1 00:00:15,316 --> 00:00:25,996 Speaker 1: Pushkin. This is a show about technological progress, and yet 2 00:00:26,836 --> 00:00:29,076 Speaker 1: in the year or so we've been making the show, 3 00:00:29,436 --> 00:00:33,916 Speaker 1: we have not had a single episode about the most 4 00:00:33,996 --> 00:00:42,596 Speaker 1: important driver of technological progress in the modern world. Semiconductors, microchips, chips, 5 00:00:42,636 --> 00:00:46,236 Speaker 1: as you know, are everywhere in the modern world, except 6 00:00:46,476 --> 00:00:50,076 Speaker 1: on What's Your Problem. I apologize for the oversight, and 7 00:00:50,116 --> 00:00:57,796 Speaker 1: we're going to fix it right now. I'm Jacob Goldstein, 8 00:00:57,876 --> 00:01:00,396 Speaker 1: and this is What's Your Problem. My guest today is 9 00:01:00,476 --> 00:01:03,796 Speaker 1: Chris Miller. He's a professor at Tufts University and the 10 00:01:03,876 --> 00:01:06,716 Speaker 1: author of a book called Chipboard, The Fight for the 11 00:01:06,756 --> 00:01:11,156 Speaker 1: World's most Critical Technology. The book explains not only how 12 00:01:11,236 --> 00:01:14,676 Speaker 1: chips have become a billion times more powerful over the 13 00:01:14,716 --> 00:01:18,556 Speaker 1: last several decades, but also how that extraordinary progress has 14 00:01:18,556 --> 00:01:24,076 Speaker 1: made chips ubiquitous and essential and increasingly something governments are 15 00:01:24,156 --> 00:01:27,076 Speaker 1: fighting over. The US government right now is fighting to 16 00:01:27,156 --> 00:01:30,996 Speaker 1: keep chip making technology out of China. Also, the US 17 00:01:31,076 --> 00:01:34,156 Speaker 1: government is spending tens of billions of dollars to get 18 00:01:34,156 --> 00:01:37,876 Speaker 1: companies to build more chip factories in the United States. 19 00:01:38,436 --> 00:01:41,716 Speaker 1: And on a related note, most of the world's cutting 20 00:01:41,796 --> 00:01:46,316 Speaker 1: edge chips, almost certainly, including the chips powering your phone 21 00:01:46,596 --> 00:01:51,236 Speaker 1: right now are made in Taiwan, a country that China 22 00:01:51,316 --> 00:01:54,756 Speaker 1: claims as part of its territory and that China might 23 00:01:54,956 --> 00:01:59,396 Speaker 1: invade or blockade or generally mess with in the coming years. 24 00:02:00,036 --> 00:02:02,116 Speaker 1: Chris writes about all of this, and we talked a 25 00:02:02,116 --> 00:02:05,556 Speaker 1: lot about it. But in order to really understand what's 26 00:02:05,596 --> 00:02:08,516 Speaker 1: going on now and how we got here, we started 27 00:02:08,516 --> 00:02:12,876 Speaker 1: out by talking about two companies, in particular, giant of 28 00:02:12,956 --> 00:02:16,516 Speaker 1: companies that are doing amazing things and that are absolutely 29 00:02:16,636 --> 00:02:20,756 Speaker 1: essential to the global economy. Also, almost nobody in the 30 00:02:20,836 --> 00:02:24,636 Speaker 1: US ever talks about either of these companies. The first 31 00:02:24,636 --> 00:02:27,956 Speaker 1: one we talked about is a Dutch company called ASML. 32 00:02:28,596 --> 00:02:31,996 Speaker 1: They make this amazing machine that you have to buy 33 00:02:32,396 --> 00:02:35,076 Speaker 1: from them if you want to make cutting edge chips. 34 00:02:35,556 --> 00:02:38,356 Speaker 1: Nobody else in the world makes this machine. The machine 35 00:02:38,476 --> 00:02:43,276 Speaker 1: uses a technique called lithography to print impossibly intricate chips. 36 00:02:43,556 --> 00:02:47,676 Speaker 1: To start, I asked Chris to explain how lithography has evolved. 37 00:02:49,116 --> 00:02:50,836 Speaker 1: So the way you do it is by using light 38 00:02:50,916 --> 00:02:54,996 Speaker 1: as your tool, and you shine light through a mask 39 00:02:55,276 --> 00:02:58,796 Speaker 1: that has the pattern you want to imprint on the chip. 40 00:02:59,476 --> 00:03:01,356 Speaker 1: So the light goes through where the holes are, it 41 00:03:01,396 --> 00:03:04,596 Speaker 1: doesn't go through where there aren't holes, and by using 42 00:03:04,676 --> 00:03:07,676 Speaker 1: essentially an upside down microscope at the outset, you could 43 00:03:07,756 --> 00:03:10,476 Speaker 1: take something that was big and make it look smaller, 44 00:03:10,756 --> 00:03:13,076 Speaker 1: just like microscopes usually take something smaller, make it like 45 00:03:13,116 --> 00:03:15,036 Speaker 1: when you look through the wrong end of a telescope. 46 00:03:15,556 --> 00:03:19,156 Speaker 1: That's exactly right, that's exactly right. So you basically take 47 00:03:19,236 --> 00:03:23,196 Speaker 1: sort of like a stencil, you stick it on a microscope, 48 00:03:23,196 --> 00:03:26,836 Speaker 1: you shine light through the microscope the wrong way, and 49 00:03:26,916 --> 00:03:31,356 Speaker 1: you you're able to basically print a chip that way. 50 00:03:32,196 --> 00:03:33,956 Speaker 1: That's right, at least that's how it worked in the 51 00:03:34,396 --> 00:03:38,196 Speaker 1: simple earliest days. So the challenge has always been to 52 00:03:38,396 --> 00:03:42,676 Speaker 1: print ever smaller features on chips. And for a long time, 53 00:03:42,836 --> 00:03:48,996 Speaker 1: visible light was perfectly acceptable printing device because it had 54 00:03:48,996 --> 00:03:51,956 Speaker 1: a wavelength of several hundred nanimeters and that's pretty small. 