Semiconductors are for the 21st century what oil was for the 20th — the material resource that fuels the entire modern economy. And, much like oil in the Seventies, our leaders are waking up to the fact that microchip manufacturing is a rivalrous geopolitical issue; in the mounting Sino-American cold war, both power blocs are competing for the military and economic advantages they confer.
Chris Miller, author of Chip War, spoke to Freddie Sayers about how semiconductors became such a vexed issue, the purpose of America’s protectionist CHIPS Act, and the chances of military confrontation over Taiwan, the world capital of microchip manufacturing, which he places at 20%. Below is an edited transcript.
Freddie Sayers: Why have microchips become a geopolitical issue?
Chris Miller: If you look at the production of advanced processor chips — the types of chips that process data that you find in a smartphone and PC, or a data centre — around 90% of them are made in Taiwan, which also produces over a third of the new computing power in the world each year. Taiwan’s importance is really extraordinary when it comes to all of the world’s technology. And it’s managed to acquire this position largely thanks to the efforts of a single company called Taiwan Semiconductor Manufacturing Company (TSMC), founded in 1987. Since that time it has grown inexorably: today, it’s both the world’s most advanced chip-maker and also the world’s largest manufacturer of silicon chips.
FS: And this pre-eminence can be traced back to TSMC’s founder, Morris Chang. Is he still involved?
CM: He’s officially retired, although he still plays a big role in the company’s decision making and in the company’s culture. He played a critical role in building the entire chip industry. He was in Texas when the first chip was invented in 1958. He played a major role in Silicon Valley’s decision to globalise the industry and build assembly facilities in East Asia, places like Hong Kong and Singapore, and especially Taiwan. More than anyone else, he can claim to have made possible the semiconductors on which the modern economy is critically dependent.
FS: Do we know anything about his politics — his contemporary relationships with China and the US?
CM: He’s done such a good job in business, in part by managing relations with multiple different governments. He was born in mainland China; his father was an official in the nationalist government. When the Communists took power in 1949, he and his family fled. He moved to the US and enrolled at at Harvard, then he spent 30 years working in the US chip industry — he held the US security clearance for working on specialised chips that went into defence systems. And then he got a job offer to start this company in Taiwan, backed by the Taiwanese government, which put up three quarters of the money needed to found TSMC. And since then, he’s lived in Taiwan. He’s still a US citizen. But he’s one of the most influential people in Taiwan because he founded and for a long time ran a business that contributes around 10% of Taiwan’s GDP. But he has generally stayed out of politics. Most of TSMC’s facilities are in Taiwan, a couple of small facilities in China, and a couple of small facilities in the United States. But it’s predominantly focused on production in Taiwan.
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