Sorin Krammer Journal of International Business Policy

BOOK REVIEW
Chip War: The Fight for the World's Most Critical Technology
Chris Miller
Simon & Schuster, 2022. 464 pp.
ISBN: 978-1982172008
Reviewed by: Prof. Sorin M.S. Krammer, University of Surrey, Guildford, UK

“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.”

Semiconductors are the bedrock of the modern global economy, supporting a wide range of products
from appliances and cars to smartphones and computers. Yet, recent supply chain disruptions due to
COVID-19 and the ongoing political tensions between the United States and China have exposed the
fragility of the industry, casting doubt on its future. Against this backdrop, Chris Miller’s Chip War:
The Fight for the World's Most Critical Technology provides an extensive and insightful account of
semiconductors, exploring the historical, technological, economic, and geopolitical forces that have
shaped this industry. The focus throughout the book lies on the ongoing battle for dominance in chip
manufacturing, a dispute with major consequences for global power balance as well as for many
downstream industries like electronics, defence, or automobiles.
The story begins in 1947 with the invention of the transistor in the U.S. by researchers at Bell
Labs, followed in 1957 by the founding of Silicon Valley’s first semiconductor company (Fairchild
Semiconductor International Inc.) by a group of engineers dubbed the “traitorous eight.” This group
included three larger-than-life characters who play a central role in Miller’s story: William Shockley
(1965 Nobel Prize for semiconductors), Gordon Moore (the proponent of Moore's law1 and co-founder
of Intel) and Bob Noyce (the inventor of the microchip, co-founder of Intel, and the unofficial “Mayor
of Silicon Valley”). Within the next decade, the technology of placing an increasing number of
transistors on a piece of silicon to make an “integrated circuit” or “chip” would become a reality,
spinning off a booming industry in the San Francisco Bay area.
Sensing the commercial and strategic potential of the new technology, international competitors
started to emerge. Notably, the Soviet Union saw chips as part of the cold war race and responded

1
An empirical relationship linked to gains from experience in production of microchips. Originally (1965),
Moore’s prediction was that the number of transistors in a dense integrated circuit will double every year for at
least a decade. In 1975, he revised this prediction, namely that the number of transistors will double about every
two years, which is consistent with historical evolution of the industry up until the present. In the early 1960s four
transistors could be fitted onto a chip; in turn, today’s technology allows for around 5.3 billion.

Electronic copy available at: https://ssrn.com/abstract=4593597

immediately by building a domestic computer industry mainly through reverse engineering of integrated
circuits developed by Texas Instruments. Their “copying” strategy involved tapping into spy networks
including American engineers (including Alfred Sarant and Joel Barr) and building Zelenograd, a Soviet
replica of Silicon Valley. Nevertheless, despite these efforts, the Soviets were never able to catch-up
with the U.S. Their inability to develop in-house new technologies, huge challenges in terms of mass
production of chips, and the rapid technology advancements of U.S.-based firms, have all sealed their
fate as perpetual laggards in chip production and technology. A legacy that, according to Miller, is still
visible today when comparing U.S. and Russia in terms of high-tech military equipment deployed for
instance on international battlefields.
In the 1980s it was Japan’s turn to challenge the U.S. for supremacy in semiconductors. Led by
visionary businessmen like Akio Morita and Masaru Ibuka (the co-founders of Sony), Japan found a
better alternative to the Soviet approach by licensing US technology and specializing in mass production
of consumer products. Market expansion, product quality, and global leadership in less advanced market
segments (i.e., discrete transistors) soon followed, in parallel with the rise of Japanese tech giants
(Hitachi, Toshiba, NEC, and Fujitsu), all done with significant governmental support and adequate
R&D investments.2 In response to this threat, the U.S. government employed the perennial “the enemy
of my enemy is my friend” strategy, and propped up the rise of the South Korean chip industry through
trade measures (by limiting Japan’s access to the US market) and technology transfers to Korean firms
(through joint-ventures and licensing). Subsequently, by the beginning of the 1990s, Samsung had
morphed successfully from a fish and vegetable wholesaler to the world’s leading memory chip maker.
Elsewhere, Europe’s strategic failure to acknowledge the significance of chips is depicted
largely as a consequence of politics. This is punctuated by a quirky anecdote from 1962 when French
president de Gaulle reportedly sniffed at the sight of a new transistor radio, a gift from Japan’s prime
minister, Hayato Ikeda. The apathy for semiconductors in Europe has persisted until 2018, when
existing chip technologies were plateauing in terms of their ability to further miniaturize transistors.
Enter ASML: a Dutch company which, after several decades of R&D and largely funded by Intel,
perfected the Extreme Ultraviolet Lithography (EUVL) technology that allows production of even
smaller chips. Effectively, ASML became a monopoly in terms of cutting-edge production of chips
(turnover €18.6 billion in 2021), dwarfing its main competitors (Japanese behemoths Canon and Nikon)
who were denied access to the IP (intellectual property) behind the tech. However, this ascendance
comes with a strong allegiance to Washington’s political and commercial interests. Thus, ASML
remains subject to export controls from USA, which effectively ban it from exporting EUVL machines
to China (The Wire China, 2021), and with recent measures targeting also upstream suppliers (The
Register, 2023) to curb their influence in the chips arena.