55 00:03:52,276 --> 00:03:55,316 Speaker 1: But a couple decades ago we got to the point 56 00:03:55,316 --> 00:03:58,036 Speaker 1: where chips already had features that were so small a 57 00:03:58,116 --> 00:04:01,716 Speaker 1: visible light wasn't small enough or powerful enough to do 58 00:04:01,796 --> 00:04:05,316 Speaker 1: the printing. So is that is yes, a wild moment, right, 59 00:04:05,356 --> 00:04:07,516 Speaker 1: So the idea that like these things on the chip 60 00:04:07,556 --> 00:04:12,756 Speaker 1: are so fine, so close together, that light is weirdly 61 00:04:12,836 --> 00:04:18,996 Speaker 1: too big, like they're smaller than the wavelength of visible light. 62 00:04:19,316 --> 00:04:22,276 Speaker 1: So this is the next problem. How does that get solved? 63 00:04:23,116 --> 00:04:26,036 Speaker 1: You need to make a jump to a very different 64 00:04:26,116 --> 00:04:29,596 Speaker 1: light source with a much smaller wavelength, And that's the 65 00:04:29,596 --> 00:04:33,836 Speaker 1: origins of the EUV, the extreme ultra violet lithography machines 66 00:04:33,876 --> 00:04:36,596 Speaker 1: that we have today. So ultra violet light has a 67 00:04:36,716 --> 00:04:40,196 Speaker 1: shorter wavelength than visible light, so therefore you can print 68 00:04:40,236 --> 00:04:44,876 Speaker 1: even smaller stuff on a chip. Extreme ultra violet is 69 00:04:44,876 --> 00:04:48,156 Speaker 1: presumably the short end of ultraviolet light, so you can 70 00:04:48,196 --> 00:04:51,076 Speaker 1: still get smaller and smaller. So we're in this world 71 00:04:51,156 --> 00:04:54,716 Speaker 1: where there's this one company, SML. Right, tell me about 72 00:04:54,756 --> 00:04:57,716 Speaker 1: this company, and tell me about the EUV machine that itselfs. 73 00:04:58,876 --> 00:05:03,956 Speaker 1: So the machines themselves create UV light by having balls 74 00:05:03,996 --> 00:05:07,236 Speaker 1: of tin thirty microns wide, so thirty millions of the 75 00:05:07,276 --> 00:05:10,756 Speaker 1: meter wide falling through a vacuum. Then, like, first of all, 76 00:05:10,796 --> 00:05:12,916 Speaker 1: what does that even me? Right? You say those words, 77 00:05:12,956 --> 00:05:18,356 Speaker 1: but like why it's what a ball of tin thirty 78 00:05:18,356 --> 00:05:21,356 Speaker 1: microns wide falling through a vacuum, Like what's even going on? 79 00:05:21,476 --> 00:05:23,916 Speaker 1: Why do you need falling balls of tin in a vacuum? 80 00:05:24,676 --> 00:05:27,556 Speaker 1: Because this tin, when you strike it twice with an 81 00:05:27,636 --> 00:05:32,836 Speaker 1: ultra powerful laser will explode into a plasma that is 82 00:05:33,516 --> 00:05:36,276 Speaker 1: forty or fifty times hotter than the surface of the sun, 83 00:05:37,076 --> 00:05:41,396 Speaker 1: and this plasma will release light with exactly the right 84 00:05:41,396 --> 00:05:44,636 Speaker 1: wavelength extreme ultra violet light needed for lethar. And so 85 00:05:44,676 --> 00:05:47,356 Speaker 1: then that light goes through some kind of a mask 86 00:05:47,516 --> 00:05:51,276 Speaker 1: or stencil and makes the imprint on a chip. Well, 87 00:05:51,316 --> 00:05:54,596 Speaker 1: the trick is that you need really unique mirrors that 88 00:05:54,756 --> 00:05:58,396 Speaker 1: the flattest mirrors humans have ever made to collect that 89 00:05:58,476 --> 00:06:01,396 Speaker 1: light after it's produced by the plasma. And there's around 90 00:06:01,436 --> 00:06:03,636 Speaker 1: a dozen of these mirrors inside of each machine that 91 00:06:03,716 --> 00:06:07,396 Speaker 1: then directs it towards the stencil and then onto the 92 00:06:07,476 --> 00:06:10,396 Speaker 1: silicon wafer. So okay, so that those are the basic 93 00:06:10,636 --> 00:06:14,316 Speaker 1: mechanics of the machine. How big is one of these machines? 94 00:06:14,516 --> 00:06:19,996 Speaker 1: What's it look like? The size of a truck? Okay? 95 00:06:20,196 --> 00:06:24,996 Speaker 1: And they look like they got wires and tubes of 96 00:06:24,996 --> 00:06:29,636 Speaker 1: all sorts coming out of them from every direction. They're 97 00:06:29,676 --> 00:06:32,916 Speaker 1: the most complex manufacturing tool humans have ever made. And 98 00:06:33,116 --> 00:06:36,956 Speaker 1: inside of them there are hundreds of thousands of component parts. 99 00:06:37,436 --> 00:06:39,356 Speaker 1: So you say it's the size of a truck, like 100 00:06:39,436 --> 00:06:41,356 Speaker 1: a like a pickup truck or like a semi truck. 101 00:06:41,436 --> 00:06:43,876 Speaker 1: What am I picturing like a semi truck. It takes 102 00:06:43,956 --> 00:06:48,356 Speaker 1: multiple airplanes to move one of these machines. Oh interesting, okay? 103 00:06:48,796 --> 00:06:51,796 Speaker 1: And how much does it cost? Around one hundred and 104 00:06:51,796 --> 00:06:55,516 Speaker 1: fifty million dollars apiece, So they're the most expensive machine 105 00:06:55,516 --> 00:06:59,596 Speaker 1: tool produced in human history. So okay. Because this machine 106 00:06:59,716 --> 00:07:03,716 Speaker 1: is so expensive and so complex, and because the market 107 00:07:03,756 --> 00:07:05,996 Speaker 1: for it is so small, right, only a few companies 108 00:07:06,036 --> 00:07:08,956 Speaker 1: in the world make truly cutting edge chips. We've found 109 00:07:08,996 --> 00:07:11,156 Speaker 1: it in this world where there is only this one 110 00:07:11,236 --> 00:07:14,756 Speaker 1: company ASML that makes this