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. ( )

Enlightening books. It tells the story of ubiquitous technology. Very well researched. It covers the whole spectrum. History of the chips how, when and where they were invented. And, what role these tiny chips play in world's geopolitics. Very well written. ( )

Read

istened to this on audio, at the recommendation of Oberon. This was an excellent read. Miller goes thru the history of the semi-conductor industry from the start when Silcon Valley wasn't a thing and Gordon Moore was just coming up with his "law". To the evitable off-shoring of manufacturing (which happened much earlier than I suspected) to the current economic and national security battles that are ongoing with China and the US and where the much needed chips that drive our society need/can be made. Its the new Cold War. Excellent read. ( )

There's a lot going on in this book. It covers history, technology, engineering, economics, business strategies, government, and international relations over more than seventy years. The audience for each of these often has little interest in the others. As such, it has taken on more than most books. It's heaviest on history but chips are in the headlines even today as I write this. Reading this book will help anyone understand why The Chips Act had bipartisan support and is one of President Biden's most prominent accomplishments. The news coverage is full of ground-breaking announcements in several states, especially the battleground states of the 2024 election. There's one important downside here. This field is moving so fast this book is already out of date, even though it was published in 2022. It does discuss GPUs, NVIDIA, and even artificial intelligence, but it never mentions ChatGPT, Gemini, Claude, Copilot, Large Language Models. While these are all software, they are altering the chip world, and war, dramatically.

The most important thing I realized reading this book is the importance of the difference between designing chips and manufacturing them at scale. I knew there was a difference, but I did not appreciate both how dramatic and how important the difference is. While the United States has been the king of chips, other countries, especially China, are ready to challenge that leadership. And it’s the difference between design and manufacturing, or as they refer to it, fabricating, that's at the heart of that challenge. The U.S. dominates the design side of chips. That has captured the world's attention. What has been obvious to many is designing is just one side of the story. Other countries dominate the fabrication side, most notably Taiwan and China. The U.S. now sees this as a strategic vulnerability and is taking steps to correct that situation. The Chips Act subsidizes companies that choose to build chip manufacturing facilities in the United States. That's state subsidization, a long time no-no of free trade which has long dominated U.S. trade policy. But the downsides of what free trade has wrought in the world of chips are no longer acceptable. While the U.S. is playing catchup, there are significant headwinds which will delay this process.

This book is an excellent source to understand the headwinds. And there are several. Just looking at the present makes it obvious that change will require upsetting an applecart that is working exceedingly well for several big players. Some will argue that change will likely disturb partners that have worked well together so far and indeed have contracts that bind them for some time into the future. U.S. companies need to rely on their foreign partners to deliver on promises they've already made, so the present works against change for the future. Another headwind is the fact that chips can never be totaled divorced from the products they are used in. While chips are everywhere, the two the most important are electronic devices, such as computers and cell phones, and cars and trucks, both today's gas versions and tomorrow’s electric versions. Almost all are either manufactured or assembled outside the U.S. Think Apple products assembled in China and many Tesla's. While chips are small, if they are fabricated where they will be used, costs will be lower. Supply chains understand that logic. Another headwind is time. It takes a significant amount of time to both design and build at scale. Changing gears will involve significant time delays. Existing players enjoy significant lead having spent years developing their position. Along with time is money. A significant barrier to entry, as well as a high likelihood of failure, is the significant startup cost. Table stakes are exorbitant. There's also unpredictability. What will tomorrow bring? It makes it harder to convince others of your vision. And then there's the difficulty of speed. Making chips faster normally involves making things smaller. We've reached a point where the engineering required to make things smaller is reaching atomic limits. Only one firm in the world, a Dutch firm, ASML, is currently capable of building the machines that can create the chips at the atomic level required. There's no competition. Their machines are huge, very expensive, and take a long time to build. This roadblock sits across all development in this area. Major headwind.

Fortunately, there are still people who are ready to join the fray. Most of the activity is at the design stage. While today NVIDIA dominates the GPUs needed for the enormous needs of artificial intelligence software, several others are working on alternatives including Google, Apple, Intel, and AMD. Development on the design side is funded by these huge corporations. Intel has long dominated the workstation and server market with its famous slogan and logo, "Intel inside". Intel has a long-term problem. It's relatively unique as it has both designed and fabricated chips. It has also played both sides by having installations in both the U.S. and overseas. But their fabrication machines are oriented toward the older x86 design, which is less demanding on tolerance. The chips of the future require much higher tolerance to achieve the denser packing needed to create faster and smaller chips. The old machines can't compete. Intel has to build new factories with new machines. A costly and time-consuming process. AMD has reverse engineered the x86 Intel chips and has taken market share from Intel. They've spun off their fabrication facilities. That should allow them to focus on design. Apple eventually abandoned Motorola for Intel, but more recently is designing their own chips for their computers and cell phones. The fabrication side is different. There is one major player that dominates that market, Taiwan Semiconductor Manufacturing Company, TSMC. It fabricates chips but is even better known for assembling consumer electronics for Apple and others. More recently, the major news is that TSMC fabricates the GPUs designed by NVIDIA. TSMC is based in Taiwan but has major installations in China, India, and Vietnam. TSMC and Intel are taken advantage of the Chips Act and are building plants to fabricate chips in the US.

While this book follows major trends, there are several people, Bill Gates, Steve Jobs, Jeff Bezos, Elon Musk that are barely mentioned – Gates and Musk mentioned on one page, Bezos, never. Yes, their focus was elsewhere, so this may make sense. My guess is they were players in the chip world as well. ( )