2
The fall of GCA (overtaken by Nikon) was a clear indication of superiority in terms of certain segments of
chip production technology.

Electronic copy available at: https://ssrn.com/abstract=4593597

China is certainly one of the main actors in the book. While Miller suggests that the U.S.
initially perceived Xi Jinping as a proponent of democratic reforms and a potential Western ally, his
strong authoritarian measures to restrict information access and desire for self-sufficiency by
developing Chinese counterparts to Silicon Valley’s giants quickly dispelled this notion. Xi’s strategy
to reduce the country’s reliance on foreign technologies included, in addition to heavy governmental
investments and involvement, some more controversial actions to stimulate technology transfer via
mandatory joint ventures, infringe on certain IP, and veiled attempts to quietly acquire quietly Western
firms and technologies related to chips. These triggered some harsh American responses in the form of
policies laid out by the Trump (2018)3 and Biden (2023)4 administrations, which targeted technology
exports, chip manufacturing, and commitments from allied countries to stop working with Chinese tech
companies. While these measures appear to have curbed Chinese advancements in this area, their long-
term effectiveness remains unclear, particularly given the sheer size of its needs (for illustration, China
spends nowadays more on imports of semiconductors than on oil) and the rapid technological and
geopolitical changes in this space.5
Taiwan receives its fair share of coverage, proportional to its important role in the industry. A
central figure of its tale is Morris Chang, the founder of the Taiwan Semiconductor Manufacturing
Company (TSMC) in 1987, after being passed over as CEO at Texas Instruments. Educated at MIT and
Stanford, Mr. Chang developed Taiwan’s un-inimitable chip fabrication plants (“fabs”), focusing on
efficient production for the world’s biggest chip designers, particularly Apple (which surprisingly, was
refused by Intel in a strategic blunder). The success of the Taiwanese fab model came also with massive
governmental support and impressive technological leaps,6 allowing TSMC to surpass its US
counterparts. Moreover, as chips’ size shrank from year to year, their production costs skyrocketed,
shifting most chipmakers towards the “buy” (external) option rather than making them internally. This
resulted in an unprecedented concentration in terms of chip production worldwide and particularly for
high-end highly powered chips.
The book concludes by examining the intensifying rivalry between the US and China, fuelled
by the desire to dominate emerging technological areas such as AI or 5G. According to Miller, China’s
IP infringements and forceful technology transfers have ultimately led Washington to impose tighter
export controls. Nevertheless, he suggests that these bans, unlike those laid on the Soviets sixty years
ago, are likely to fail their purpose, and at best, they might only delay China’s progress. Unlike the
Soviet Union, China is much more integrated into the global economy, better supported through
governmental funds, and better equipped with highly skilled, US-educated, Chinese nationals who can

3
Trade measures. Section 301, Chinese Products (Tax Foundation, 2022).
4
CHIPS Act. https://www.commerce.gov/news/press-releases/2023/02/biden-harris-administration-launches-
first-chips-america-funding.
5
According to Miller, China’s current market share in chip production remains small (about 15 percent) despite
massive public investments, behind Japan (17%) or Taiwan (41%).
6
For instance, the “Grand Alliance”- an R&D consortium led by TSMC.

