Chip War

Chapter 50 details the corporate espionage case involving Micron, a US memory chipmaker, and Jinhua, a Chinese state-backed firm. Kenny Wang, a Micron employee, attempted to steal confidential data, including designs and manufacturing processes, to help Jinhua create advanced DRAM chips. Jinhua received massive government subsidies, and its aim was to compete against global DRAM leaders like Micron, Samsung, and SK Hynix. The chapter highlights how China’s intellectual property theft and government-backed espionage played a significant role in its tech ambitions. When Micron sued, Jinhua countersued in a Chinese court, illustrating China’s use of legal systems to support economic warfare. Under the Trump administration, the US government took unprecedented action by cutting off Jinhua from accessing US semiconductor equipment, effectively halting its progress. The case showcases the intersection of intellectual property theft, state backing, and how critical semiconductor manufacturing is to global power dynamics.

Chapter 51 covers the US government’s escalating campaign against Huawei, a Chinese telecom giant, and its broader implications for global technology and geopolitical competition. Under President Trump, Huawei was labeled a national security threat due to its potential ties to Chinese espionage. The US banned Huawei from purchasing American-made chips and technologies, eventually expanding restrictions to any products made with US technology, severely crippling Huawei’s ability to produce advanced semiconductors. This chapter also details international reactions, with some countries like Australia following the US lead in banning Huawei, while others, like Germany and the UK, hesitated. Despite the devastating impact on Huawei, China has avoided direct retaliation, possibly acknowledging its dependence on Western technology. The case exemplifies how intertwined global tech supply chains have become a new battleground for national power and control, highlighting the strategic use of “weaponized interdependence.”

Chapter 52 discusses China’s intensified efforts to develop a competitive semiconductor industry, spurred by the US imposing export controls and sanctions on companies like Huawei. The comparison to the US’s “Sputnik moment” highlights how these actions catalyzed China’s commitment to achieving technological independence in chip manufacturing. The chapter focuses on companies like Yangtze Memory Technologies Corporation (YMTC), which received significant government support even during the COVID-19 lockdown. It also covers the pitfalls of China’s massive investments in semiconductors, such as fraudulent ventures like Wuhan Hongxin (HSMC). The challenges China faces, including the immense cost and complexity of replicating cutting-edge technologies like ASML’s EUV lithography machines, are detailed. While complete technological independence is viewed as unrealistic, the chapter emphasizes China’s growing influence in non-cutting-edge chip production, which could increase its leverage in the global semiconductor supply chain.

Chapter 53 examines the global chip shortage that began in 2020, highlighting its impact on industries like automotive manufacturing. The shortage, driven by supply chain disruptions during the COVID-19 pandemic and a surge in demand for semiconductors, revealed vulnerabilities in global supply chains. President Biden’s administration called for increased investment in domestic chip manufacturing to reduce reliance on foreign producers, like Taiwan’s TSMC and South Korea’s Samsung. Despite the political narrative framing the shortage as a supply chain problem, the real issue was soaring demand for chips in sectors such as consumer electronics, 5G, and AI. The chapter also explores how chip manufacturing has become a geopolitical issue, with countries like South Korea and Taiwan investing heavily in semiconductor production while balancing their relationships with the US and China. The US aims to regain leadership in chip production, but the industry’s concentration in East Asia remains a key concern.

Chapter 54 relates the geopolitical tension surrounding Taiwan and its critical role in the global semiconductor industry, particularly through TSMC (Taiwan Semiconductor Manufacturing Company). As China ramps up military exercises near Taiwan and escalates rhetoric about potential conflict, there are increasing concerns about the vulnerability of Taiwan’s semiconductor fabs, which produce a significant portion of the world’s advanced logic chips. The chapter explores how China’s potential military action could disrupt global supply chains, with catastrophic consequences for industries reliant on semiconductors, such as technology, automotive, and defense. The US and its allies rely heavily on Taiwanese semiconductors, but the increasing Chinese military presence poses a grave threat to the global economy. As a result, TSMC’s dominance in chip production has become a crucial, yet precarious, asset in the global power struggle between China, Taiwan, and the US.

The Conclusion reflects on the pivotal role semiconductors have played in shaping modern society, emphasizing the intertwining of technological advancement, geopolitical power, and economic influence. Miller examines the origins of Silicon Valley’s success, with key innovators like Jack Kilby, Morris Chang, and Gordon Moore pioneering the early development of integrated circuits. The chapter explores how the semiconductor industry’s rapid growth has led to global dependencies, with Taiwan’s dominance in chip production creating precarious vulnerabilities in the geopolitical landscape. Additionally, the discussion touches on the future of semiconductor technology, contemplating the potential end of Moore’s Law, the increasing specialization of chips for artificial intelligence, and the implications for global power structures. The chapter reinforces that semiconductors will continue to be critical to technological and economic progress, even as the industry faces new challenges.