History of semiconductors, i would have said you were crazy. But this reads like a spy novel. It is. It is. It is absolutely gripping, believe it or not, you know, going back to the 1950s when they semiconductor. First of all, the concept of the semiconductor. But subsequently the the evolution of the industry began. So im just so thrilled to be joined by professor chris miller. And chris, i really again great book could not have been more timely considering the congressional passage of the chips act. And well get to that. But let me start with the fairly obvious question, which is, you know, youre a professor. I looked at the list of the books youd written. Youd written mostly on russia about the transformation of the russian economy, about about vladimir putin. Also very timely, but not about not much about the sort of protagonists of chip world. Not a lot about the taiwanese, the chinese, the japanese. What tell us. Sort of what what prompted you to get interested in the topic and to do the research that resulted in this in this Remarkable Book . Well, thank you, jim. First of all, for hosting this conversation. When i started this research about five years ago, i was thinking i was going to write a book on the cold war arms race, because one of the key questions that had motivated me was why was it that in the cold war, the soviet union could make nuclear weapons, they could make missiles and rockets that shot the first satellite into space, but they could never miniaturize Computing Power. And that seemed to me an important question for the history of the cold war. But as i began to dig into that, i came to realize that the answer to that question had to do with the origins of computer chips, which first emerged in missile and rocket guidance systems in the early cold war. And i came to realize this just as the Us Government was ramping up its competition with china to control the future of chip technology. And i sort of put these two pieces together. The history of chips in Missile Technology and the current uschina competition, and realize that there was an entire history of the last 60 years that you really couldnt understand. And without knowing much about computer chips and i admit, when i started, i knew very little. But today ive come to the conclusion that the really the core to understanding globalization, the balance of military power and how our economy has changed as the first chips were invented in the late 1950s. Yeah, yeah. You know, as i was reading your book, i sort of thought, you drew you dont you do draw an analogy between chips and oil which, you know, everybody has an intuitive feeling about why oil and energy are at the core of so much geopolitical action taken and you you know, it really comes across. You may be, by the way, if your book catches on, you may be the dan yergin of semiconductors, but its very much in the very much in the tradition of those books that sort of tell a general population about some of the powerful economic forces underlying geo political events. Im thinking of guns, germs and steel and that sort of thing. So many people will be watching us right now who dont necessarily have the same sort of intuitive feel for the importance of Semiconductor Chips that they might have for oil. Because, of course, most of us put gasoline in our cars. So for those who have yet to read the book, make make the argument about why semiconductors in some ways are the, you know, oil of the 21st century, or at least critical to not just our economies, but to our National Security. Well, the first thing to say is that the typical person doesnt realize it, but we touch dozens that in many cases, hundreds of chips each day in your smartphone, there could well be a dozen different chips, your computer only functions, things, the chips inside of it. When you log on to the internet, the internet exists on large numbers of servers, which are which are boxes of semiconductors, mostly when you sit in your car, your car will have dozens, in some cases hundreds of chips inside of it, turning your dishwasher. Theres chips there, too. And your microwave today, almost anything with an on off switch except for a light bulb will have some sort of chip inside of it. And although we never see the chips unless you take apart your iphone or your computer, in fact, you rely on them for almost everything in day to day life. So theyre as important to the Economy Today as energy is and as we put Computing Power in more and more things, were going to become even more reliant on chips going forward. So theyre as ubiquitous as oil, even if we see them less frequently than we do pumping up our cars. But theres a difference with oil and the difference is that unlike oil, the computer chip production process is concentrated in a small number of countries and controlled by just a couple of companies in the oil industry. We think of saudi arabia being a big player, but the saudis produce. 10 to 15 of all the worlds oil. By contrast, 90 of the most advanced processors chips today are produced by one company on the island of taiwan and across the supply chain thats used to produce advanced semiconductors. Theres a number of parts of that process in which one company or a small number of companies play an indispensable role. So theres even more concentration of production in semiconductors than there is in the oil industry. So lets talk a little bit about the Security Side of that from two different angles. One of the remarkable moments in your book is when you talk about, you know, the world watching what america does in 1991, in the first gulf war, where precision guided munitions, land right on top of tanks, these are of course, munitions that have been flown from far away, probably off the deck of an Aircraft Carrier. Theyve been dropped by planes at High Altitude and they hit their targets with perfect precision. And theres a whole bunch of other things that happened in 1991 in your book. Makes that point that the russians, the chinese and everybody else said, holy smokes, when they saw that. So so talk a little bit about that, but also talk about, you know, you sort of talk about it the way our our entire lives are surrounded by chips. Theres another very interesting moment. Your book, where you say, you know, a chip may not make your coffee, but your coffee maker is going to use a chip to determine the mix and the temperature. So talk a little bit about the both the incredible advantages, but the strategic vulnerabilities that come from this permeate of our daily lives. Bye bye bye, semiconductors. If you start with the Defense Technology side of things, although chips emerged out of the demand for smarter guidance, computers on Missile Systems in the cold war today, defense uses constitute maybe one or 2 of chips that are produced. So its a relatively small end market compared to smartphones or computers or even automobiles. But more than ever before, Defense Systems are reliant on computer chips and the persian gulf war, as you mentioned, was one of the first instances where we saw what the application of Computing Power to Missile Systems and bombs could accomplish in terms of precision. But today, 30 years later, our military is even more reliant on computer chips and in fact, every military is increasingly reliant on computer chips. And if you project forward ten or 20 years more and look at what the Defense Department in the us or other countries militaries are planning to roll out, theyre