Chip War: The Quest to Dominate the World's Most Critical Technology

Microchip are critical for just about everything today. However, the manufacturer of chips is heavily concentrated. In the early days, companies would build their own factories to manufacture their own chips. DRAM chip production was highly competitive, with regular boom and bust cycles. Companies like Intel began to focus on microprocessors.

Almost all newer semiconductor companies are "fabless". They design the chips, but don't manufacture them. The production has been concentrated in a few companies in southeast Asia like Taiwan Semiconductor. Other parts of production are also heavily concentrated. A single Dutch company produces Extreme Utlraviolet Lithography machines to manufacture advanced chips. Other key parts for chip production are concentrated in Silicon Valley companies. Because of this concentration, the US government was able to shut down a company that copied Micron by preventing them from importing supplies.

There is also a lot of copying going on in the chip industry. Russia was notorious for copying US chip designs. However, this probably kept them perpetually behind the US industry. While government and defense work may have provided some of the initial impetus for chip design, it became the US consumer market that allowed for massive growth?

What does the future hold? The concentration does spook a lot of governments. However, it is difficult to scale and compete with the various other operations.