Microchips and the Future of International Politics

The world runs on microchips. The small silicon wafers with transistors imprinted on them that serve as the basis for digital computing are indispensable for virtually all contemporary transportation and communication. They pervade manufacturing–both the processes of making a vast array of industrial and consumer products and the products themselves. They make possible not only personal computers and smartphones but also contemporary automobiles, refrigerators, toys, and many other things as well.

Chip War by Chris Miller tells, in a lively, readable, and informative manner, the remarkable story of this indispensable technology. The author, who teaches at Tufts University in Massachusetts and is affiliated with the American Enterprise Institute in Washington, D.C., recounts the history of chips—also known as semiconductors or integrated circuits. That history begins with the replacement of vacuum tubes by transistors in the early computers in the 1950s. It continues with the ongoing engineering miracle that has led to the development of commercially available chips containing as many as 114 billion miniaturized transistors each, and the development of the technique, known as photolithography—a combination of photography and etching—that puts the transistors on the silicon wafers.___STEADY_PAYWALL___

Along the way, Miller introduces the reader to the leading personalities in the story: William Shockley, the irascible, eccentric inventor of the transistor, for which he received a Nobel Prize; Robert Noyce, an engineer who quit his job working for Shockley to help found two new companies in Silicon Valley, the second of which—Intel—remains America’s largest chipmaker; Noyce’s colleague, Gordon Moore, who in 1965 coined what came to be known as Moore’s Law­–the prediction, seemingly belonging to the realm of science fiction but that nonetheless proved to be accurate for half a century–that the number of transistors that could be placed on a chip would double every two years; Morris Chang, an engineer born in China and educated in the United States who, after a successful career in America, moved to Taiwan and founded that country’s chip industry, which became the most important one in the world; and William Perry, who, as an official in the American Department of Defense (and before he became Secretary of Defense in the Clinton Administration) recognized the military potential of integrated circuits and steered the American armed forces toward incorporating them in the country’s weaponry.

Given the importance of semiconductors over the past six decades, the history that Miller traces is not as well-known or as widely appreciated as it should be. For this there are several reasons, not the least significant of which is the fact that chips are more or less invisible, or at least unseen: they are tiny, they are embedded in far larger machines, and while hundreds of millions of people have bought the products that depend on them, relatively few have ever directly purchased a free-standing chip. Nor, especially in the last five decades, did the extraordinary advances in chip technology come about, for the most part, through the work of single, inspired inventors or entrepreneurs. Instead, teams of sophisticated engineers have designed them and have built the ever-more complicated and expensive machinery required to make them.

News of chips appeared, when it appeared in public at all, in specialized journals or, occasionally, the business pages of newspapers. Such news almost never reached the front page. Now, however, these tiny silicon wafers have become a focal point of public attention because they are entangled in the increasingly intense geopolitical rivalry between the People’s Republic of China and the rest of the world, especially the United States. The course of that rivalry will depend in part on access to chips and on the capacity to make the most advanced ones.

The chip-making process, as it has evolved, has come to have three distinct stages, in which different companies in different countries play major roles: first, fabricating the physical chips themselves, which takes place in fabrication plants known as “fabs;” second, designing the wide variety of specialized chips that the world uses; and third, manufacturing the intricate and complex equipment, especially for photolithography, that fabrication requires. Many firms around the world are involved in these three activities: the chip industry offers a vivid example of globalized interdependence. Yet the geographic distribution of the industry affects the main cleavage in present-day international politics in two ways.

First, virtually all the relevant firms are located outside China and in countries friendly to or actually allied with the United States. This raises the possibility that, in a crisis or a war pitting China against its neighbors and the West, the rest of the world will deny to China the chips that are vital to its economy. The international response to Russia’s February 2022 invasion of Ukraine offers a suggestive precedent and, to the Communist leaders of the People’s Republic, a doubtless unsettling one. The Chinese government has thus for some time been spending on a large scale to try to make the country self-sufficient in chips, but the achievement of that goal remains distant.

The chip-making process is also concentrated in another way, one that alarms the countries arrayed against China, especially the United States. The largest supplier of the most sophisticated, cutting-edge chips is Morris Chang’s Taiwan Semiconductor Manufacturing Company (TSMC), which accounts for an estimated 92 percent of them. This is a vulnerability for the West, since TSMC’s facilities are located on an island 100 miles from the coast of Communist-controlled China that the Communist authorities claim they have the right to rule and for the conquest of which they have for decades made military preparations.

This makes Taiwan roughly comparable, for American foreign policy, to Saudi Arabia. Because the Saudi kingdom has the world’s largest readily accessible reserves of the oil on which the global economy depends, the United States has undertaken to protect it. Now, because of TSMC, in addition to defending a democracy threatened by a communist neighbor and protecting a country whose location in the Pacific Ocean makes it a major military asset in dealing with China, the United States has a third powerful incentive to keep Taiwan free of communist control: to assure the supply to the world of the most advanced integrated circuits. Because a Chinese assault that damaged TSMC would hurt China as well as the rest of the world, the People’s Republic is unlikely to target the Taiwanese chip company deliberately; but a war over the island could have that unintended effect.

To insure against the possibility that Taiwan will cease to be a reliable source of chips, the American government has taken another step. Last year it appropriated funds to subsidize the building of fabrication plants in the United States that can produce the integrated circuits now made only by TSMC. Establishing a fab that can do what is done exclusively in Taiwan will be a lengthy and costly process–if indeed it can be done at all.

The main reason that chips have become part of the competition is that they have military uses, and have had them from the beginning. The early intercontinental ballistic missiles that the United States built and deployed incorporated integrated circuits. The Pentagon was once the American chip industry’s major customer. The devastating effectiveness in the first Persian Gulf War in 1991 of the American military’s precision guided munitions–which became known to the public as “smart bombs”–demonstrated the powerful impact that chips could have on warfare. Since then, the technology and its military as well as civilian applications have grown vastly more sophisticated and versatile.

Specifically, the most advanced chips now make possible artificial intelligence, and weapons using it seem likely to dominate the battlefields of the future. Miller quotes an American official as saying of China that “everything we’re competing on in the twenty-first century . . . rests on the cornerstone of semiconductor mastery.” Based on that conviction, the American government adopted a policy in 2022 of barring the sale of the most advanced chips to China and preventing Americans from assisting the ongoing and massive Chinese effort to gain a military advantage by developing the capacity to make them.

China’s chip-making campaign, which began well before last year, and the Western response to it, have placed chips at the forefront of the twenty-first century arms race. Silicon, the raw material for the chips on which the world runs, is abundant. The scarce and highly valuable component of the chip is not the silicon itself but the scientific and technical expertise that turns this common material into integrated circuits of extraordinary complexity. The competition to develop and retain that expertise will help to shape global politics in the years ahead.

Michael Mandelbaum is the Christian A. Herter professor emeritus of American Foreign Policy at the Johns Hopkins University School of Advanced International Studies, a member of the Editorial Board of American Purpose, and the author of The Four Ages of American Foreign Policy: Weak Power, Great Power, Superpower, Hyperpower, (2022).

Image: CP8 microchip (Flickr: OldTor)