What does book “Chip War” talk about?

Chip War

Strongly recommend to read my post of “A series of Intel decisions led to where it is today” before you move next.

Why everybody is taking about this book?

The book “Chip War” has attracted great attention in the past two or three years. I personally think there are several reasons:

  • Semiconductors have become the oil of the 21st century, an indispensable resource and technology for all countries in the world. Semiconductor chips will certainly attract global attention.
  • The United States passed the “Chip and Science Act” to provide large government subsidies of US$52 billion to subsidize semiconductor manufacturing companies willing to set up factories in the United States, while allocating tens of billions of US dollars to invest in future science and research and development. The U.S. government has also provided $12 billion to establish the National Semiconductor Technology Center and other initiatives to promote research and development in the chip industry.
  • Especially in the confrontation between China and the United States, the United States is afraid that China will surpass the United States and has stepped up its containment of China in all aspects, especially in the technology industry. And it has united with Western countries, plus Taiwan, Japan, and South Korea, to repeatedly tighten the semiconductor embargo and containment on China.
  • The semiconductor industry, especially chip manufacturing, is now “the only” important advanced industry in which Taiwan ranks first in the world. Taiwan is of course one of the protagonists of this book.

Note: The book mentions that Jerry Sanders, the founder of AMD, said as early as the 1980s, “Chips were the oil of the 1980s.” In recent years, too many celebrities, politicians, and well-known media have expressed a similar view: “Semiconductors have become the oil of the 21st century.”

Note: How important are semiconductors? Please refer to my following article:

Reasons for recommending this book

  • This is a good book with a detailed story and a serious and attentive author. I personally think it is a must-read book for semiconductor investors.
  • If you want to start from scratch and understand the invention and application of semiconductors, as well as the introductory book on semiconductors that all ordinary investors must understand now, this is a book written for that purpose.
  • Understand how the United States uses the invention of semiconductors (just like using the dollar, media, and aircraft carriers) to control global technological development and block and suppress any country that may surpass the United States.
  • Want to understand the semiconductor supply chain, Morris Chang, TSMC (TSMC is one of the protagonists of this book), please see my posts of “TSMC Morris Chang’s controversial words and deeds” and “How did Morris Chang found TSMC?”

Note: Investors who want to know more about the semiconductor supply chain can refer to my following posts:

Semiconductor History

How was semiconductor invented?

How vacuum tubes, transistors, and integrated circuits were invented are explained in detail in this book in words that ordinary people can understand. This also mentions Texas Instruments, Express, and Intel, three semiconductor pioneer companies, as well as several transistor inventors who won the Nobel Prize.

Note: For the history of semiconductor development, please see my following posts:

U.S. military and NASA

The U.S. military and NASA were the two largest customers when the transistor was invented. Especially during the Cold War, the United States and the Soviet Union were fighting to the death in the two major fields of arms and space, and the demand for semiconductors was particularly strong. . The U.S. military and NASA purchased almost most of the transistors on the market at that time, especially Texas Instruments, which was the main supplier.

This situation lasted for a long time. Later, due to the efforts of Quick, Texas Instruments, and Intel, together with other peers, the demand for semiconductors for general sales to the public was developed. Since then, the semiconductor industry has skyrocketed to this day.

Note: For details about Texas Instruments and Intel, please see my following posts:

Other countries

Countries other than the United States, because of their inferior technology and national strength, have come into contact with semiconductors through technology transfer to the United States or plagiarism (meaning the Soviet Union). The book also mentions that China, Japan, Taiwan, Hong Kong, Malaysia, and Singapore in East Asia began to benefit from the cost-saving semiconductor packaging and testing outsourcing of the U.S. semiconductor industry in the 1960s.

Geopolitics dominates everything

US interests first

This is a book written by an American, full of Americans’ hegemonic thinking: taking the interests of the United States as the only consideration, without considering the positions and feelings of other countries, forcing other countries to cooperate with the policies formulated by the United States, and even more Let alone whether the policies and measures implemented by the United States are reasonable.

Oppression of Japan in the 1980s

From the late 1970s to the 1980s, Japanese semiconductor industry dominated the world. Whether it was the efficiency of chips, manufacturing yields, or market share, they all overwhelmed their American counterparts.

