[How About This Book] The 'Chip' Alliance Trapped in the Cold War and Between Wars... Finding a Favorable Position for Korea

Building Semiconductor-Centered Relations in International Affairs
The Core of Intercountry Competition is the 'Chip War'
Fluctuations Due to Limitations of Soviet and Chinese Systems
The US Tried to Maintain Military Superiority with Semiconductors
Control Gaps Arise Amid Corporate Competition
South Korea Must Find Survival Opportunities Within

On August 18, 2020, the US Navy destroyer USS Mustin entered the northern end of the Taiwan Strait. Sailing through the strait with its 5-inch (12.7 cm) gun aimed southward, it declared that the waters were not under Chinese sovereignty. Inside the ship’s control room, screens were filled with data tracking the movements of airplanes, drones, ships, and satellites across the Indo-Pacific region, while the deck was equipped with 96 vertical launch systems capable of striking aircraft, ships, and submarines hundreds of kilometers away. Upon the Mustin’s entry into the Taiwan Strait, China launched live-fire exercises around Taiwan as a retaliatory measure. At the time, a Chinese newspaper described China’s actions as a “military unification operation” drill, but China quickly denied any intention to invade Taiwan. Why did China show a retreating stance? Was it fear of a military clash with the US? Chris Miller, author of Chip War, points to the semiconductor value chain as one of the reasons.

According to the author, an expert in international politics, the world is building new relationships centered around semiconductors. For example, ARM, a company owned by Japan but headquartered in the UK, employs engineers in California and Israel who use software developed in the US to design semiconductor blueprints. The completed designs are sent to Taiwan, where silicon wafers from Japan and special gases are used to etch the designs onto the wafers using the world’s most sophisticated machinery. There are five leading companies that manufacture this equipment: one each in the Netherlands and Japan, and three in California. The chips are then tested in Southeast Asia before being sent to China to be used as components in mobile phones and computers. But what if China launches an amphibious operation against Taiwan? The author states, “The global economy would be severely shaken by a semiconductor-induced shock,” adding, “It is hard to imagine a more dramatic event China could undertake.”

Semiconductors, which now hold such a critical position, only began to attract global attention about 70 years ago. Semiconductors have properties between conductors and insulators, allowing them to switch between conducting and insulating states as needed, which led to explosive scientific advancements. American airships reached space, and computers and the internet were born. It was truly revolutionary.

The US, which initially dominated semiconductors, aimed to maintain military superiority through them. However, as is often the case, military technology expanded into the electronics industry, encompassing personal computers, the internet, wireless communication technologies, and eventually almost all mechanical devices. The US’s first partner in expanding the market globally was Japan. After World War II, the US integrated Japan?then in dire straits?into its economic network by positioning it as a salesman for the transistor industry led by the US. However, Japanese companies, led by Sony, surpassed the US in transistor production by 1976, just over 20 years later, and by 1985, Japan’s exports of electronic products including semiconductors exceeded $60 billion (about 79 trillion won). This posed a significant threat to the US.

As Japanese companies dominated the market, US semiconductor firms lobbied Congress and the Pentagon, claiming the competition was unfair. They argued that government support was necessary due to the strategic value of computer chips. Indeed, Japan’s aggressive low-price strategy was so intense that US company Intel gave up on the DRAM sector. Feeling threatened, the US turned to South Korea as an alternative. The US believed that South Korea could produce DRAM more cheaply and help counter Japan’s market monopoly strategy of “dumping” regardless of cost.

Meanwhile, the Soviet Union and China were unable to gain strength in the semiconductor market. The Soviet Union recognized the importance of semiconductors early on and had many Nobel laureates in physics, but faced setbacks due to sanctions from the Coordinating Committee for Multilateral Export Controls (CoCom), which was led by democratic countries. Exports of advanced technologies, including semiconductors, were strictly blocked. Although industrial spies were active, stolen chips were “like stealing a cake without knowing how it was made.”

China also prioritized semiconductor devices in scientific research in the 1950s and began actual semiconductor production in 1965. However, the Cultural Revolution in 1966 reset everything to square one. China ended up spending more on semiconductor imports than on oil. Recently, companies like Huawei have attempted a semiconductor resurgence, but US sanctions have made “semiconductor independence” extremely difficult.

The author explains that the current international situation surrounding semiconductors was not intended by the US. It emerged naturally through competition among Silicon Valley companies. Japan, once a “cheap labor” market, became too large, so production shifted to South Korea and Taiwan, while China’s desperate attempts to enter the market are being blocked.

However, significant changes are occurring in the semiconductor market, which was once almost exclusively controlled by the US. As the market becomes more advanced, gaps have appeared in US control. The author highlights these gaps strictly from the US perspective, but many countries are finding opportunities within them.

Chip War: Who Will Be the Ultimate Winner in the Semiconductor Battle | Written by Chris Miller | Translated by No Jeong-tae | Bookie | 656 pages | 28,000 KRW