Memorable quotes
1. America’s dominance of the world’s tech infrastructure would be undermined. China’s geopolitical clout would grow. To counter this threat, the U.S. barred Huawei from buying advanced computer chips made with U.S. technology.
2. Around a quarter of the chip industry’s revenue comes from phones; much of the price of a new phone pays for the semiconductors inside.
3. Last year, the chip industry produced more transistors than the combined quantity of all goods produced by all other companies, in all other industries, in all human history. Nothing else comes close.
4. The making of Moore’s Law is as much a story of manufacturing experts, supply chain specialists, and marketing managers as it is about physicists or electrical engineers.
5. Chips from Taiwan provide 37 percent of the world’s new computing power each year. Two Korean companies produce 44 percent of the world’s memory chips. The Dutch company ASML builds 100 percent of the world’s extreme ultraviolet lithography machines, without which cutting-edge chips are simply impossible to make. OPEC’s 40 percent share of world oil production looks unimpressive by comparison.
6. A person looking to use the results of the Mathematical Tables Project had to flip through the pages of one of the twenty-eight volumes to find the result of a specific logarithm or exponent. The more calculations that were needed, the more pages had to be flipped through.
7. and off, performing a function not unlike an abacus
8. on and off, performing a function not unlike an abacus
9. He would have to create it, which meant keeping the military at arm’s length so that he—not the Pentagon—set Fairchild’s R&D priorities. Noyce declined most military research contracts, estimating that Fairchild never relied on the Defense Department for more than 4 percent of its R&D budget.
10. Fairchild chips served 80 percent of this computer market. Bob Noyce’s price cuts had paid off, opening a new market for civilian computers that would drive chip sales for decades to come. Moore later argued that Noyce’s price cuts were as big an innovation as the technology inside Fairchild’s integrated circuits.
11. The size of transistors and their energy consumption was shrinking, while the computing power that could be packed on a square inch of silicon roughly doubled every two years. No other technology moved so quickly—so there was no other sector in which stealing last year’s design was such a hopeless strategy.
12. “Japan is a keystone in America’s Pacific policy…. If she cannot enter into healthy commercial intercourse with the Western hemisphere and Europe, she will seek economic sustenance elsewhere,” like Communist China or the Soviet Union.
13. Trade publications like Electronics magazine—which might have been expected to take the side of U.S. companies—instead noted that “Japan is a keystone in America’s Pacific policy…. If she cannot enter into healthy commercial intercourse with the Western hemisphere and Europe, she will seek economic sustenance elsewhere,”
14. Trade publications like Electronics magazine—which might have been expected to take the side of U.S. companies—instead noted that “Japan is a keystone in America’s Pacific policy…. If she cannot enter into healthy commercial intercourse with the Western hemisphere and Europe, she will seek economic sustenance elsewhere,” like Communist China or the Soviet Union.
15. Fairchild was the first semiconductor firm to offshore assembly in Asia, but Texas Instruments, Motorola, and others quickly followed.
16. Yet even after the U.S. finally admitted defeat in Vietnam and drew down its military presence in the region, these trans-Pacific supply chains endured. By the end of the 1970s, rather than dominoes falling to Communism, America’s allies in Asia were even more deeply integrated with the U.S.
17. In the early 1960s, it had been possible to claim the Pentagon had created Silicon Valley. In the decade since, the tables had turned. The U.S. military lost the war in Vietnam, but the chip industry won the peace that followed, binding the rest of Asia, from Singapore to Taiwan to Japan, more closely to the U.S. via rapidly expanding investment links and supply chains.
18. U.S. firms, with GCA as the leader, controlled 85 percent of the global market for semiconductor lithography equipment in 1978. A decade later this figure had dropped to 50 percent. GCA had no plan to turn things around.
19. U.S. chipmakers built facilities from Taiwan to South Korea to Singapore. These territories were defended from Communist incursions not only by military force but also by economic integration, as the electronics industry sucked the region’s peasants off farms—where rural poverty often inspired guerilla opposition—into good jobs assembling electronic devices for American consumption.
20. The firm established a stranglehold on the market for PC chips, issuing a new generation of chip every year or two, offering smaller transistors and more processing power. Only the paranoid survive, Andy Grove believed. More than innovation or expertise, it was his paranoia that saved Intel.
21. Except for Apple’s computers, almost every PC used Intel’s chips and Windows software, both of which had been designed to work smoothly together. Intel entered the personal computer era with a virtual monopoly on chip sales for PCs.
22. As in Japan, therefore, Korea’s tech companies emerged not from garages, but from massive conglomerates with access to cheap bank loans and government support.
23. Most of Silicon Valley was happy to work with Korean companies, undercutting Japanese competitors and helping make South Korea one of the world’s leading centers of memory chipmaking. The logic was simple, as Jerry Sanders explained: “my enemy’s enemy is my friend.”
24. “If you start worrying” about overinvestment, one Hitachi executive admitted, “you can’t sleep at night.” So long as banks kept lending, it was easier for CEOs to keep spending than to admit they had no path to profitability
25. The firms that made these goods lacked the expertise to produce semiconductors, so they’d prefer to outsource fabrication to a specialist, he reasoned. Moreover, as technology advanced and transistors shrank, the cost of manufacturing equipment and R&D would rise. Only companies that produced large volumes of chips would be cost-competitive.
26. The founding of TSMC gave all chip designers a reliable partner. Chang promised never to design chips, only to build them. TSMC didn’t compete with its customers; it succeeded if they did.
27. “You mean to tell me you’re going to spend money on something that we don’t even know if it’s gonna work?” Grove asked skeptically. “Yeah, Andy, that’s called research
28. Both ASML and TSMC started as small firms on the periphery of the chip industry, but they grew together, forming a partnership without which advances in computing today would have ground to a halt.
