'Chip War': What is it good for?

Today, global powers aren't all fixated on artillery, heavy weapons or monstrous tanks. It's not the world map they're plotting to invade either. Instead, all eyes are on a tiny, yet immensely powerful, magical thing – the semiconductor. For better or worse, these minuscule marvels can accomplish far more than the heaviest weapons ever could.

The United States, under the Biden administration, has been addressing its declining share in global semiconductor production by passing the CHIPS and Science Act, which provides significant funding to incentivise semiconductor companies to move their factories back to the US.

This effort is driven by the need to counterbalance China's technological advancements, as well as by the semiconductor shortages experienced during the Covid-19 pandemic. However, challenges such as workforce shortages and market demand fluctuations have caused delays in some projects.

Other countries, including the European Union, Japan and India, are also investing heavily in semiconductor manufacturing to reduce dependence on a single country or region. Geopolitical factors are influencing these investments, with countries aiming to strengthen their semiconductor capabilities for economic and strategic reasons.

Intel, for example, is expanding its operations in Europe, recognising the importance of having manufacturing hubs on multiple continents. The US is also collaborating with its allies to align incentives and avoid detrimental subsidy competition.

Despite the focus on strengthening domestic capabilities, the US is actively supporting semiconductor manufacturing in allied countries as part of supply chain diversification efforts. However, achieving complete self-sufficiency in semiconductor production is considered unrealistic and undesirable by experts.

At large, the global semiconductor industry is undergoing significant transformations driven by geopolitical considerations, supply chain concerns and the increasing importance of semiconductor technology in various sectors. 

But how we have reached this state and what could be the future of microchips is explored in this well-narrated book— Chip War: The Fight for the World's Most Critical Technology by Chris Miller. 

This is a captivating and timely book that explores the history, geopolitics and economics of the semiconductor industry, which has become the key driver of innovation and power in the 21st century. The author, Chris Miller, is an economic historian and a professor at Tufts University, who has written extensively on Russia, China and Europe.

In the 500-page book, he combines his expertise and insights to tell the story of how the US became the leader in chip design and manufacturing, and how it is now facing fierce competition from China, which is determined to catch up and surpass the US in this vital sector.

Miller crafted this book in a narrative style, avoiding overwhelming the reader with dry facts and information. Consequently, I found myself engaged and never bored throughout any of the 54 chapters. Additionally, the inclusion of a glossary for technical jargon greatly smoothed my reading experience, especially as someone with a non-tech background.

The author argues that microchips are the new oil, the scarce and essential resource that fuels the modern world. He shows how chips enable virtually everything, from missiles to microwaves, and smartphones to the stock market, and how they have given the US a decisive edge in military and economic affairs. 

He traces the origins of the chip industry to the Cold War when the US invested heavily in research and development to create faster and more powerful chips, which helped it defeat the Soviet Union and secure its global dominance. 

He also explains how the US leveraged its chip advantage to foster innovation and growth in other sectors, such as software, biotechnology and artificial intelligence.

However, Miller also warns that the US is losing its edge, as it has outsourced much of its chip production to other countries, especially Taiwan, which is under constant threat from China. He reveals how China, which imports more chips than oil, has launched a massive and ambitious plan to become self-reliant and dominant in chip technology, by investing billions of dollars, acquiring foreign firms and stealing intellectual property. 

He analyses the implications of this chip war for the US-China rivalry, the global economy and the future of innovation. He also offers some policy recommendations for the US to regain its leadership and competitiveness in this critical industry.

Chip War is a well-written, well-researched and well-argued book that provides a comprehensive and compelling account of the past, present and future of the chip industry. Anyone interested in understanding the role of technology in shaping the world order and the challenges and opportunities that lie ahead for the US and China will have a great time with the book.

It is also a fascinating and accessible book that should appeal to a wide range of readers, from tech enthusiasts to policymakers, from historians to business leaders and from students to general audience. 

Chip War is not only a book about chips, but also a book about the world we live in and the world we want to create.