Electronic copy available at: https://ssrn.com/abstract=4593597

help it develop such technologies in-house. This integration can provide partnerships and alternative
access to access key technologies and manufacturing tools in addition to the expertise developed
domestically. Finally, geo-politics loom large over the industry. Taiwan remains part of China’s
reunification ambitions and at the same time, a major choke point in the industry that is responsible for
about 37% of the global production of chips. This accentuates the perception of fragility for the industry,
one that was well-exposed by the events of the recent pandemic.
In addition to a plethora of historical insights on one of the world’s most global industries, Chip
Wars also presents some fruitful avenues for international business (IB) research. The most obvious
one is a better understanding of globalization, both in terms of explicating its status quo and potential
evolution. Global economic integration has been slowing down for a while (The Economist, 2019), and
has even reverted in some areas via significant ‘decoupling’ initiatives (Witt, 2019; Witt et al., 2023).
While IB scholars have recently started to engage in this conversation, most of this work remains
descriptive or conceptual in nature; moreover, most contributions in this area have been confined to the
prominent China-United States economic and technological battle for global supremacy (Luo & Van
Assche, 2023). Yet, the world remains inherently gray, and the promise of globalization (in terms of
growth and development) remains palpable for many firms, industries, and nations around the world7.
Thus, examining the degree of integration (or decoupling) as well as the drivers and consequences of
these strategies (Hu, Tian, Wu & Wang, 2021), should make an interesting research agenda particularly
in the wake of the COVID-19 pandemic, which has exacerbated these issues as part of a “new normal”
(Ciravegna & Michailova, 2022; Krammer, 2022).
Furthermore, the book provides great examples of governmental interventions that can inform
current policy debates. Specifically, it condemns nationalistic reactions as a political response toward
semiconductors and other industries8, suggesting that historically self-sufficiency policies9 never
delivered, and in fact, may have even caused unnecessary crises and economic turmoil.10 Such
arguments resonate with the existing academic consensus (Colantone & Stanig, 2019; Luo, 2022) and
most importantly, with historical evidence. Thus, more research is needed around capturing and
quantifying the consequences of such populist and national measures vis-à-vis the status quo, i.e., a
globalized, inter-dependent, free world economy (Ghauri, Strange, & Cooke, 2021). In addition, as IB
scholars we have a duty to remember and understand our history, in particular the parallels it presents
for better tackling today’s challenges (Jones & Khanna, 2006).

7
A such prominent example emerging from the book is Taiwan, the current epicentre of this global rivalry, highly
dependent on both China (for sales) and the USA (for production technology and military support).
8
China imposed imposing export controls on the overseas sales of gallium and germanium, elements essential to
the production of semiconductors (CNN, 2023).
9
Following the recent CHIPS act and given the generous subsidies offered by the US government both Samsung
and TSMC have agreed to build fabs (factories) on American soil. However, both still concentrate their main
activities in their home countries (i.e., South Korea and Taiwan).
10
For the American chip industry these measures triggered a supply glut which caused price decreases that resulted
in losses of about $1.5 trillion (The Economist, 2022a).

Electronic copy available at: https://ssrn.com/abstract=4593597

Finally, the book is critical of non-collaborative, unilateral, and coercive actions that are set to
undermine the global economy. Just like the recent frictions with China, the US had trade disputes with
Japan back in 1980s concerning the latter’s meteoric rise to dominance in several industries, including
semiconductors. However, nothing can fend off the forces of creative destruction (Schumpeter, 1942).
As such, waging trade wars have ultimately failed to preserve US supremacy in this area or provide any
substantive other benefits for that matter; instead, they mainly took a toll on US consumers, acting as a
deadweight for society. Such conjectures are supported by recent evidence on the negative impact of
Trump tariffs on GDP, income, and employment in the US (Tax Foundation, 2022), as well as limited
damage inflicted to Chinese exporters (Jiao et al., 2022). Even other alternatives, like the CHIP4
initiative (set up so that the US can control China’s access to technology and equipment) are still subject
to the usual challenges of cartel-like structures (The Economist, 2022b) including incentive alignment,
communication, trust, or shortages. IB scholarship should therefore strive to identify and balance these
complex trade-offs, with a final aim of informing and advising policymakers on the best course of
action.