machine and that fact is 111 00:07:14,796 --> 00:07:18,316 Speaker 1: really important in terms of trade and geopolitics and lots 112 00:07:18,316 --> 00:07:20,196 Speaker 1: of other big things that I want to talk about that. 113 00:07:20,676 --> 00:07:23,756 Speaker 1: But before we do, I want to talk about one 114 00:07:23,996 --> 00:07:29,596 Speaker 1: other big important underdiscussed in the US company that also 115 00:07:29,676 --> 00:07:32,876 Speaker 1: has an acronym for a name. That company is TSMC, 116 00:07:33,356 --> 00:07:36,476 Speaker 1: the biggest chip maker in the world. So tell me 117 00:07:36,516 --> 00:07:40,756 Speaker 1: the story of TSMC. TSMC was founded by an executive 118 00:07:40,836 --> 00:07:44,756 Speaker 1: named Morris Chang who had spent his career at Texas 119 00:07:44,836 --> 00:07:47,996 Speaker 1: Instruments really building the US chip industry, and TI at 120 00:07:47,996 --> 00:07:51,676 Speaker 1: the time was one of the leaders in chip technology, 121 00:07:51,716 --> 00:07:54,796 Speaker 1: but he was passed over for the CEO job in 122 00:07:54,836 --> 00:07:57,396 Speaker 1: the middle of the nineteen eighties, was looking for something 123 00:07:57,436 --> 00:08:00,396 Speaker 1: else to do and was approached by the Taiwanese government 124 00:08:00,516 --> 00:08:02,956 Speaker 1: to help build a chip industry in Taiwan. And he 125 00:08:03,036 --> 00:08:07,916 Speaker 1: realized at the time that as manufacturing chips was getting 126 00:08:07,916 --> 00:08:12,076 Speaker 1: more complex and as the economies of scale to manufacturer 127 00:08:12,236 --> 00:08:17,956 Speaker 1: growing because you needed more complex equipment, more specialized materials, 128 00:08:17,996 --> 00:08:21,076 Speaker 1: that in the future there would be a market for 129 00:08:21,396 --> 00:08:24,956 Speaker 1: manufacturing services of semiconductors. And so he can see this 130 00:08:24,996 --> 00:08:28,076 Speaker 1: company not to design any chips. They've never designed chips. 131 00:08:28,116 --> 00:08:32,116 Speaker 1: They only manufacture, and they serve a large number of 132 00:08:32,156 --> 00:08:36,796 Speaker 1: companies from Apple to AMD to Nvidia that today don't 133 00:08:36,796 --> 00:08:39,956 Speaker 1: do any manufacturing. They only do chip design. And so 134 00:08:41,036 --> 00:08:44,316 Speaker 1: when people talk about like Apple zone chip, you know, 135 00:08:44,316 --> 00:08:47,396 Speaker 1: when Apple starts using its own chips, Apple's not making 136 00:08:47,436 --> 00:08:49,556 Speaker 1: those chips, right in the same way that they're not 137 00:08:49,636 --> 00:08:52,316 Speaker 1: making whatever the rest of the iPhone, right, they're designing 138 00:08:52,356 --> 00:08:55,396 Speaker 1: the chip and it's actually being made in a factory 139 00:08:55,556 --> 00:08:59,196 Speaker 1: in Taiwan. In fact, that's right, and I think if 140 00:08:59,196 --> 00:09:00,756 Speaker 1: you if you look on the back of an iPhone, 141 00:09:00,756 --> 00:09:04,716 Speaker 1: it'll it'll say designed in California, assembled in China, And 142 00:09:05,076 --> 00:09:07,676 Speaker 1: that's true, but it misses a critical step because all 143 00:09:07,716 --> 00:09:09,996 Speaker 1: of the key chips, not only in iPhones but in 144 00:09:10,356 --> 00:09:13,836 Speaker 1: most Apple products are manufactured by one company in Taiwan, 145 00:09:14,236 --> 00:09:18,356 Speaker 1: and so t SNC is now at the frontier, right, 146 00:09:18,356 --> 00:09:24,356 Speaker 1: they are making the smallest, most advanced chips. No US 147 00:09:24,436 --> 00:09:27,516 Speaker 1: company is any longer at that frontier. So in that 148 00:09:27,676 --> 00:09:32,316 Speaker 1: TSMC story, is there like a moment that is sort 149 00:09:32,316 --> 00:09:35,076 Speaker 1: of the key moment when the kind of center of 150 00:09:35,116 --> 00:09:39,436 Speaker 1: gravity and the chip world shifts from California to Taiwan. Yeah, 151 00:09:39,636 --> 00:09:43,156 Speaker 1: the key shifts was the smartphone. Steve Jobs actually went 152 00:09:43,236 --> 00:09:46,996 Speaker 1: to Intel when he was conceiving the iPhone and asked 153 00:09:47,036 --> 00:09:49,876 Speaker 1: if Intel will be interested in producing chips for this device. 154 00:09:50,436 --> 00:09:52,116 Speaker 1: But at the time it seemed a little bit crazy 155 00:09:52,156 --> 00:09:55,676 Speaker 1: to think that people would want computer sized processing on 156 00:09:55,756 --> 00:09:58,996 Speaker 1: their phone. Intel thought it'd be a low volume product 157 00:09:59,036 --> 00:10:03,476 Speaker 1: and said no thanks, and he took it to contract 158 00:10:03,556 --> 00:10:06,836 Speaker 1: manufacturers in East Asia instead, first producing it at Samsung 159 00:10:06,876 --> 00:10:10,156 Speaker 1: and then later turning to TSM to be the exclusive 160 00:10:10,156 --> 00:10:13,236 Speaker 1: producer of the iPhones chips. And it wasn't just Apple, 161 00:10:13,436 --> 00:10:17,396 Speaker 1: the entire smartphone ecosystem grew up alongside TSMC, and so 162 00:10:17,556 --> 00:10:22,916 Speaker 1: today TSMC produces on eighty percent of the world's smartphone processors, 163 00:10:23,356 --> 00:10:26,396 Speaker 1: and a typical smartphone will have a dozen semiconductors inside, 164 00:10:26,436 --> 00:10:28,476 Speaker 1: one for the Wi Fi, one for the Bluetooth, one 165 00:10:28,556 --> 00:10:31,876 Speaker 1: for the audio. And many of these ships are produced 166 00:10:31,876 --> 00:10:36,396 Speaker 1: by DSMC. So your background, you're a scholar, and your 167 00:10:36,436 --> 00:10:41,316 Speaker 1: background is basically in international relations, right, not in technology 168 00:10:41,356 --> 00:10:46,476 Speaker 1: your innovation. And it seems like that seems like an 169 00:10:46,476 --> 00:10:53,156 Speaker 1: extraordinarily interesting and useful framework for thinking about chips basically right, 170 00:10:53,196 --> 00:10:56,396 Speaker 1: for thinking about sort of global the global semiconductor industry today. 