Chip War by Chris Miller — battle for the globe’s computing power

On January 17 1991, American stealth bombers flew from Saudi Arabia to Iraq where they destroyed the telephone exchange building in Baghdad with laser-guided bombs. Moments later, US navy ships launched 116 Tomahawk cruise missiles at targets around the Iraqi capital, starting the first Gulf war.

The awesome firepower unleashed during Operation Desert Storm was instrumental in driving Saddam Hussein’s army out of Kuwait. But it also sent a powerful signal to the Soviet Union about American military power and the growing importance of semiconductors.

In one of many fascinating facts in Chip War, a riveting history of the semiconductor by Chris Miller, a historian at Tufts University describes how the Soviet, and later Russian, chip industry was so far behind the US despite the best efforts of the KGB that one production plant was “producing tiny chips for McDonald’s Happy Meal toys”. Soviet military leaders had credited America’s computing prowess as a decisive factor in winning the cold war.

In a compelling book that explains a very complicated industry in digestible fashion, Miller details the vicissitudes of the chip business, both in the US and in the Asian countries that dominate many parts of the supply chain for a technology that is more indispensable than oil. His volume could not be better timed, coming just months after Congress passed legislation to provide $52bn to bolster domestic semiconductor production in the US.

Chips play into American fears of increasing vulnerability. Chips are critical for products from phones and refrigerators to fighter jets and the rising Chinese threat to Taiwan, now home to the world’s biggest chipmaker, along with supply chain vulnerabilities exposed by the Covid pandemic, has raised questions about the security of their supply.

Miller peppers his book with vivid accounts of the scientists who invented the semiconductor. These include Robert Noyce who co-founded Intel in 1968 along with Gordon Moore, an engineer whose name became forever linked with chips when he predicted that their power would double every two years, a maxim known as “Moore’s Law”. Other colourful characters include Jack “Mr Spud” Simplot, an Idaho farmer who once supplied half the potatoes for fries sold at McDonald’s before ending up rescuing Micron, a chipmaker.

Soviet military leaders had credited America’s computing prowess as a decisive factor in winning the cold war

One of the most influential people in the book is Morris Chang, who fled China before the Communists took power and ended up in the US where he studied at Harvard, MIT and Stanford. Chang spent years at Texas Instruments before leaving after being passed over for chief executive. In one of the most consequential developments in the history of the semiconductor Taiwan’s government hired him to establish a cutting-edge chip industry. Chang created TSMC, which produces chips designed by its clients, as opposed to designing its own. The company now produces 92 per cent of the world’s most advanced semiconductors.

Miller recounts the emergence of the industry in the late 1950s when scientists and companies built chips — also known as integrated circuits — by carving microscopic transistors into pieces of silicon. The 1957 Sputnik shock that occurred when the USSR put a satellite in space created buyers. Nasa bought chips for its Apollo programme while the air force wanted a new computer for the Minuteman II missile. Over time, Miller says, private sector demand eclipsed military buyers with the emergence of commercial computers.

Chip War chronicles another shift that occurred, in the 1960s, when US companies started offshoring some production to Hong Kong, Taiwan and Singapore in what would be the start of the hollowing out of the US domestic industry. In the 1980s, American business found itself under siege from Japanese rivals, which further accelerated offshoring to Taiwan and South Korea in order to cut costs, and resulted in the big US companies, such as Intel, seeking government help. But as they entered the 1990s, there was a reversal of fortune. Not only had Japan’s economic bubble burst, writes Miller, but Japanese companies had missed the rise of personal computers that were powering strong demand for Intel’s chips.

In one of the many examples of the dramatic swings in the rapidly evolving industry, Miller describes how Intel invested in the development of extreme ultraviolet lithography technology that makes it possible to produce the most advanced chips, yet “squandered” its lead by missing shifts in chip architecture needed for artificial intelligence, had production issues, and struggled to keep up with Moore’s Law.

Towards the end of the 410-page volume, Miller outlines the efforts China has made to develop a chip industry, and how they have been hampered by US efforts to stall its progress. The Trump administration started efforts to slow China’s industry, and the Biden administration is following suit.

In the end, Miller concludes, the stakes are extremely high. “World War II was decided by steel and aluminium, and followed shortly thereafter by the Cold War, which was defined by atomic weapons,” Miller writes. “The rivalry between the United States and China may well be determined by computing power.”

Chip War: The Fight for the World’s Most Critical Technology by Chris Miller Simon & Schuster £20/Scribner $30, 464 pages

Demetri Sevastopulo is the FT’s US-China correspondent

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