We usually feature books more squarely about workplaces, but Chip War by Chris Miller, a Tufts history professor, has been garnering such accolades recently—including the FT Business Book of the Year—that we’re covering it this week.

It’s a book we recommend for anyone interested in business and technology history, a sweeping, fast-paced look at the evolution of the semiconductor industry. Here are key takeaways, including some more broadly relevant to work and business:

  • The US government kickstarted the industry, and eventually was surpassed by it. Military and space applications represented over 95% of the chips Fairchild Semiconductor, an industry pioneer, produced in 1965. Today the US government represents only about 2% of the chip market and outsources production of even the semiconductors used in military and spy applications. A new chip-making plant can cost $20 billion to set up, well beyond the government’s usual spending appetite.
  • A copycat approach failed. The USSR’s Cold War semiconductor strategy was to spy on and reverse engineer the production of the US chip sector. But this “copy it” strategy “condemned them to backwardness,” Miller writes. (p. 43) A CIA analysis found that Soviet copies of Intel and Motorola chips were always half a decade behind.
  • Semiconductor manufacturing has been a shockingly male industry. This exhaustive chronicle of the key players of the global chip-making sector from its origin includes almost no women. The nameless female contributors to the industry in its early assembly lines are mentioned in this context: “Chip firms hired women because they could be paid lower wages and were less likely than men to demand better working conditions.” (p. 53)
  • Low interest rates and easy loans were a key competitive advantage. Japanese companies rose to leading positions in the industry partly because they had access to much lower-interest rate loans in the 1970s and 1980s than US chip makers to finance the massive investments to build semiconductor factories. In the early 1980s, they invested 60% more than their US rivals in production equipment.
  • Paranoia led to an important thought experiment. Faced with the loss of memory chip dominance to Japanese producers, the CEO Andy Grove (author of Only the Paranoid Survive) asked Intel co-founder Gordon Moore, “If we got kicked out and the board brought in a new CEO, what do you think he would do?” (p. 125) Moore acknowledged they should get out of memory chips and focus on microprocessors for PCs, a gamble that arguably saved the company. Grove’s question is one any leader should at least occasionally ask themselves to reflect on the moves they’re not making but should.
  • Intel is a tragic case study in missed opportunities. CEO Paul Otellini turned down the contract to build chips for the iPhone because Intel overestimated what it would cost to make those chips and vastly underestimated the volume it would sell. Intel instead prioritized the production of server and PC chips with high profit margins “which made it impossible to try anything new,” Miller writes. (p. 196) The author remains concerned about Intel’s future: “Intel remains enormously profitable today. It’s still America’s biggest and most advanced chipmaker. However, its future is more in doubt than at any point since Grove’s decision in the 1980s to abandon memory and bet everything on microprocessors.” (p. 236)
  • Those who saw a step ahead in the industry often succeeded enormously. TSMC founder Morris Chang foresaw the opportunity for a semiconductor manufacturer that made chips designed by its customers, at a time when chip makers mostly designed their chips in-house. ASML, a lithography equipment maker spun out from Philips in 1984, integrated components from many different manufacturers to establish a market-leading position in the highly technical machines needed in all chip manufacturing. The lasers in ASML’s most cutting-edge machines alone require 457,329 component parts.
  • Outsourcing to companies abroad paradoxically made US semiconductor dominance possible. Qualcomm, a leader in chips used in smartphones, for example, designs semiconductors that are then manufactured by companies like Samsung and TSMC. “Companies like Qualcomm might not have survived if they’d had to invest billions of dollars each year building” factories, Miller writes. They’re “wizards at cramming data into the radio-wave spectrum and devising ever-more-clever chips to decode the meaning of these signals….It was a good thing they didn’t have to try to be semiconductor manufacturing experts, too.” (p. 213)
  • Only two companies are now capable of the most advanced semiconductor manufacturing. They’re Samsung in South Korea and TSMC in Taiwan. TSMC has a massive 55% share of the market for manufacturing chips designed by other companies, with Apple as its biggest customer. More than one-third of the new computing power the world relies on each year is made in Taiwan, helping make the fate of the island nation in the face of China’s claim to sovereignty over it a top national security concern for the US.
  • China remains highly dependent on the US for chips. While Xi Jinping has made it a top national priority for China to gain superiority in chip technology, “even the surveillance systems that track China’s dissidents and its ethnic minorities rely on chips from American companies like Intel and Nvidia,” Miller writes. “All of China’s most important technology rests on a fragile foundation of imported silicon.” (p. 245) Chinese firms have just a 6% share of the entire chip supply chain, compared to 39% for the US, 16% for South Korea, and 12% for Taiwan. US restrictions on the sale of chips and related technology to China’s Huawei in 2020 over national-security concerns crippled its smartphone and server businesses and forced China to delay rolling out its 5G wireless network. But China’s share of chip-making is expected to rise, as it uses open-source and older technologies.

To be sure:

  • Chip War is deeply researched and notably well written. It also has a breakneck pace, with key players introduced in staccato fashion, and is divided into no fewer than 54 chapters.
  • The absence of women in Miller’s recounting of roughly eight decades of history is seemingly a shortcoming of both the industry and the book itself.

Memorable facts, anecdotes, and quotes:

  • “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,” Miller writes. (p. xxi)
  • “No other facet of the economy is dependent on so few firms,” he writes. “Chips from Taiwan provide 37% of the world’s new computing power each year. Two Korean companies produce 44% of the world’s memory chips. The Dutch company ASML builds 100% of the world’s extreme ultraviolet lithography machines, without which cutting-edge chips are simply impossible to make. OPEC’s 40% share of world oil production looks unimpressive by comparison.” (p. xxv)
  • Micron co-founder Joe Parkinson was so focused on costs he dimmed the hallway lights in company offices to save on electricity bills when the price Micron could command for memory chips fell.
  • The USSR minimized the use of electronics and computers in military systems because it couldn’t count on what its domestic semiconductor industry produced.
  • Carmakers produced 7.7 million fewer cars in 2021 than they would have been able to had there not been semiconductor shortages, representing $210 billion in lost revenue. (Miller contends the auto industry itself is largely to blame, having canceled chip orders early in the pandemic that it quickly would come to need.)

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