29. But the idea of pouring money into mobile devices seemed like a wild gamble at a time when there was far more money to be made selling processors for PCs. So Intel decided not to enter the mobile business until it was too late.
30. A fixation on hitting short-term margin targets began to replace long-term technology leadership. The shift in power from engineers to managers accelerated this process. Otellini, Intel’s CEO from 2005 to 2013, admitted he turned down the contract to build iPhone chips because he worried about the financial implications.
31. Van Atta saw few reasons for confidence and none for complacency. “The U.S. leadership position,” he warned in 2007, “will likely erode seriously over the next decade.” No one was listening.
32. Even he admitted, though, that it was becoming harder to make money while owning and operating a fab. The problem was simple: each generation of technological improvement made fabs more expensive. Morris Chang had drawn a similar conclusion several decades earlier, which is why he thought TSMC’s business model was superior.
33. Within four years of the iPhone’s launch, Apple was making over 60 percent of all the world’s profits from smartphone sales, crushing rivals like Nokia and BlackBerry and leaving East Asian smartphone makers to compete in the low-margin market for cheap phones.
34. Now Apple not only designs the main processors for most of its devices but also ancillary chips that run accessories like AirPods. This investment in specialized silicon explains why Apple’s products work so smoothly.
35. Foreigners saw immense potential in the Chinese chip industry, but only if disastrous corporate governance and business processes could somehow be fixed. “When a Chinese firm said, ‘Let’s open a joint venture,’ ” one European semiconductor executive explained. “I heard, ‘Let’s lose money.’ ” The joint ventures that did emerge were generally addicted to government subsidies
36. Foreigners saw immense potential in the Chinese chip industry, but only if disastrous corporate governance and business processes could somehow be fixed. “When a Chinese firm said, ‘Let’s open a joint venture,’ ” one European semiconductor executive explained. “I heard, ‘Let’s lose money.’ ” The joint ventures that did emerge were generally addicted to government subsidies and rarely produced meaningful new technology.
37. The problem wasn’t simply that Chinese government-linked funds were buying up foreign chip firms. They were doing so in ways that violated laws about market manipulation and insider trading.
38. There were too many Chinese state-owned and state-financed “private equity” firms circling the world’s semiconductor companies to describe this as anything other than a government-led effort to seize foreign chip firms.
39. Amid this frenzied dealmaking, Tsinghua Unigroup announced in 2017 that it had received new “investment”: around $15 billion from the China Development Bank and $7 billion from the Integrated Circuit Industry Investment Fund—both owned and controlled by the Chinese state.
40. America’s technological lead in fabrication, lithography, and other fields had dissipated because Washington convinced itself that companies should compete but that governments should simply provide a level playing field. A laissez-faire system works if every country agrees to it.
41. Why did Australian and British cybersecurity experts differ in their assessment of Huawei risk? There’s no evidence of technical disagreements. UK regulators were quite critical of deficiencies in Huawei’s cybersecurity practices, for example. The debate was really about whether China should be stopped from playing an ever-larger role in the world’s tech infrastructure.
42. former head of the UK’s signals intelligence agency, argued that “we should accept that China will be a global tech power in the future and start managing the risk now, rather
43. Robert Hannigan, former head of the UK’s signals intelligence agency, argued that “we should accept that China will be a global tech power in the future and start managing the risk now, rather than pretending the west can sit out China’s technological rise.”
44. Many Europeans also thought China’s technological advance was inevitable and therefore not worth trying to stop.
45. Moreover, targeting China’s highest-profile tech firm would send a message worldwide, warning other countries to prepare to take sides.
46. Moreover, targeting China’s highest-profile tech firm would send a message worldwide, warning other countries to prepare to take sides. Hobbling Huawei’s rise became a fixation of the administration.
47. Excluding the chips Intel builds in-house, all the most advanced logic chips are fabricated by just two companies, Samsung and TSMC, both located in countries that rely on the U.S. military for their security.
48. and manufacture its semiconductors abroad.” The new Commerce Department rules didn’t simply stop the sale of U.S.-produced goods to Huawei. They restricted any goods made with U.S.-produced technology from being sold to Huawei, too. In a chip industry full of choke points, this meant almost any chip.
49. Carmakers spent much of 2021 struggling and often failing to acquire semiconductors. These firms are estimated to have produced 7.7 million fewer cars in 2021 than would have been possible had they not faced chip shortages, which implies a $210 billion collective revenue loss, according to industry estimates.
50. There are few industries that sailed through the pandemic with so little disruption. Such problems that emerged, notably the shortage of auto chips, are mostly the fault of carmakers’ frantic and ill-advised cancelation of chip orders in the early days of the pandemic coupled with their just-in-time manufacturing practices that provide little margin of error.
51. Taiwan’s president Tsai Ing-wen recently argued in Foreign Affairs that the island’s chip industry is a “ ‘silicon shield’ that allows Taiwan to protect itself and others from aggressive attempts by authoritarian regimes to disrupt global supply chains.” That’s a highly optimistic way of looking at the situation.
52. Carver Mead, the Caltech professor who coined the phrase “Moore’s Law,” shocked the world’s semiconductor scientists with his prediction half a century ago that chips might eventually contain 100 million transistors per square centimeter. Today, the most advanced fabs can squeeze a hundred times as many transistors on a chip than even Mead thought possible.
53. So the important question isn’t whether we’re finally reaching the limits of Moore’s Law as Gordon Moore initially defined it—exponential increase in the number of transistors per chip—but whether we’ve reached a peak in the amount of computing power a chip can cost-effectively produce.