171 00:10:56,396 --> 00:10:59,036 Speaker 1: I mean, you have one company that's essential that's in 172 00:10:59,076 --> 00:11:03,916 Speaker 1: the Netherlands. You have another company, maybe the most important 173 00:11:03,916 --> 00:11:05,636 Speaker 1: company in the global economy if I wanted to be 174 00:11:06,156 --> 00:11:10,076 Speaker 1: found to reach for it, TSMC as in Taiwan. Taiwan 175 00:11:10,196 --> 00:11:12,596 Speaker 1: is an island right off of China that thinks it's 176 00:11:12,596 --> 00:11:15,036 Speaker 1: an independent country, but that China thinks is a part 177 00:11:15,036 --> 00:11:18,596 Speaker 1: of China. Semiconductors are like the most important thing in 178 00:11:18,636 --> 00:11:22,076 Speaker 1: the world economy right now. Maybe oil, but you could 179 00:11:22,076 --> 00:11:27,276 Speaker 1: make a good case for semiconductors, like that's a super interesting, 180 00:11:27,316 --> 00:11:32,476 Speaker 1: super complex, fraught situation. How should we think about it? Well, 181 00:11:32,956 --> 00:11:35,436 Speaker 1: I think you're right about how complex it is. And 182 00:11:36,116 --> 00:11:39,756 Speaker 1: what is striking to me is the extent to which 183 00:11:40,316 --> 00:11:43,996 Speaker 1: we think of industries like the chip industries being globalized 184 00:11:44,756 --> 00:11:48,836 Speaker 1: and they're international, but actually the production is concentrated in 185 00:11:48,836 --> 00:11:52,596 Speaker 1: a number of really key countries and companies. Joe Biden 186 00:11:52,716 --> 00:11:57,436 Speaker 1: was in the Netherlands a few months ago in part 187 00:11:57,516 --> 00:12:00,996 Speaker 1: to make sure that SML wasn't selling its fancy machines 188 00:12:01,036 --> 00:12:03,396 Speaker 1: to China, right, Like, that's how important it is that 189 00:12:03,756 --> 00:12:05,516 Speaker 1: the president is going to go there and be like, 190 00:12:05,956 --> 00:12:08,396 Speaker 1: thank you for not selling these machines to China. Please 191 00:12:08,476 --> 00:12:12,636 Speaker 1: keep not selling them to China. The Biden administration also 192 00:12:13,076 --> 00:12:16,676 Speaker 1: imposed restrictions more generally on selling chips to China. Was 193 00:12:16,716 --> 00:12:19,196 Speaker 1: the last year, like talk me through that, talk me 194 00:12:19,236 --> 00:12:25,196 Speaker 1: through China's role in in the global semi conductor industry. Today, 195 00:12:25,316 --> 00:12:28,276 Speaker 1: China produces a fair number of chips, but almost all 196 00:12:28,276 --> 00:12:30,476 Speaker 1: of them are pretty low tech, okay, And when it 197 00:12:30,476 --> 00:12:34,476 Speaker 1: comes to cutting edge chips, China's far behind the cutting 198 00:12:34,516 --> 00:12:36,596 Speaker 1: edge of what can be produced in Taiwan or in 199 00:12:36,636 --> 00:12:41,276 Speaker 1: the United States. And almost all chipmaking in China requires 200 00:12:41,556 --> 00:12:45,276 Speaker 1: machine tools like lithography tools from ASML, other types of 201 00:12:45,276 --> 00:12:48,116 Speaker 1: tools that are imported from abroad from the US, from Japan, 202 00:12:48,716 --> 00:12:53,436 Speaker 1: from the Netherlands, and because of that, the Chinese economy 203 00:12:53,596 --> 00:12:57,556 Speaker 1: is critically dependent on imported chips. It's trying to trying 204 00:12:57,556 --> 00:12:59,516 Speaker 1: to catch up. Are they gonna catch up? They've been 205 00:12:59,556 --> 00:13:02,756 Speaker 1: trying to catch up Since twenty fourteen, the Chinese government 206 00:13:03,316 --> 00:13:06,756 Speaker 1: has made some conductors a priority, pour billions of dollars 207 00:13:06,796 --> 00:13:09,796 Speaker 1: each year into the chip industry in China. But the 208 00:13:09,796 --> 00:13:13,356 Speaker 1: problem is it's really hard. It's really really hard to 209 00:13:13,396 --> 00:13:16,996 Speaker 1: acquire these capabilities. And it's hard because we're talking about 210 00:13:16,996 --> 00:13:21,676 Speaker 1: the most complex manufacturing humans have ever undertaken. The difficulty 211 00:13:21,756 --> 00:13:24,676 Speaker 1: that Chinese firms have faced are twofold. First is that 212 00:13:25,156 --> 00:13:28,996 Speaker 1: the market is so consolidated that breaking into it requires 213 00:13:29,316 --> 00:13:33,156 Speaker 1: enormous capital investment plus really unique technologies, and so it's 214 00:13:33,156 --> 00:13:35,516 Speaker 1: just hard to break into new markets when it comes 215 00:13:35,516 --> 00:13:37,996 Speaker 1: to the chip industry, which is why you've seen in 216 00:13:38,076 --> 00:13:41,196 Speaker 1: many segments of the industry, firms stay in their market 217 00:13:41,236 --> 00:13:44,636 Speaker 1: position for years, if not decades. And that's just an 218 00:13:44,716 --> 00:13:48,476 Speaker 1: environment