Chips: The New Oil
Tufts professor Chris Miller makes a strong case that
computer chips have become to the 21st century what oil was to the 20th century
in terms of global politics. Computer chips are now ubiquitous and have
uncountable applications in industry, consumer products and military hardware.
We found that out when pandemic related supply shortages shut down production
in a host of industries.
Miller plows over old ground with his discussion of
the invention of the transistor at Bell Labs in 1947 to the co-invention of the
integrated circuit in 1956 by Jack Kilby at Texas Instruments and Bob Noyce who
would go on to lead Intel. He then goes on to discuss the “traitorous eight”
who bail out of Fairchild Semiconductor in 1968 to for what was to become the
Intel behemoth. They all wanted to get rich.
The government plays a major role in supporting the
industry. The need to reduce the weight of the Minuteman missile sent the
Pentagon scurrying to buy integrated circuits from Texas Instruments. As the
Cold War heats up more and more integrated circuits find their way into
military hardware. I remember in 1967 when I was working for Litton Industries,
I first noticed integrated circuits appearing in airborne guidance and control
systems.
Not mentioned in the book, Texas Instruments benefited
from the Kennedy/Johnson White Houses sending defense contracts to Texas and
New England. Silicon Valley in California was left out in the cold, but more
than compensated by going after the lucrative civilian market.
To me most interesting was the role of Texas
Instruments engineer Morris Chang who invented chip production processes. When
he was passed over to be president of the company he moves to Taiwan and is
instrumental in establishing Taiwan Semiconductor, now the largest manufacturer
of chips in the world. Who knows what would have become of Texas Instruments if
he became its president.
It is Morris Chang who makes Taiwan a semiconductor
powerhouse and that is the reason why most of the world’s chips are made there
today. Being located 100 miles from China is not exactly the safest place in
world to manufacture this critical commodity. It is for this reason there now
is a move to diversify production to other sources including the huge U.S.
government subsidies now being funneled into the domestic chip industry.
Because both the Russians and the Chinese understand
how critical computer chips they established their own industries. The Russians
did what they do best which was to copy the west, but with the technology
advancing so quickly that became a failing strategy. China, on the other hand,
is making a huge investment in their own chip industry to wean their economy’s
dependence on western made chips and equipment. In case of the latter there was
a story today where Chinese spies obtained secrets from ASML, the Dutch
monopoly supplier of extreme ultraviolet lithography equipment. Their machines
are essential in the manufacture of chips and cost $100 million apiece.
The saddest part of the book is Miller recounting the
decline of Intel. It seems the bean counters took over from the engineers. In
2008 Intel turned down Steve Jobs’ offer to them to make chips for the I-Phone
ceding the market to Qualcomm. Thus, Intel was nowhere in communication chips
and it is being rapidly displaced in the server market by graphics processing
chips being made by NVIDIA and AMD.
Miller’s book reads like a fast-paced business
thriller. There are great anecdotes and reader will learn much about what will
shape geopolitics this decade and beyond.
*-Amazon has yet to post this review. The review was just posted 2:23MST at Chips: The New Oil (amazon.com)
No comments:
Post a Comment