Chip War

In this chapter, Miller explores the competitive dynamics and cultural beliefs that shaped semiconductor manufacturing in the 2000s. AMD founder Jerry Sanders famously championed the idea that semiconductor companies needed to own their fabrication plants (fabs) to remain competitive. However, the rising cost of building and maintaining fabs, especially for advanced chips, made this model increasingly difficult to sustain. Meanwhile, companies like TSMC revolutionized the industry by adopting a foundry model, allowing firms to design chips without owning fabs. As the industry split into three key sectors—logic, memory, and analog—different strategies emerged regarding fab ownership. Many firms, particularly in logic and memory chip production, outsourced their manufacturing to Asia, where countries like Taiwan, South Korea, and Singapore had strong government support for fabs. Despite Sanders’s pride in maintaining fabs, the economic realities and increasing costs of advanced fabrication led many companies to transition toward the fabless model, reshaping the semiconductor industry.

Miller examines the rise of the fabless business model in the semiconductor industry, where companies design chips but outsource their manufacturing to foundries like TSMC. This model allowed companies to innovate without the enormous costs of building and maintaining fabrication plants (fabs).