I think it was Hugh who recommended this book. I’m greatful as it was an excellent read and definitely didn’t make me duck over to eBay to buy an Intel 4004 chip set to play with.
The book uses the backdrop of our current struggles to retain supremacy in high tech manufacturing versus an ambitious China to tell the story of the semiconductor industry in general. It’s a global story of massive proportion, with a huge amount of the global economy now dependent on a product which didn’t exist 75 years ago.
The story starts just after world war two, with Fairchild Semiconductor and Texas Instruments battling it out to produce integrated circuits from newfangled transistors for the Apollo and Minuteman 2 programs. Importantly, Silicon Valley saw consumer market adoption of semiconductors and cheap efficient Asian manufacturing as key to driving down prices and increasing yield rates.
At the same time the Pentagon saw integrated circuits as key to maintaining a technological advantage over their Cold War rivals — the Soviet Bloc was winning in terms of quantity of armament, so the plan was to win with quality of armament. Effectively, the Pentagon sought to bankrupt the Russians by making them spend ever increasing amounts to defend against increasingly accurate and reliable weapons from the US. Honestly, it worked.
The book argues that over time semiconductors became a strategic resource much like oil, and similarly to oil the US military and civilian economy had become dependent on a thing that it could not produce enough of domestically. I think its fair to say the COVID supply chain shocks proved this assertion to be true.
As an aside, I wasn’t really aware of the history of the 1970s US gasoline shortages. In all fairness it happened before I was born, but I didn’t realise that it was political in nature (not just cartel pricing games), and that it caused a decade long recession in the US. The book discusses this as an example of what might happen if the global supply of semiconductors was to be disrupted by conflict.
Next the book discusses the movement to fabless chip designers, where effectively the exorbitant costs of building a fab are shared between many players. This is what TSMC excels at, although it probably helps that they a whole bunch of the Taiwanese government’s money to play with too. The author argues there are entire categories of company (GPU and mobile manufacturers specifically) that wouldn’t have survived if they had also had to build their own fabs.
The final part of the book focuses on China’s problem — it plays a very small part in the global semiconductor market and is heavily dependent on foreign technology for the functioning of its military and economy. China approached this problem with a multipronged strategy, including strong arming western partners into either taking investment or transferring technology in return for market access. To be honest this portion of the book is perhaps a little less interesting than the preceding sections, which also being much more concerning.
Overall this was a fantastic read and I recommend it.
Business & Economics
September 14, 2023
Winner of the Financial Times Business Book of the Year award. An epic account of the decades-long battle to control the world's most critical resource--microchip technology Power in the modern world - military, economic, geopolitical - is built on a foundation of computer chips. America has maintained its lead as a superpower because it has dominated advances in computer chips and all the technology that chips have enabled.