that was given prominence in this book was between firms that design the chips and firms that manufacture the chips.  Firms used to design and manufacture chips, but that has become too expensive which led to a division of labor between designing the chips and manufacturing them.  The Mead-Conway Revolution enabled students to design chips that were then quickly fabricated without the students actually going to fabrication facilities. 

Mass production works with standardized parts.  For chip manufacturing, standardization was impossible.  There are too many sensitive variables in various aspects of production.   Chips also advance every few years, which required changing the tools that make them.  Chips had gotten extremely small by the 1990s, but possible to be smaller.  The problem was that it required more precise lithography tools which were difficult to mass produce. 

Chip fabrication has become too expensive for all but a few firms.  The expense caused the division of labor between chip design and manufacturing, with claims that some firms might not have survived if they needed to build chip manufacturing capacity along with design aspects.  Alternatively, Samsung has a conflict of interest as it produces consumer goods along with chip production.  Therefore, competing with their own customers.  By 2010s, chip production became less profitable than selling ads on apps.  

Manufacturing chips was a labor intensive process.  Charlie Sporck used strategies to keep unions weak, but also provided stock options to employees.  Women were hired because they were cheaper.  America did not have enough cheap labor to produce chips at scale, which lead to efforts to offshore assembly. 

The public sector with military and space paid for chip R&D initially.  But as governments cut costs, civilian products became the source of revenue that paid for R&D. 

Many U.S. tech firms were going bankrupt during the 1980s, which lead to claims that they might be desperate enough to sell valuable technologies.

 

Is There A Source For How Chip Technology Came To Be?

Although mechanical computers were created before WW2, their technological capacity was accelerated due to the war.  Bombers used a mechanism to compute when to drop the bombs.  A few inputs and only one output.  The outcomes were better than pilot guesswork.  Even with the mechanism, bombs rarely hit their targets, with the war being decided on quantity of bombs rather than the mechanisms accuracy.  More calculations would be needed for accuracy.  Mechanical gears were then replaced by computers with electrical charges. 

 

What Was The USSR Strategy With Chips?

The USSR was effective at producing various resources in quantities, but lacked the advanced manufacturing to produce quality.  USSR was not able to obtain advanced technologies due to limited transfers to communist countries. 

Obtaining chips through spy networks and theft did not help USSR as the chips did not come with instructions on how the chip was made.  Chip production was complicated and relied on knowledge that was not contained within a single source.  Copying chips was also not an effective strategy because chip technology advanced far too quick to enable the copy strategy to be effective.  What the copy strategy did was keep USSR technologically behind. 

The USSR had poor management of chip manufacturers, which relied mostly on military demand.  USSR also lacked an international supply chain.  An international supply chain that enabled U.S. and other states to spread R&D costs. 

Americans could not compete with the quantity of weapons with USSR, but they could compete in quality.  War became a contest of accuracy which the U.S. had an advantage.  U.S. reliance on technological superiority to win makes chips a strategic product.

 

How To Increase American Influence?

America helped rebuild Japan and supported Japan’s technological capacity to have Japan bound to American system.  Alternatively, Taiwan wanted to have American company’s plants in Taiwan for Americans to want to defend Taiwan which would foster economic growth and political stability.  Semiconductor assembly facilities were globally based and integrated into U.S. politics rather than communist states.   

 

An Unfair Competition?

Spying among chip facilities was the norm.  Domestic, and foreign spying.  There were many accusations and legal cases against each other for stealing employees, ideas, and intellectual property. 

While some governments, like Japan, subsidized chipmakers and enabled them to work together.  Other government, like the U.S., had antitrust laws that prevented chip firms from colluding.  U.S. firms claimed Japan’s efforts were evidence of unfair competition.  This is during a time when U.S. firms were losing a competitive advantage, while the U.S. government were funding the firms through other ventures such as providing grants for speculative technologies and innovation.  Japan had cheaper capital to fund firms due to lower interest rates, and Japan was funding firms that in the U.S. would have been driven to bankruptcy.  As Japan was gaining more of the chip market, Japan did not consider their practices unfair given U.S. providing chipmakers help such as in the form of defense contracts. 

During the 1980, American manufacturers in multiple industries such as chip makers, steel, and cars were losing their competitive advantage.  The claim was that while Americans were investing in lawyers, Japan was investing in engineers.  The Japanese work culture was more effective. 

Japan’s production capacity in chipmaking made it possible for Japan to make claims against America rather than the previous American lead agendas since 1945.

   

What Was China’s Strategy?

In China, Mao promoted farming and reduced the capacity to rely on foreign investments and generally invest in technology.  Electronics were deemed anti-socialist.  Alternatively, in other countries such as Taiwan, and South Korea, leaders were putting farmers into the manufacturing plant position. 

China might be able to provide software for e-commerce and related products, but is reliant on foreign hardware.  China provided subsidies for fabrication plants in provinces, which were investments based on politics that lead to them being inefficient.  They rely on subsidies and do not produce meaningful technology. 

What gives China an advantage is doing business with failing foreign companies that provide China with technological information in exchange for saving their business.

 

Caveats?

This book is a scientific, political, and economic history of chip production.  Some of the history themes repeat, and can make the history appear self-similar just with different competitors.