In the 1960s, the first semi-conductor chips are built in Silicon Valley at Fairchild and in Dallas at Texas Instruments by Berkeley, Stanford, MIT physics graduates, including Bob Noyce, Gordon Moore, and Andy Grove with the US Army and NASA as the first customers and soon mass market calculators and mainframe computers

The USSR stays on the sidelines trying to copy American chips but never succeeding despite their top-notch physics scientists because of the complexity and fast rate of improvement of the process and the much bigger market the US and its allies have access to to compensate R&D costs

Japan becomes a leader at mass production of products using American chips (like the first widely adopted consumer radio from Sony), the US lets it happen because a strong Japan as part of a US-led system is part of their anti-communist strategy

In the 1970s, US chipmakers outsource a large proportion of manufacturing to South East Asia, in particular Taiwan and South Korea, looking to integrate more closely economically with the US to secure their defense after the US’ defeat in Vietnam

Bob Noyce and Gordon Moore leave Fairchild to found Intel and move from special purpose chips to general purpose memory and compute chips

In the 1980s, Japanese firms (Sony, Toshiba, Fujitsu) start outcompeting the US on a broad range of industries (steel, radios, TVs, cars, memory chips) first copying American products and improving quality by perfecting manufacturing processes, then creating new products (the walkman) - this expansion is heavily supported by government funding and bank loans and by 1986, Japan leads in chip making

By this time, the US military has become increasingly dependent on computer chips to regain its dominance over the USSR after the defeat in Vietnam, with electronics (satellites, radar, guided missiles) accounting for 17% of military spending compared to 6% two decades earlier - this makes preserving the US chip industry a matter of national security

US chip makers (Intel in particular) lobby the government for support and get tax cuts, they also organize and industry emergency consortium, but none of this is enough to compete against Japan in memory chips

In 1980, IBM builds the first personal computer, outsourcing the microprocessor computing chip to Intel and the software to Bill Gates - this is a glimmer of hope for Intel, the beginning of Microsoft, and the end of IBM’s dominance (it turns out that building microprocessors and software is hard while assembling PCs is easy)

Under Grove’s leadership, Intel makes the bold move to leave the memory business to focus on microprocessing chips for personal computers - they fire 25% of the workforce, copy Japanese manufacturing processes for efficiency, and relentlessly innovate on CPU design to maintain their lead as PCs become mainstream

In 1990, the Japanese economy enters a crisis and deep recession - some causes: too much reliance on low interest bank loans and not enough focus on profits over growth at all costs, and missing the personal computer revolution

In Korea in the late 1980s, Samsung - by now the leader across many sectors of the Korean economy, with cheaper labor and full support of the Korean government and US resellers happy to undercut Japan enemies - bets on the memory chips market and starts gaining market share; by 1998, South Korea is the largest memory chip producer

In 1987, Taiwan, with the Taiwan Semiconductor Manufacturing Company (TSMC), starts fighting for survival in the market as China enters the market; their only chance is technological innovation, moving beyond assembly to chip design and component fabrication; to lead this effort, they bring back Morriss Chang from Texas Instruments who had emigrated to the US decades before - they focus on manufacturing chips designed elsewhere

In the 2000s, after Andy Grove, Intel starts milking its moat in PC chips and server chips, puts an MBA as CEO, optimizes for profit margins as opposed to innovation, misses the iPhone contract and the mobile revolution

Fabless companies - focusing on their differentiating product and relying on TSMC and other foundries for fabrication - emerge in the 1990s: Nvidia for GPUs, Qualcomm for specialized communication chips

In the 2000s and 2010s, TSMC emerges as the leading foundry and leverages its market power and large ecosystem of both piece suppliers and chip maker customers to beat other integrated foundries like Samsung - in 2023, it produces over 60% of the world’s semiconductors and over 90% of the most advanced ones

A single Deutsch company, ASML, is able to build the latest generation of manufacturing machines at 14nm (~20 atoms) precision

Apple designs iPhone chips but outsources fabrication to TSMC, the only company with the ability to build the chips - chip materials represent the bulk of the cost of the phone

Intel - the only company able to fabricate chips in the US today - is behind the two other alternatives in the world (TSMC and Samsung)

China is currently reliant on US-designed Taiwan-built chips, importing most of its chips ($400B = 16% of its imports in 2021, more than oil) and they desperately want to get rid of existing technology - but developing an independent supply chain in-house would take well over a decade and more than $1trillion

During the Trump administration, the US government banned sale of chips designed US technology (which includes all high-end chips at some point in their supply chain) to Huawei, causing a severe blow to the company - it currently produces 37% of the world’s computing chips

Intel is now focused on regaining dominance over chip fabrication by 1) leveraging the next generation of technology from ASML, 2) launching its own foundry business