Seeing that this situation could not continue, the United States resorted to similar methods to deal with China, accusing Japan of government subsidies, suspected of stealing American intellectual property rights, unfair cost advantages, price-cutting export dumping, and the protection of Japan’s domestic market, forcing Japan to enter into a humiliating U.S.-Japan agreement. Semiconductor Agreement──Japan and China are different. Japan accepts everything according to the agreement, which has caused Japan to lag behind in semiconductor manufacturing.

Note: Please replace all “Japan” in this paragraph with “China”. This is the method currently used by the United States to deal with China.

Note: Japan’s DRAM memory forced Intel to lay off 25% of its employees and end its DRAM memory business.

Investors who want to understand the U.S.-Japan Semiconductor Agreement and how the United States oppresses Japan, and how Japan obediently accepts the unreasonable demands of the country that is now militarily occupying Japan, can refer to the following posts of mine:

Block Soviet Union during the Cold War

Before the rise of China, the United States used all its might to block the Soviet Union, just as it currently does against China. The difference between the two is that after the disintegration of the Soviet Union, the national power of Russia, its successor, was greatly weakened. In addition, it was trapped in the quagmire of the war in Ukraine. The United States’ priority in confronting and preventing blockade has shifted to China.

Anti-China

The whole book (especially the description in recent years) is full of anti-China views. The main content of the book is to hinder China, prevent China from surpassing the United States, and unite U.S. allies to attack China. It is the same as the previous methods used to suppress the semiconductor industries of Japan and the Soviet Union. It happens all the time, no different.

But China understands the intentions of the United States and remains unyielding so far. Investors can refer to my related articles listed below:

Forced TSMC to set up factories in US

In order to rebuild the semiconductor manufacturing industry in the United States, TSMC was forced to set up a factory in the United States. Taiwan, like Japan in the 1980s, succumbed to the intimidation of the United States, knowing full well that TSMC’s establishment of a factory in the United States would hollow out Taiwan. TSMC’s U.S. factory Under the premise that it is impossible to make money, the Taiwan government still cannot protect TSMC and say no to the United States.

I can do it but you can’t

The book repeatedly rationalizes the rationality and legitimacy of various measures introduced by the United States to prevent China from surpassing the United States. The entire argument is made from the perspective of the United States, as if the United States is the messenger of justice and China has become a demon in the control group. ───There are two sets of standards for everything. The same thing can only be done by the United States, but not by other countries.

The “Chip and Science Act” of the United States’ large government subsidies of US$52 billion, the establishment of the National Semiconductor Technology Center of US$12 billion and other measures to promote the research and development of the chip industry are necessary ──Similar subsidies launched by China have been labeled as “inappropriate” and “undeserved” state-level subsidies.

How important are Far East chips?

How important is the chip production of East Asian countries? The book lists the chip production of major East Asian countries and their global proportion.

The whole of East Asia (accounting for the whole world)

  • 90% of memory chips
  • 75% of processor (logic) chips
  • 80% of wafers

China

  • 15% of the chips
  • The total value of chip imports is US$260 billion (2017)

South Korea

  • 44% of memory chips
  • 8% of processor chips
  • Chips account for 15% of total export value (2017)

Japan

  • 17% of the chips

Taiwan

  • 41% of processor chips
  • More than 90% of the most advanced chips
  • Chips accounted for 36% of total export value (2017)

Singapore

  • 5% of chips
  • Chips accounted for 17% of total export value (2017)

The protagonists of this book

Companies mentioned in this book

Since there are so many companies mentioned in this book, I have tried my best to list the U.S. stock trading symbols of these companies in the tags of this article. For relevant posts from these companies, you can find relevant Internet links at the back of this article, just click on them.

Semiconductor Group

Intel, Texas Instruments, Samsung, Renesas, Fujitsu, Toshiba, Hitachi, RCA, Philips, General Instruments

Chip design company

Express, AMD, Qualcomm, VIA, ARM, MediaTek, Lattice, HiSilicon, Cypress, Xilinx

Memory chip maker

Micron, Fujian Jinhua, Kioxia, Witten, Hynix, Elpida

Chip foundry

TSMC, GLOBALFOUNDRIES, SMIC, UMC, Chartered, Hua Hong, Grace

Semiconductor equipment company

Nikon, ASML, Zeiss, Canon, Applied Materials, Lam Research, KLA

Semiconductor materials supplier

Kodak

Software company

Microsoft, Synopsys, Cadence, and Mentor Graphics

Other company

Apple, Amazon, IBM, Huawei, Xerox, HP, BlackBerry, Sugon, Tesla

Chip War
credit: amazon.com

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Author: Andy Lin

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