Book review: Chip War

Semiconductors are central to the modern economy. Every electronic product that we buy, and many products that we wouldn't expect, has a microchip, or many, embedded inside. Semiconductors have also been in the news a lot recently, both as the key focus of a trade war between the US and China, and as a component in the ongoing development of artificial intelligence. So, I was interested to read more about how semiconductors became some central to the global economy and the risks that poses, and picked up a copy of Chris Miller's recent book Chip War.

The book provides a run-through of the historical development of the semiconductor industry, in the US and worldwide, from the development of the first computers and up to the present day. Miller paints a picture of an industry that has gone through an ongoing process of concentration over time, with small firms increasingly giving way to larger and larger firms, that have the resources necessary to fund the research and development, the infrastructure, and the processes, necessary to produce the most advanced chips. These processes of concentration have occurred globally, resulting in an industry where the fabrication of chips is undertaken mostly in Asia, and concentrated in Taiwan.

As you would expect, the book also highlights the international tensions that have occurred over time, between the US and Russia, the US and Japan, and most recently the US and China. That the semiconductor industry is so heavily reliant on Taiwan, an island that is at constant risk of Chinese aggression, is the key issue that Miller presents. He also outlines the loss of competitiveness of the US semiconductor industry in key areas, alongside the increasingly aggressive approach to international cooperation and intellectual property adopted by China. For example, while the US has fallen behind:

...China is pouring billions of dollars into its chip industry while pressuring foreign companies to turn over sensitive technology. For every major chip firm, the Chinese consumer market is far more important a customer than the U.S. government.

However, at the same time that Miller presents Chinese behaviours as an issue, Miller also outlines the ways in which this issue may not be problematic, due to recent trade restrictions imposed on China by the US. For example, Miller notes that:

For China, which lacks competitive firms in many parts of the supply chain, from machinery to software, technological independence is even more difficult. For complete independence, China would need to acquire cutting-edge design software, design capabilities, advance materials, and fabrication know-how, among other steps. China will no doubt make progress in some of these spheres, yet some are simply too expensive and too difficult for China to replicate at home.

And in relation to Chinese aggression and any potential takeover of semiconductor manufacturing in Taiwan, Miller notes that:

The idea that China would simply destroy TSMC's fabs out of spite doesn't make sense, because China would suffer as much as anyone, especially since the U.S. and its friends would still have access to Intel's and Samsung's chip fabs. Nor has it ever been realistic that Chinese forces could invade and straightforwardly seize TSMC's facilities. They'd soon discover that crucial materials and software updates for irreplaceable tools must be acquired from the U.S., Japan, and other countries. Moreover, if China were to invade, it's unlikely to capture all TSMC employees. If China did, it would only take a handful of angry engineers to sabotage the entire operation.

The book overall strikes me as having been overtaken a little by recent events. It would have presented a much more challenging and scary picture if the US hadn't enacted trade restrictions in recent times, making very apparent the fragility of Chinese goals. Nevertheless, it was an interesting read, especially for the historical detail, which Miller has clearly investigated in depth.

However, I found the style of writing to be less engaging than it could otherwise have been. The book is made up of very short chapters, which are more-or-less chronological. That is good in a way, but each chapter reads a bit like a standalone article, and that means that there is fair amount of repetition. There is even repetition within particular chapters, which I found a bit frustrating. For someone who reads a chapter at a time, this might be ok, but a book that keeps repeating itself will struggle to maintain the attention of a dedicated reader like myself. Nevertheless, if you are interested in the semiconductor industry, this book may be an interesting read for you.