Chris Miller: ‘Making chips is the most fascinating and complicated manufacturing problem in human history’

The sounds of New York surround Chris Miller as he answers the phone. An unidentifiable loudspeaker. Exchanges of morning greetings. Finally, the creak of a closing door and the silence of a room free of intruding noises. Miller, a professor of international history at the Fletcher School at Tufts University in Massachusetts, traveled from Boston to the Big Apple to speak on television about Chip War, a book the Financial Times included in its list of the best business books of 2022.

Miller put aside his studies on the USSR and Putin’s Russia, to which he devoted three essays, to delve for five years into the universe of semiconductors – a topic as relevant as it is complicated, with wide-reaching economic, technological and geopolitical implications. His research began when he became aware of their importance in the missile guidance systems during the Cold War. That, however, was just the tip of the iceberg. “I started realizing that a lot of the trends that I was interested in understanding, whether it was the shape of globalization, the structure of supply chains, or the future of military power, you couldn’t understand any of them without making sense of the role that semiconductors play in all of those.”

This is seen in the latest controversy in the power play between the United States and China. Washington recently announced that no company will be allowed to supply certain semiconductors to Chinese companies if they are made with American technology; the goal is to prevent Beijing from using them in the development of its own technology industry or in strategic areas like supercomputers or next-generation weapons.

The timing of Miller’s book – which is based on more than 100 interviews with scientists and other industry experts – could hardly be better. And not only because of the US-China conflict. These microscopic silicon components, present in vehicles, phones, computers and countless civil and military devices, were the source of much talk after the Covid-19 pandemic. The shortages of semiconductors, when consumers rushed to buy again, especially after the lockdown, meant that millions of cars could not be sold, causing brands multimillion-dollar losses and delaying deliveries to desperate customers for many months.

That was when the public realized that cars could not be sold without these microprocessors, and the words “chips” and “semiconductors” became part of everyday conversations. “Most people think of chips as being inside computers, which is certainly true. And that’s one of the major uses of chips. But in fact, they’re in almost everything we touch that has an on-off switch, from microwaves to watches. The dishwasher often has one or several chips inside. A smartphone will have a dozen or so chips inside of it, not only the main chip that manages the operating system, but also chips for the camera, the audio or the Wi-Fi.”

Miller draws several conclusions from the thousands of hours he has spent researching. “The more I dug into their history and the process of how they’re made, the more I realized that making them is the most fascinating and complicated manufacturing problem in human history.” This is a technology that is measured in nanometers (smaller than the coronavirus that stopped the planet in 2020) and conceived in sophisticated industrial plants that can cost up to $20 billion (that is the budget of the one that Intel is building in Ohio) and which need several years before they can operate. What’s more, they depend on minutely defined supply chains, in a back and forth of materials that, from design to manufacturing, involves firms from multiple countries.

“It’s so difficult and expensive. There are a small number of firms and countries that control their use, and that has huge economic ramifications, because if you’re a company that’s able to play such an irreplaceable role in the supply chain, you’ve got an incredible market position. But it also has tremendous geopolitical ramifications because it gives certain countries access and the ability to cut off other countries from getting the most advanced chips,” he explains.

The name of Taiwan resonates in that select club. That is where the industry giant Taiwan Semiconductor Manufacturing Company (TSMC) operates, with a market capitalization of $350 billion. Miller mentions it 200 times in the 400+ pages of his book. The fact that it is in a hot spot due to territorial tensions with China, under the latent threat of an invasion, could have far-reaching consequences. A single missile against TSMC’s most advanced factory – Miller warns in the book – would cause hundreds of billions in losses due to delays in the production of phones, data centers, vehicles, telecommunications networks and other technologies.

Just like the concern for gas was not part of the agenda of the Western political class until Russia invaded Ukraine, semiconductors were not the center of attention until the shortages. Now, Europe is hoping to boost its own semiconductor industry and ease its reliance on exports with multimillion-dollar investments from Brussels. The EU intends to reach 20% of the global microprocessor manufacturing quota by 2030 (it currently covers around 10%).

But Miller thinks Europe will remain mutually dependent on other countries, no matter how many funds are put on the table. The facts indicate so. The Dutch ASML, for example, is an irreplaceable part of that mechanism, as a manufacturer of the machinery necessary to produce the chips. “My advice to European policymakers would be not to embark on some sort of campaign of self-sufficiency, which is unrealistic and propagandistic [...] because the reality is that Europe is going to be reliant on Japan and the US, just like Japan in the US and our allies in Europe. That’s how complicated multinational supply chains work.”

A key element in military supremacy

But this is not just an economic battle. Miller believes that military supremacy is also at stake. “The balance of military power in the future will be shaped in no small part by access to the most advanced computer chips. And that’s one of the reasons why it’s not just finance ministries or economic ministries that are concerned about this; it’s also defense ministries around the world. The future of military power will be even more about semiconductors. If you think of autonomous drones, for example, they’re going to require an enormous amount of computing power, of memory, of AI, signal processing, and that’s all about the chips. You only have to look at the Russian missiles that have been shot down by and taken apart.”

As for the sanctions on the Putin regime, are they helping or hindering access to semiconductors? “They already face pretty severe restrictions in terms of the types of chips they [the Russians] can buy. [...] Now, enforcing these bans is, in some cases, kind of tricky, because there are so many chips in the world and you can buy them on black markets. But we know that Russia has faced a lot of difficulty in acquiring chips. [...] Whether it’s missile systems, whether it’s drones or whether it’s more traditional military gear like tanks, they all require chips. And for Russia, it will just be more and more difficult to get the chips they need.”

Meanwhile, in high-security laboratories where employees wear bulky protective suits, the work to take technology further does not stop. Miller describes the current state of that business battle: “TSMC is in the process of bringing online its five nanometer chip, and the three nanometer is coming shortly thereafter. Samsung and Intel are slightly behind. [...] TSMC and others are already working on their two nanometer processes, and there will be a one nanometer after that.” Smaller means more information in less space. And ultimately, the ability to create more advanced civil and military devices.