Chip War

In Chapter 43, Miller discusses China’s ambitions to achieve technological self-sufficiency, particularly in semiconductors, in response to its dependence on foreign tech and semiconductors. In a 2017 speech at Davos, Xi Jinping framed China’s vision for global economic leadership, while simultaneously expressing deep concerns about the country’s reliance on imported chips. China had vast technological ambitions, as outlined in its “Made in China 2025” plan, which aimed to drastically reduce the share of foreign chips in its economy by developing a domestic semiconductor industry. This chapter reveals the depth of China’s efforts, driven by government subsidies, partnerships, and industrial policy. The stakes of this plan threatened to disrupt the global semiconductor industry, challenging the dominance of Taiwan, South Korea, and the United States in chip design and production.

In Chapter 44, Miller probes the complex dynamics of technology transfer between American companies and China. During the mid-2010s, Chinese leaders sought to strengthen their semiconductor industry, pushing for technology-sharing agreements with major US firms like IBM, AMD, and Qualcomm. Facing challenges such as declining market share and political pressure, companies like IBM saw opportunities in China to license their chip technologies in exchange for market access. This chapter examines how these deals, including controversial ones like AMD’s licensing of x86 chip architecture, were structured in ways that avoided regulatory scrutiny but provoked concerns about national security. The transfer of advanced chip technology, often done for short-term profit, helped bolster China’s semiconductor industry but also posed long-term risks for US technological dominance and security interests.

In Chapter 45, Miller recounts the rise of Zhao Weiguo, a Chinese businessman who turned his attention to the semiconductor industry through aggressive acquisitions backed by state funds. Zhao, who transformed Tsinghua Unigroup from a real estate-heavy enterprise into a player in China’s chip ambitions, pursued a global shopping spree, targeting companies in China, Taiwan, and the US. He leveraged both political connections and capital to acquire stakes in chip firms, including attempts to purchase American companies like Micron, although these efforts were ultimately rebuffed due to national security concerns. Zhao’s strategy aligned with the Chinese government’s broader push to dominate the global semiconductor industry, using mergers and investments as tools to gain technological capabilities. However, his deals raised concerns about China’s intentions and its integration of state-backed capital with market manipulation.

Chapter 46 explores the rise of Huawei, founded by Ren Zhengfei, and its development into a global tech giant. Initially focused on importing telecom switches, Huawei transitioned to designing and building its own telecom infrastructure equipment. By adopting strategies similar to Samsung, including aggressive global expansion and cultivating strong political ties, Huawei became a major player in both telecom infrastructure and smartphones, rivaling companies like Apple and Samsung. The company faced accusations of intellectual property theft and espionage but distinguished itself through massive investments in research and development (R&D). Huawei’s achievements in designing advanced chips for its smartphones, combined with its leadership in 5G technology, positioned it as a global force. However, Huawei’s close relationship with the Chinese government and state backing raised national security concerns, particularly in the United States, as the company became more embedded in global telecom networks.

Chapter 47 describes the transformative potential of 5G technology and Huawei’s leadership role in this sector. 5G represents a leap in data transmission, far beyond faster internet for phones, influencing the future of computing and semiconductors. Huawei has mastered the equipment needed for this shift, embedding itself in the core of 5G infrastructure alongside competitors like Ericsson and Nokia. The chapter explains that 5G will enable greater connectivity between devices, powering the growth of smart industries, autonomous vehicles, and more. However, despite Huawei’s strength in telecom, it still relies on foreign-made semiconductors, particularly from US firms, raising concerns about technological self-sufficiency and global security implications. The expansion of 5G promises significant shifts in industry, tech, and geopolitics, with China potentially becoming a rival to Silicon Valley in chip design and production by 2030.

Chapter 48 explores the intensifying technological competition between the US and China, particularly in military applications of artificial intelligence (AI) and semiconductors. The US has historically dominated in defense technology, but China has aggressively invested in high-tech weaponry to offset American advantages. The chapter details China’s shift from Mao-era military tactics to an emphasis on precision missiles, cyber warfare, and AI, aiming to match or surpass US military capabilities. The US military’s response, known as the “next offset,” relies heavily on maintaining a technological edge, particularly through AI-enabled autonomous systems and advanced semiconductor technology. However, the chapter also highlights America’s growing reliance on foreign-made chips—especially from Taiwan—raising concerns about supply chain vulnerabilities. The future of military power is deeply tied to the ability to produce and control semiconductors, with Taiwan at the center of both countries’ strategies.