18 Jul 2023

Semiconductors rule the world: An interview with Professor Chris Miller

Professor Chris Miller will be holding a keynote session and a fireside chat at the IFA Leaders Summit on September 1st.

Semiconductor chips are the new ground zero for global conflict. Technology, as it ever was, is akin to might — and the semiconductor is proving to be an almighty weapon.

The component is a vital part of almost everything in our modern world, from toys and phones, to cars and military equipment. Without chips, these items either become “dumb,” or stop working altogether.

And, whoever controls semiconductors — on some level at least — controls the world.

This is why the components have become a key cog in the escalating battle between the United States and China. Not only has the US and its allies placed increasingly strict regulations against selling its Asian rival microchips, but governments across the world are also pumping huge amounts of cash in an attempt to nationalise their design and production.

We’ve entered a new era of global conflict: the semiconductor struggle. 

To find out more about how this battle will play out, we spoke with Professor Chris Miller, the author of ‘Chip War.’ This non-fiction work explores how semiconductors are shaping the world and has been one of the key texts in understanding this shift in global politics.

Free microchips electronics semiconductor illustration

Does Europe even matter?

So far, the central aspect of the chip war has been a power struggle between the US and China — but that isn’t the whole story.

The European Union is keenly aware of this global development and is doing its best to become a major player. This led the governmental body to create legislation, specifically the European Chips Act, to encourage the production and creation of semiconductor chips inside the bloc.

I asked Miller about whether this is enough to put the continent on the metaphorical map.

In response, the first thing he pointed to were the “different goals” EU countries were chasing with the act. One of the most common is nations desiring the bloc to produce cutting edge semiconductors of its own.

This, Miller says, will be incredibly tough to achieve because, today, “there are no European firms producing cutting edge processor chips.”

He goes on to point out that although this may be disheartening on first impression, it’s not something that should be a goal of the EU at all. 

“European firms play a bigger role in other parts of the semiconductor supply chain,” Miller tells me, “for example in producing manufacturing equipment, specialized chemicals, or types of chips like sensors and power management chips that don't require the smallest geometries.”

To put that another way, Europe should focus on the aspects of the semiconductor industry that it already has a strong foothold in. That will enable the continent to have continued success in the sector and carve out an important niche.

Europe can be a major player in the microchip industry, it just has to play to its strengths, rather than others’.

Free circuit board circuit control center illustration

A niche that may be too niche

Interestingly, one of the most important businesses in the world of semiconductor chips is ASML, a Dutch company. This business is the sole supplier of extreme ultraviolet lithography (EUV) photolithography machines, which are required to make the world’s most advanced chips.

They are a vital gear in the machine of the semiconductor world — and are, arguably, precisely the sort of company that the EU should be looking at encouraging.

But I had a question — is a monopoly on this sort of technology a good thing? ASML is the only company in the world that can make EUV photolithography machines of sufficient quality. If semiconductors are driving a global schism, then wouldn’t governments breaking up companies who have dominance over certain parts of the industry be a good thing?

Miller was unequivocal in his reaction: “No.”

He went on to tell me that while “concentration in the chip industry creates inevitable concerns about security of supply and worries about the risks of single sourcing,” the fact of the matter is that the industry is “defined by large economies of scale.”

What this means is that “we need big firms to manufacture efficiently.”

Advances in the semiconductor industry are driven by companies having huge amounts of funding to advance the technology, as well as producing them in such huge quantities that the price of individual units drops. This is why we’re able to have so many smart devices with chips installed. Without this scale, the industry would take longer to progress — and that’s something no country, government, or company wants.

Harmfully good, or just straight-up harmful?

One of the side effects of the US’ increased restrictions on China is how it has rocketed Taiwan back into the centre of global politics.

The country is home to TSMC, one of — if not the — most important chip companies in the world. It manufactures and designs semiconductors and is the sector’s most valuable business. The world relies on TSMC to create and produce next generation chips, and, considering the relationship between Taiwan and China, it has put the former country under increasing chance of military action from the latter.

“The new controls impact China's decision making about attacking and/or blockading Taiwan in complex ways,” Miller tells me when I brought the topic up. 

“On the one hand, if China's leaders believe that their efforts to catch up technologically will fail, they may be more prone to take risks now. On the other hand, if they continue to invest militarily and build up their capabilities, they will have a greater chance of seizing Taiwan if they try.”

And tying all this military power together? Semiconductors.

“The reason there is more tension in the Taiwan Strait today,” Miller says, “is that China's military power has grown to the extent that it is unclear if the U.S. can deter China from attacking Taiwan.”

Free Chip Technology photo and picture

Something beautiful turned bad

There’s something galling, yet so very human, about a technology as transformative as semiconductors being so closely tied to the military. Here is something that, in many ways, showcases the best of humans, of our desire to create, to push boundaries, to work together and build something miraculous.

I asked Miller about whether this would always be the case, whether semiconductor chips could move beyond being merely a pawn in a militaristic game.

“Today there is a dangerous arms race underway in Asia, driven primarily by China's dramatic military buildup and its stated goal of annexing Taiwan either by peaceful or what the Beijing government formally refers to as ‘non-peaceful’ means.”

Miller also points towards a similar trend across other countries in the region, with Japan “doubling defense spending as a share of GDP,” Korea becoming a “world leader in manufacturing defense industrial goods,” Taiwan “[tripling] the duration of military service,” and Australia “buying nuclear powered submarines.”

There’s a clear arms race happening in that part of the world. And, Miller says, as long as this continues, it’s “inevitable that computing power — a key component of military power — will be seen as a source of national power.”

It’s not the fault of semiconductors that they are at the core of a global political struggle. Technology, as we’ve said before, is power — and there’s little more powerful in the world today than microchips. One day, far into the future, this may not matter, but we’re still a long way away from that.

Until then, this is semiconductors’ world, we’re just living in it.

Interested to hear more about this topic? Get your ticket for IFA here.

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