where new entrance is hard, Like like making becoming 219 00:13:48,476 --> 00:13:52,796 Speaker 1: another SML, it's like kind of not going to impossible. Yeah, 220 00:13:52,876 --> 00:13:55,756 Speaker 1: that's right. Yeah. Yeah. The other issues that the US 221 00:13:55,796 --> 00:13:58,876 Speaker 1: government has been making it harder over the past around 222 00:13:58,916 --> 00:14:02,636 Speaker 1: five years by cutting off China's access to certain types 223 00:14:02,636 --> 00:14:09,436 Speaker 1: of tools, equipment, materials, software, and knowledge because now it's 224 00:14:09,476 --> 00:14:12,636 Speaker 1: illegal for USS and to work with certain Chinese semi 225 00:14:12,636 --> 00:14:15,916 Speaker 1: conductor companies and transfer knowledge to them. And the US 226 00:14:15,996 --> 00:14:18,596 Speaker 1: wants to do this because it's afraid that if China 227 00:14:18,676 --> 00:14:21,756 Speaker 1: develops more advanced shipmaking capabilities, it will apply these to 228 00:14:22,276 --> 00:14:25,356 Speaker 1: military and intelligence systems, which of course it would, That's 229 00:14:25,356 --> 00:14:33,156 Speaker 1: what all governments do, right exactly. So China wants to 230 00:14:33,236 --> 00:14:37,516 Speaker 1: make advanced chips, and Taiwan makes the most advanced chips 231 00:14:37,516 --> 00:14:40,996 Speaker 1: in the world, and China thinks Taiwan should be part 232 00:14:40,996 --> 00:14:44,436 Speaker 1: of China. In a minute, what does Taiwan's chip industry 233 00:14:44,636 --> 00:14:48,196 Speaker 1: mean for its relationship to China? In particular, what does 234 00:14:48,236 --> 00:14:51,116 Speaker 1: it mean for the possibility of a Chinese invasion or 235 00:14:51,196 --> 00:15:01,836 Speaker 1: annexation of Taiwan. That's the end of the ads. Now 236 00:15:01,876 --> 00:15:04,836 Speaker 1: we're going back to the show. In a more general context, 237 00:15:04,916 --> 00:15:09,956 Speaker 1: people talk about the possibility of China invading or blockading 238 00:15:10,156 --> 00:15:15,476 Speaker 1: or annexing Taiwan. How do you think about that in 239 00:15:15,516 --> 00:15:22,436 Speaker 1: the context of the chip industry. Some people argue that 240 00:15:22,556 --> 00:15:25,636 Speaker 1: China would want to attack Taiwan in order to acquire 241 00:15:25,676 --> 00:15:29,196 Speaker 1: the chipmaking facilities there. I think that's close to impossible. 242 00:15:29,556 --> 00:15:33,756 Speaker 1: The reality is that although Taiwan has unique manufacturing capabilities, 243 00:15:34,236 --> 00:15:38,476 Speaker 1: the facilities in Taiwan require importing machines from the Netherlands, 244 00:15:38,556 --> 00:15:42,516 Speaker 1: from the US, from Japan, they require importing materials like 245 00:15:42,556 --> 00:15:45,716 Speaker 1: silicon wafers and lots of ultraspecialized chemicals, and so they 246 00:15:45,996 --> 00:15:50,316 Speaker 1: really couldn't operate without regular imports from abroad. So I 247 00:15:50,356 --> 00:15:53,556 Speaker 1: think it's really really unlikely that China were to attack 248 00:15:53,636 --> 00:15:56,596 Speaker 1: Taiwan with the aim of seizing that you're making facilities, 249 00:15:56,636 --> 00:15:59,036 Speaker 1: because the Chinese leaders know that they be blown up 250 00:15:59,036 --> 00:16:04,076 Speaker 1: in the process. It wouldn't be possible. So China certainly 251 00:16:04,476 --> 00:16:06,996 Speaker 1: thinks Taiwan should be part of China, right, that's not 252 00:16:07,076 --> 00:16:13,676 Speaker 1: ambiguous independent of TSMC. So in a world where China 253 00:16:13,756 --> 00:16:16,596 Speaker 1: tried to make Taiwan part of China by force, what 254 00:16:16,716 --> 00:16:19,636 Speaker 1: would happen, Like, what is the sort of set of 255 00:16:19,636 --> 00:16:22,316 Speaker 1: probabilities you think about in terms of what would happen 256 00:16:22,916 --> 00:16:25,316 Speaker 1: to the chip industry and the global economy more generally 257 00:16:26,236 --> 00:16:29,596 Speaker 1: if there were attack on Taiwan or a blockade that 258 00:16:29,676 --> 00:16:33,196 Speaker 1: disrupted trade and out of Taiwan. The impact for the 259 00:16:33,196 --> 00:16:37,236 Speaker 1: world economy would be catastrophic. TSMC produces eighty percent of 260 00:16:37,276 --> 00:16:40,716 Speaker 1: smartphone processors, it produces a third of PC processors, It 261 00:16:40,796 --> 00:16:44,196 Speaker 1: produces all sorts of critical chips and data centers and 262 00:16:44,276 --> 00:16:49,676 Speaker 1: telecoms infrastructure, and then it produces tons of less sophisticated 263 00:16:49,756 --> 00:16:53,396 Speaker 1: chips that are critical for many other types of goods dishwashers, 264 00:16:53,596 --> 00:16:58,156 Speaker 1: washing machines, coffee makers, microwaves. A new car will often 265 00:16:58,236 --> 00:17:01,276 Speaker 1: have a thousand chips inside of it, and in a 266 00:17:01,356 --> 00:17:03,956 Speaker 1: given car, you should assume that at least twenty percent 267 00:17:03,996 --> 00:17:07,196 Speaker 1: of the chips are made in Taiwan. So when you 268 00:17:07,556 --> 00:17:12,836 Speaker 1: sort of think with your foreign affairs international relations training 269 00:17:12,956 --> 00:17:16,996 Speaker 1: about those implications, like, I could imagine that going different 270 00:17:16,996 --> 00:17:20,236 Speaker 1: ways in a kind of game theoretical way for China 271 00:17:20,356 --> 00:17:21,916 Speaker 1: right on the one hand would be like, oh, well, 272 00:17:21,956 --> 00:17:24,556 Speaker 1: we don't want to blow up the world economy. On 273 00:17:24,596 --> 00:17:26,676 Speaker 1: the other hand, it's like, oh, that's like a kind 274 00:17:26,716 --> 00:17:29,036 Speaker 1: of leverage. Right. We could say to the world, hey, 275 00:17:29,116 --> 00:17:31,236 Speaker 1: just let us make Taiwan part of China, because we 276 00:17:31,276 --> 00:17:32,716 Speaker 1: all know it's part of China, and we'll let the 277 00:17:32,756 --> 00:17:35,876 Speaker 1: chips keep flowing. I don't know, are those are those 278 00:17:35,956 --> 00:17:37,196 Speaker 1: the ways you think about it? How do you think 279 00:17:37,196 --> 00:17:44,156 Speaker 1: about it? The Taiwanese government describes the chip industry is 280 00:17:44,156 --> 00:17:46,996 Speaker 1: a silicon shield, the idea of being that China one 281 00:17:47,076 --> 00:17:50,596 Speaker 1: attack because it knows that the economic consequences would be 282 00:17:50,636 --> 00:17:52,876 Speaker 1: disastrous for China and for the rest of the world, 283 00:17:52,916 --> 00:17:56,756 Speaker 1: which it would be. And I think that dynamic is present. 284 00:17:56,996 --> 00:18:01,316 Speaker 1: But I worry as well that if China tries to 285 00:18:01,716 --> 00:18:04,356 Speaker 1: move on Taiwan in a way that's below the threshold 286 00:18:04,356 --> 00:18:07,916 Speaker 1: of what would necessarily trigger US response, so a partial blockade, 287 00:18:07,956 --> 00:18:10,556 Speaker 1: for example, which would present the US with a really 288 00:18:10,556 --> 00:18:14,036 Speaker 1: difficult calculus as to what to do. In that type 289 00:18:14,036 --> 00:18:16,676 Speaker 1: of scenario, US leaders would have a choice. Do you 290 00:18:16,916 --> 00:18:20,916 Speaker 1: do nothing and let China pressure Taiwan while watching US 291 00:18:20,996 --> 00:18:24,996 Speaker 1: credibility in Asia disappear, or do you do something and 292 00:18:25,116 --> 00:18:27,276 Speaker 1: risk a disruption of the supply chains on which the 293 00:18:27,316 --> 00:18:30,796 Speaker 1: world economy depends. And in that scenario, I think it's 294 00:18:30,836 --> 00:18:34,916 Speaker 1: far from obvious that the chip industry helps secure Taiwan, 295 00:18:34,956 --> 00:18:37,596 Speaker 1: and in fact, it could well deter the US from 296 00:18:37,596 --> 00:18:41,556 Speaker 1: helping Taiwan and therefore give China leverage over the United States. 297 00:18:42,516 --> 00:18:45,916 Speaker 1: So the US passed a law last year, the Chips Act, 298 00:18:46,076 --> 00:18:53,476 Speaker 1: which is basically subsidizing the manufacturer of chips in the US. Right, 299 00:18:53,556 --> 00:18:58,756 Speaker 1: tell me about that law. So, the Chips Act allocates 300 00:18:58,916 --> 00:19:03,396 Speaker 1: around fifty two billion dollars to semiconductors. Three quarters of 301 00:19:03,436 --> 00:19:06,756 Speaker 1: that goes to subsidizing chipmaking in the US, one quarter 302 00:19:06,836 --> 00:19:09,996 Speaker 1: goes to funding long run R and D. And the 303 00:19:10,036 --> 00:19:12,276 Speaker 1: idea behind the Act is that right now, it's it's 304 00:19:12,436 --> 00:19:14,836 Speaker 1: more expensive to build ship making facilities in the US 305 00:19:14,916 --> 00:19:18,036 Speaker 1: than an East Asia for a variety of reasons, government subsidies, 306 00:19:18,036 --> 00:19:22,476 Speaker 1: tax policy, regulation, etc. And the US wants to reduce 307 00:19:22,556 --> 00:19:25,756 Speaker 1: the cost gap and is putting government money behind that, 308 00:19:26,436 --> 00:19:28,276 Speaker 1: behind that to make it more competitive to build in 309 00:19:28,276 --> 00:19:31,356 Speaker 1: the US. There's real concern about what happens if China 310 00:19:31,356 --> 00:19:34,996 Speaker 1: does attackable like hate Taiwan, and in that scenario, we 311 00:19:35,036 --> 00:19:38,596 Speaker 1: need more chip making capacity in other geographies, not in China, 312 00:19:38,636 --> 00:19:41,876 Speaker 1: not in Taiwan. And so that's why Congress put money 313 00:19:41,876 --> 00:19:44,556 Speaker 1: behind the Chips Act to try to build some capacity 314 00:19:44,636 --> 00:19:48,076 Speaker 1: in other geographies. I feel like there's a there's a 315 00:19:48,236 --> 00:19:51,396 Speaker 1: bigger theme here that's interesting, right. An interesting theme is 316 00:19:51,436 --> 00:19:56,076 Speaker 1: the the relationship of the government to the private sector 317 00:19:56,156 --> 00:19:59,356 Speaker 1: and innovation more generally, and that's a theme that runs 318 00:19:59,356 --> 00:20:02,676 Speaker 1: through the history of the chip industry really and I'm 319 00:20:02,716 --> 00:20:05,156 Speaker 1: curious if you could just sort of talk it through, 320 00:20:05,316 --> 00:20:08,956 Speaker 1: you know today, how has that played out, and how's 321 00:20:08,956 --> 00:20:12,116 Speaker 1: it playing out today, and like, how do you see 322 00:20:12,156 --> 00:20:17,196 Speaker 1: that sort of optimal relationship there. The government's been deeply 323 00:20:17,236 --> 00:20:21,996 Speaker 1: involved in the chip industry from day one. It funded 324 00:20:22,116 --> 00:20:24,396 Speaker 1: a lot of the r and D that made chips possible. 