From the Finch Lane Library: Chip War
Book Synopsis
Chip War is an exploration into the history and geopolitical importance of semiconductors, commonly known as chips. Here are the key takeaways:
Vital Role of Semiconductors: This book underscores the indispensable nature of semiconductors in powering modern technology, from smartphones and computers to military hardware. Semiconductors are now crucial for both economic prosperity and national security.
Historical Insight: Miller expertly charts the evolution of the semiconductor industry, from its American roots to its global expansion, with a particular focus on the emergence of Taiwan and South Korea as key manufacturing centers. The Cold War had a significant impact on the semiconductor industry and was a main driver for innovation. The Cold War struggles between the United States and the USSR provide an analog to the US-China competition today.
US-China Competition: A key theme of the book is the intensifying rivalry between the United States and China for supremacy in the semiconductor sector. China's push for self-reliance in chip manufacturing poses a significant geopolitical challenge.
Taiwan's Critical Position: The book highlights Taiwan's pivotal role in the global chip supply chain, home to TSMC, the world's largest and most advanced chip foundry. Dependence on Taiwan raises concerns about potential disruptions due to geopolitical tensions or natural disasters.
Implications for the Future: Chip War predicts that the battle for dominance in the semiconductor industry will profoundly shape the geopolitical landscape of the 21st century. The book prompts reflection on the future of globalization, technological progress, and the balance of power among nations.
Finch Lane Takeaways
The semiconductor supply chain is interdependent on a number of key countries and the idea that chips can be "American" or "Chinese" made from start to finish is currently unrealistic and noneconomic.
The semiconductor supply chain relies heavily on the idea of globalization and is very fragile as that idea is challenged. One key component in the chain removed and the chain breaks without alternatives.
Bottleneck companies in the supply chain are the extreme ultraviolet (EUV) lithography company (Netherlands), the electronic design automation software companies (US), some key equipment manufacturers (US) and the chip foundries (Taiwan and South Korea).
Tailwinds for semiconductors are strong as chips are the mission critical component in almost everything we use today. Figuring out where to invest in the supply chain so that the value created is partly captured by the company is key. Not all value created is captured by the company creating that value (e.g. airlines vs. Google).
Chip War: The Fight For The World's Most Critical Technology by Chris Miller. See book info here.
