919: Chris Miller | Chip War: The Battle for Semiconductor Supremacy
Nov 9, 2023
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In this compelling discussion, Chris Miller, the author of "Chip War: The Battle for Semiconductor Supremacy," shares his expertise on the fierce global competition for semiconductor dominance. He highlights how semiconductors are foundational to modern technology and military capabilities. Miller explains why Taiwan is a leader in chip production and delves into China's struggles to keep pace despite heavy investments. He also discusses the potential impact of U.S. policies, like the CHIPS Act, on domestic manufacturing and the strategic stakes tied to semiconductor technology.
China's progress in high-end chip manufacturing is far behind companies like Apple, and it may take a decade or longer for China to catch up.
Chip manufacturing is a complex process that requires unique expertise and specialized infrastructure, making it challenging for China to replicate without assistance.
Taiwan has solidified its position as a major player in the chip industry thanks to strategic investments, the establishment of companies like TSMC, and close connections to Silicon Valley.
Deep dives
China's Challenge in Catching Up with High-End Chip Manufacturing
China is investing billions of dollars in its chip industry and making progress in certain areas, but it is still far behind in high-end chip manufacturing. While it may catch up to the current level of chips in a couple of years, companies like Apple will continue to produce chips that are substantially better, keeping China at a significant gap. It may take China a decade or even longer to reach the cutting edge of chip manufacturing, if at all.
The Complexity and Specialization of Chip Manufacturing
The process of chip manufacturing is incredibly complex and specialized, making it challenging for China to replicate without the necessary expertise and infrastructure. The know-how involved in cutting-edge chip making is unique and can only be gained through experience working at chip companies. Additionally, the manufacturing equipment required for chip production is controlled by a small number of companies in the US and other countries, limiting China's access to this essential technology.
The Role of Taiwan and TSMC in Chip Production
Taiwan has become a crucial player in chip production, thanks to its strategic investments and the establishment of companies like TSMC (Taiwan Semiconductor Manufacturing Company). TSMC, founded in 1987, has pioneered a business model focused on chip manufacturing rather than design, making it the world's most important chip maker. The expertise and specialized workforce in Taiwan, coupled with the close connections to Silicon Valley, have solidified Taiwan's position as a major player in the chip industry.
China's Challenges in Building its Own Chip Manufacturing Industry
China faces significant challenges in building its own chip manufacturing industry. The specialized expertise required, reliance on foreign companies for essential equipment, and inefficiencies in government funding distribution are hindrances to China's progress. Despite substantial investments and attempts to replicate chip production, China remains years away from reaching the cutting edge, particularly in high-end chip manufacturing for applications like smartphones, GPUs, and PC processors.
US-Chinese tech partnerships facing restrictions
US firms have historically resisted helping Chinese partners develop technology due to financial interests. However, in recent years, government restrictions on tech transfer into China have caused many US and Chinese partnerships to dissolve. Restrictions have been imposed to limit the transfer of advanced technologies, but the US government still encourages the sale of less advanced technologies like smartphone chips, PC chips, and data center chips to China.
The risks and challenges in the semiconductor industry
China's increasing investment in chip manufacturing poses a threat to the global market, potentially flooding it with lower-cost chips. This surge of capacity in mature technologies could impact the profitability of US, Japanese, and European tech firms. The US government's initiative, the CHIPS Act, aims to boost chip manufacturing in the US by subsidizing the cost differential between manufacturing in the US and in Taiwan. However, the long-term sustainability of the US chip industry remains uncertain due to higher costs compared to Taiwan and the challenge of replicating the Taiwanese workforce and efficiently organizing the supply chain.
How high are the geopolitical and technological stakes in the international struggle for semiconductor supremacy? Chip War author Chris Miller chimes in!
What We Discuss with Chris Miller:
Semiconductors, commonly known as semis or chips, are essential components in thousands of products such as computers, smartphones, appliances, gaming hardware, medical equipment, and military technology.
How superconductors evolved to become so crucial to our modern infrastructure.
The intricacies of semiconductor manufacturing -- from their complex operation to the resources required to create them -- mean the countries that can produce the most advanced chips have a strategic advantage on the world stage. Taiwan is currently the leader in this field.
Why China, despite investing heavily in semiconductor technology, is always playing catch-up with the rapid pace of Western-influenced technological advancement -- and what underhanded steps it might take to slow this pace to its advantage.
What the recently passed CHIPS and Science Act will likely mean for semiconductor research and manufacturing jobs in the United States.