325 00:20:24,476 --> 00:20:27,916 Speaker 1: It was the first buyer of chips for missile programs 326 00:20:27,956 --> 00:20:31,996 Speaker 1: and for the space race, and even today it's a 327 00:20:32,036 --> 00:20:35,796 Speaker 1: major funder of research and development the chip industry. But 328 00:20:36,116 --> 00:20:38,836 Speaker 1: it was never the forest that let the chip industry scale. 329 00:20:38,996 --> 00:20:42,956 Speaker 1: Selling to consumer markets was always more important in terms 330 00:20:42,956 --> 00:20:45,276 Speaker 1: of scaling because there's a lot more consumer demand than 331 00:20:45,316 --> 00:20:48,636 Speaker 1: government demand. Tim Cook, Apple CEO has a lot more 332 00:20:48,636 --> 00:20:51,476 Speaker 1: influence over this and nine country supply chain than the 333 00:20:51,556 --> 00:20:55,436 Speaker 1: US president because he buys a lot more expensive chips. 334 00:20:56,316 --> 00:20:58,196 Speaker 1: In the end, what do you think it's the fundamental 335 00:20:58,316 --> 00:20:59,836 Speaker 1: question of the book or what do you think is 336 00:20:59,876 --> 00:21:03,156 Speaker 1: the question the book ends up answering. I think the 337 00:21:03,796 --> 00:21:08,236 Speaker 1: key takeaway from the book is that although we don't 338 00:21:08,276 --> 00:21:10,396 Speaker 1: think about I can Inductor is much at all. They're 339 00:21:10,516 --> 00:21:13,516 Speaker 1: very deep in our devices. In fact, you can't understand 340 00:21:13,596 --> 00:21:16,636 Speaker 1: any of the major transformations in the modern world without them. 341 00:21:16,716 --> 00:21:19,876 Speaker 1: Whether it's the shape of the globalized economy, whether it's 342 00:21:19,916 --> 00:21:22,116 Speaker 1: the balance of military power, whether it's the rise of 343 00:21:22,156 --> 00:21:27,236 Speaker 1: big tech firms. All of them have silicon semiconductors at 344 00:21:27,276 --> 00:21:30,796 Speaker 1: their core, and they've structured all these big trends and 345 00:21:30,836 --> 00:21:33,916 Speaker 1: ways that until recently we were only dimly aware of. 346 00:21:36,876 --> 00:21:39,996 Speaker 1: In a minute, the lightning round, including where Chris thinks 347 00:21:40,036 --> 00:21:43,356 Speaker 1: the next silicon valley might be, and also what his 348 00:21:43,476 --> 00:21:53,276 Speaker 1: next book might be. Now back to the show. I 349 00:21:53,396 --> 00:21:56,516 Speaker 1: know you have to go relatively soon, so I want 350 00:21:56,516 --> 00:21:59,676 Speaker 1: to close with a lightning round a bunch of fast questions. 351 00:22:01,396 --> 00:22:05,796 Speaker 1: So you've studied the Soviet Union and Russia extensively, You've 352 00:22:05,916 --> 00:22:08,676 Speaker 1: lived and worked in Moscow. What's one thing that you 353 00:22:08,756 --> 00:22:13,116 Speaker 1: wish more people in the US understood about Russia. M 354 00:22:15,156 --> 00:22:16,836 Speaker 1: That's a hard question to answer, right, I mean, I 355 00:22:17,116 --> 00:22:18,196 Speaker 1: don't know if I don't know if you have a 356 00:22:18,236 --> 00:22:21,036 Speaker 1: good answer to that question in the context of this conversation. 357 00:22:21,196 --> 00:22:23,836 Speaker 1: Forget the context of this I mean, look, obviously, the 358 00:22:23,836 --> 00:22:26,876 Speaker 1: context for that question is the war in Ukraine. Frankly, Yeah, Okay, 359 00:22:26,876 --> 00:22:29,676 Speaker 1: well that's the context. Yeah. I think what's striking about 360 00:22:29,716 --> 00:22:34,236 Speaker 1: Russia is the extent to which the Russian foreign policy elite, 361 00:22:34,876 --> 00:22:37,196 Speaker 1: the people who make foreign policy in the Foreign ministry 362 00:22:37,196 --> 00:22:40,916 Speaker 1: in the Kremlin, they're convinced that their country is a 363 00:22:40,956 --> 00:22:43,436 Speaker 1: great power on the world stage, and they're convinced that 364 00:22:43,476 --> 00:22:46,116 Speaker 1: the way to make your country great power is to 365 00:22:46,196 --> 00:22:50,636 Speaker 1: assert it militarily and territorially. It seems to me like 366 00:22:50,676 --> 00:22:55,716 Speaker 1: a very nineteenth century or before view. The problem is 367 00:22:55,716 --> 00:22:58,356 Speaker 1: that it's here and now in the twenty first century, 368 00:22:58,916 --> 00:23:04,076 Speaker 1: and we can't wish it away. Every region wants to 369 00:23:04,076 --> 00:23:07,796 Speaker 1: create its own silicon valley, you know, there's like whatever, 370 00:23:07,876 --> 00:23:11,076 Speaker 1: Silicon beach, Silicon mountain. Everybody has their own bad name. 371 00:23:11,916 --> 00:23:13,796 Speaker 1: What place do you think has the best shot of 372 00:23:13,836 --> 00:23:19,476 Speaker 1: doing it? And why India right now is putting a 373 00:23:19,476 --> 00:23:22,876 Speaker 1: lot of money into its chip industry, and simultaneous to that, 374 00:23:22,916 --> 00:23:26,476 Speaker 1: it's putting a lot of focus on electronics assembly that 375 00:23:26,596 --> 00:23:29,756 Speaker 1: India is trying to attract assembly that's leaving China for 376 00:23:29,836 --> 00:23:32,916 Speaker 1: smartphones and PCs, and so I would say that although 377 00:23:32,916 --> 00:23:35,876 Speaker 1: it's starting from a very low base, India is likely 378 00:23:35,956 --> 00:23:39,156 Speaker 1: to substantially grow as chip industry over the next decade. 379 00:23:39,476 --> 00:23:43,236 Speaker 1: What's one thing research universities get wrong about fostering innovation. 