The Struggle For The Future Of Computing: Q&A With Chris Miller, Author Of “Chip War”

Chris Miller, author of the recently released book Chip War, explains the complexities and ramifications of international competition for dominance in the critical technology of semiconductors.

Global Finance: How global is the “chip war”?

Chris Miller: There are only a small number of countries that participate in the production of advanced semiconductors: the Netherlands, Germany, the UK, the US, Japan, Taiwan and Korea. But there are several countries placing restrictions on China’s access to that technology. Japan has been a driver of this, alongside the United States. The Netherlands has also joined in, so it’s more of a coalition of countries that are trying to restrict China’s access to [advanced] technology so that it’s not used for intelligence and military purposes.

GF: Is a similar battle playing out in other sectors?

Miller: There’s competition in sectors from biotechnology to quantum computing. Semiconductors are unique because of their criticality to intelligence and military systems, but also because they’re widespread throughout the civilian economy—and that makes them complex and tricky to regulate.

Although most chips go to civilian uses like smartphones and PCs, defense and intelligence officials are fixated on the military applications. So long as there’s a dangerous arms race in East Asia between China, Taiwan, Japan and the US, the focus on controlling access to key technologies that are necessary to produce military technology will persist.

GF: What are the potential long-term scenarios?

Miller: It’s a struggle for the future of computing. You can’t train advanced artificial intelligence [AI] systems today without the most advanced semiconductors. The key advanced technologies are controlled by a small number of companies in a small number of countries.

China is certainly going to try to spend a lot of money and focus a lot of its efforts on acquiring some of these capabilities domestically, but the reality is that it’s going to be quite difficult. China’s position in the production process of manufacturing advanced chips today is quite limited. There’s almost nothing that China can do that other countries can’t. There are a lot of capabilities that other countries have that China does not have. We’re not going to know for five or 10 years whether China is succeeding or failing, but it’s far from guaranteed that any country catches up.

GF: You say that the end of Moore’s Law (the exponential increase in the number of transistors per chip) would be devastating for the semiconductor industry—and the world. What does this mean for the corporate world as we know it?

Miller: For the past 60 years, we’ve gotten free increases in computing capabilities every single year. We haven’t had to pay; we’ve gotten discounts. The average price per transistor in the 1960s was many dollars, whereas today it’s a fraction of a cent. This discounted computer power year after year has made possible the application of computing to all sorts of different use cases. Right now, we take for granted that we’re going to be able to apply computing to more use cases year after year, whether it’s agriculture or consumer goods or manufacturing. If this begins to shift and we must start paying for additional computing capabilities, that will have widespread ramifications across the economy and can be dramatic for long-term productivity growth.

GF: How important is it for corporates to keep an eye on the chip war?

Miller: It’s critical. The chip industry is one of the sectors that invest the most, as a share of revenue, in research and development. That has been necessary to keep Moore’s Law going. A lot of other companies in sectors like autos and industrial are beginning not only to buy a lot of chips, but also to think about designing their own chips. They’ve found that if they’ve gotten chips that are specifically designed for their own use cases, they can get better performance, often at lower cost.

There’s a lot of risk in the structure of the chip industry, with immense focus on Taiwan. If there were a loss of access to Taiwan’s chipmaking due to a blockade or a war, the impact on manufacturing would be as dramatic as anything we’ve seen since the Great Depression. It goes far beyond smartphones and PCs­—it’s cars, dishwashers and most manufactured goods. Most corporates have done zero scenario planning and are completely unprepared for how disastrous a loss of access to Taiwan’s chipmaking would be.