Electronic copy available at: https://ssrn.com/abstract=4593597

REFERENCES

Ciravegna, L., & Michailova, S. (2022). Why the world economy needs, but will not get, more
globalization in the post-COVID-19 decade. Journal of International Business Studies, 53: 172-
186.
CNN (2023). China hits back in the chip war, imposing export curbs on crucial raw materials. Available:
https://edition.cnn.com/2023/07/03/business/germanium-gallium-china-export-
restrictions/index.html (Accessed August 9, 2023).
Colantone, I., & Stanig, P. (2019). The surge of economic nationalism in Western Europe. Journal of
Economic Perspectives, 33(4): 128-51.
Ghauri, P., Strange, R., & Cooke, F. L. (2021). Research on international business: The new
realities. International Business Review, 30(2): 101794.
Hu, Y., Tian, K., Wu, T., & Yang, C. (2021). The lose-lose consequence: Assessing US-China trade
decoupling through the lens of global value chains. Management and Organization
Review, 17(2), 429-446.
Jiao, Y., Liu, Z., Tian, Z., & Wang, X. (2022). The impacts of the US trade war on Chinese
exporters. Review of Economics and Statistics. https://doi.org/10.1162/rest_a_01229.
Jones, G., & Khanna, T. (2006). Bringing history (back) into international business. Journal of
International Business Studies, 37: 453-468.
Krammer, S. M. (2022). Navigating the New Normal: Which firms have adapted better to the COVID-
19 disruption? Technovation, 110: 102368.
Luo, Y. (2022). Illusions of techno-nationalism. Journal of International Business Studies, 53: 550-567.
Luo, Y., & Van Assche, A. (2023). The rise of techno-geopolitical uncertainty: Implications of the
United States CHIPS and Science Act. Journal of International Business Studies,
https://doi.org/10.1057/s41267-023-00620-3
Schumpeter, J., 1942. Capitalism Socialism and Democracy. New York: Harper.
The Register, 2023. Silicon supply chain players plot exodus from China in wake of ASML's exit.
Available: https://www.theregister.com/2023/03/13/asmls_suppliers_plot_exodus_from/
(Accessed, March 15, 2023)
The Wire China, 2021. The Chip Choke Point. Available:
https://www.thewirechina.com/2021/02/07/the-chip-chokepoint/ (Accessed March 15, 2023)
The Economist, 2019. Slowbalisation: The future of global commerce. Available:
https://www.economist.com/weeklyedition/2019-01-26 (Accessed April 9, 2023).
The Economist, 2022a.The American chip industry’s $1.5trn meltdown. Available:
https://www.economist.com/search?q=The+American+chip+industry%E2%80%99s+%241.5tr
n+meltdown (Accessed April 9, 2023).
The Economist, 2022b. America’s hoped-for Asian semiconductor pact looks tricky. Available:
https://www.economist.com/asia/2023/02/02/americas-hoped-for-asian-semiconductor-pact-
looks-tricky (Accessed April 9, 2023).
Tax Foundation, 2022. Tracking the Economic Impact of U.S. Tariffs and Retaliatory Actions.
Available: https://taxfoundation.org/tariffs-trump-trade-war/ (Accessed March 15, 2023).
Witt, M. A. (2019). De-globalization: Theories, predictions, and opportunities for international
business research. Journal of International Business Studies, 50(7): 1053-1077.
Witt, M. A., Lewin, A. Y., Li, P. P., & Gaur, A. (2023). Decoupling in international business:
Evidence, drivers, impact, and implications for IB research. Journal of World Business, 58(1):
101399.

Electronic copy available at: https://ssrn.com/abstract=4593597