380 00:23:43,676 --> 00:23:48,116 Speaker 1: Innovation is partly about science, it's probably about engineering, but 381 00:23:48,156 --> 00:23:52,156 Speaker 1: it's also probably about business models. The innovations that really 382 00:23:52,156 --> 00:23:55,396 Speaker 1: transform societies are those that have a business model that 383 00:23:55,436 --> 00:24:00,636 Speaker 1: allow them to proliferate. And universities aren't nearly as good 384 00:24:00,676 --> 00:24:02,876 Speaker 1: at producing business model innovation in the fact that I 385 00:24:02,996 --> 00:24:07,716 Speaker 1: do any of it, relative to producing engineering innovation or 386 00:24:08,716 --> 00:24:12,156 Speaker 1: innovation in fundamental science. I mean, maybe the question was 387 00:24:12,196 --> 00:24:14,876 Speaker 1: misguided as I hear you answer it, because like, maybe 388 00:24:14,876 --> 00:24:18,636 Speaker 1: a university shouldn't be in the business of innovating business models. 389 00:24:18,836 --> 00:24:21,556 Speaker 1: I guess there's a business school. But yeah, I think 390 00:24:21,596 --> 00:24:26,196 Speaker 1: that's right. I think if you look at TSMC, for example, TSMC, 391 00:24:26,516 --> 00:24:31,756 Speaker 1: you know, Morris Chang had no unique technological or scientific 392 00:24:32,716 --> 00:24:37,036 Speaker 1: insight when he started TSMC, But by starting TSMC, he 393 00:24:37,116 --> 00:24:39,916 Speaker 1: has transformed the landscape of the global chip industry. And 394 00:24:39,956 --> 00:24:43,076 Speaker 1: so I would put the founding of TSMC next to 395 00:24:43,116 --> 00:24:45,756 Speaker 1: many of the other key innovations of the twentieth century. 396 00:24:46,116 --> 00:24:49,156 Speaker 1: But it wasn't a Nobel Prize winning innovation, even though 397 00:24:49,196 --> 00:24:51,756 Speaker 1: it was areuably more important than many that have one 398 00:24:51,796 --> 00:24:55,476 Speaker 1: Nobel prizes. I mean, the fundamental innovation of TSMC was 399 00:24:56,076 --> 00:24:58,156 Speaker 1: we're not going to design chips. We're just going to 400 00:24:58,196 --> 00:25:00,356 Speaker 1: make chips that other people design. It was just that. 401 00:25:00,556 --> 00:25:03,156 Speaker 1: But that was huge, that's right, that's right, and it 402 00:25:03,276 --> 00:25:05,836 Speaker 1: was informed by all sorts of technical knowledge, but the 403 00:25:05,836 --> 00:25:09,836 Speaker 1: innovation was actually very simple and exclusively in the business model. 404 00:25:10,276 --> 00:25:13,076 Speaker 1: What was the second most important technology of the last 405 00:25:13,116 --> 00:25:20,756 Speaker 1: fifty years? Um, well, maybe this is a cop out answer, 406 00:25:20,796 --> 00:25:25,516 Speaker 1: but I think the development of the software that takes 407 00:25:25,556 --> 00:25:31,716 Speaker 1: advantage of chips bird most important. What's a good answer 408 00:25:31,716 --> 00:25:33,796 Speaker 1: to that. I don't know I've got a smart answer 409 00:25:33,836 --> 00:25:38,676 Speaker 1: to that question. I'll to think about that. Maybe genetic engineering. 410 00:25:38,836 --> 00:25:40,956 Speaker 1: But we haven't seen it payoff yet, Like if I 411 00:25:40,996 --> 00:25:43,116 Speaker 1: were going to it's kind of the obvious one, right, Like, 412 00:25:43,156 --> 00:25:46,876 Speaker 1: I feel like maybe in the next fifty years we'll 413 00:25:46,876 --> 00:25:49,076 Speaker 1: see that what has been happening in the sort of 414 00:25:49,116 --> 00:25:51,356 Speaker 1: biotech world is about to pay off in a really 415 00:25:51,396 --> 00:25:56,156 Speaker 1: profound way. You know, I'm I'm beginning to explore genetic 416 00:25:56,156 --> 00:25:59,276 Speaker 1: engineering as a potential topic for my next Wait, that's 417 00:25:59,316 --> 00:26:03,516 Speaker 1: my last question. What's your next book? Well? Yeah, so 418 00:26:03,556 --> 00:26:07,876 Speaker 1: I'm looking at at genetic engineering and the intersection of 419 00:26:07,916 --> 00:26:11,716 Speaker 1: biotech and aim as a potential next book. And if 420 00:26:11,756 --> 00:26:14,756 Speaker 1: you if you start with the thesis that DNA's just code, 421 00:26:15,236 --> 00:26:20,676 Speaker 1: then the intersection between computing and biotech seems really profound. 422 00:26:21,436 --> 00:26:24,516 Speaker 1: And the ways in which biotech has developed, both in 423 00:26:24,596 --> 00:26:28,036 Speaker 1: terms of the interplay between government and private companies and 424 00:26:28,076 --> 00:26:32,956 Speaker 1: also the international competition around it, also seems seems very important. 425 00:26:33,036 --> 00:26:35,116 Speaker 1: I think there's space to bring together some of these 426 00:26:35,116 --> 00:26:41,996 Speaker 1: big themes in a fresh way. Chris Miller is the 427 00:26:41,996 --> 00:26:44,316 Speaker 1: author of Chip War, The Fight for the World's most 428 00:26:44,356 --> 00:26:49,036 Speaker 1: critical Technology. Today's show was produced by Edith Russolo, engineered 429 00:26:49,036 --> 00:26:52,636 Speaker 1: by Amanda k Wong, and edited by Lydia Jeancott and 430 00:26:52,676 --> 00:26:57,316 Speaker 1: Sarah Nis. I'm Jacob Goldstein. You can email us at 431 00:26:57,516 --> 00:26:59,916 Speaker 1: problem at Pushkin dot fm, or you can find me 432 00:26:59,956 --> 00:27:02,876 Speaker 1: on Twitter at Jacob Goldstein. We'll be back next week 433 00:27:02,916 --> 00:27:06,876 Speaker 1: with another episode of What's Your Problem.