envisioning technologies that rely even more and Computing Power will demand even more memory, even more digital signals processing, all of which is about semiconductors. So envision, for example, an autonomous drone flying through a battlefield. But drones in a need, a lot of Computing Power, a lot of memory and have a lot of sensors on it. And all that requires chips. And so as a result, as you say, chips arent just about our coffeemakers or our dishwashers, although thats important. And wed struggled to live without them. Theyre also about accessing the most advanced Defense Technology. And i think one of the interesting things weve seen in the russiaukraine war over the past couple of months is that when russian munitions have been acquired on the battlefield in their guides, computers have been taken apart. One of the things that has been discovered is that russian missiles often rely very heavily on smuggled chips from the outside world, from the us, from korea, from taiwan, because our chips are so much better than theirs that theyve concluded theyre best off smuggling in older american chips, that older korean chips for their own Missile Systems. That shows you just how reliant they are. And the entire worlds militaries are on getting access to the most advanced chips that they can. You know, youre going to need to ride an additional chapter or maybe the two of us will write an op ed because i you you finish the book. I think just maybe as as the russian attack on ukraine occurred. But, you know, even today, sitting on the intelligence committee, as i do, i see this even today, military planners look at the number of tanks, the number of aircraft, the number of men. But what were seeing in ukraine right now is a is a transformation in that as a as an input around military strength. Because as the ukrainians and the russians are demonstrating as we speak, you can have as many tanks as you want. But if those tanks are up against munition lines that have highly advanced processors, the numbers almost dont matter. So so, you know, one of the conclusions here is and by the way, the other the other story of ukraine is that is the sharing of intelligence, which is enabled, of course, by the but but i think you could even make an argument looking at russia, ukraine, that that really we got to sort of junk the old ways. The old World War Two ways of thinking about military power and really evaluate both the quantity and quality of ships on the battlefield. Yeah, i think thats absolutely right. And as you say, its not just the chips in the munitions that are approaching their target. Its the satellite photos. Its the signals intelligence. Its the communication of all of this data from the battlefield to Decision Makers to munitions itself and communications, signals intelligence. This is all about accessing the most advanced semiconductors. And right now, ukraine has had the benefit, both of russias lag in the sphere, but also of the us supplying its extraordinary intelligence capabilities, which are largely made possible by by semiconductors, by sensors and by Computing Power that theyve enabled. So let me take you in a direction back to the coffee maker. Let me take you into a direction that you dont go much in on your book, which is the vulnerability associated with the permeation. And through through all of our lives. Back to that coffee maker, it is the internet of things. Theres just going to be nothing that isnt wired. There isnt going to be anything that isnt suffused with chips. Now, i pretty quickly get out of my own area of expertise here, but chips can be hacked. The software can be hacks, its chips can be accessed. Talk a little bit because it doesnt you dont you dont dwell on this in your book but talk a little bit about the kinds of vulnerabilities that may be out there because of the internet of things, because of everything being full of chips and what you guys like me do about that. Its true that there are some instances of vulnerability is being discovered inside of chips where they were designed in a way that made their data visible. For example, to parties that should have been able to acquire it. A couple of famous examples of this in recent years are vulnerabilities called specter and meltdown, which were visible in pc chips. But i think if you if you step back and look at the number of vulnerabilities in hardware like chips versus the number of vulnerabilities in software error, what you find is a lot easier to do produce and to exploit vulnerabilities in software. And so i worry a lot more about the types of traditional cyber vulnerabilities we think about than i, i do about hardware problems. It is an issue that we need to focus on. And i think if you look, for example, at where darpas the Defense Departments advanced research arm is putting a lot of their focus, its on how to verify that the chip you put in a military system actually works as intended, especially as the us military relies even more on chips produced abroad. But i think the scale of vulnerabilities in hardware is a lot less than you get in software, that the real vulnerable that i worry about is not that the chips we get will be compromised, but that we wont be able to access the chips in case theres some sort of emergency or war in east asia. Yup, yup. Okay. So lets lets set the stage for that conversation. And this conversation ends with the question of of of of what do we do now . But lets lets that set the stage for that. Theres theres theres sort of two ways of thinking about innovation, right . Theres sort of lets lets just call it sort of an american or a western way, which comes through in your story loud and clear. Right. Youve got its an incredible cast of characters, including like an idaho based potato farmer, you know, a disgruntled, you know, Software Programmers who get angry at each other in palo alto, etc. Its chaotic, right . Its totally chaotic. And yet out of this chaos, you get the. And i should point out, chaos, support id by research and development funded by the federal government, arpa and other programs and the pentagon out of this seeming chaos and a cast of characters that as out of a hollywood movie, you get the very best, even today, you get the very best innovation bar none. The other model, of course, is more or less think of it as a chinese model or, you know, you certainly talk about it as an old soviet model, which is were going to build a city and this city is going to be dedicated to semiconductor and it will have a bureaucrat who is running it. This is kind of what the chinese are doing now. They are literally building, you know, Artificial Intelligence cities. Which of those two models wins in the end . And whats the pluses and minuses of those two very, very different models . Well, i think answering that question, first off, depends on what youre trying to accomplish. And for the us, what were trying to accomplish is innovating on the frontier of knowledge. So we dont know where were trying to get to next because were relying on the next generation of scientists and engineers in entrepreneurs to figure out what the next best thing is. Whereas if youre behind and trying to catch up, you already know what youre trying to accomplish. Youre trying to accomplish what other people did five, ten, or 15 years ago. And so its a bit more straightforward of a process to identify the priority and then catch up to it. So in some ways, chinas got an easier task because theres still trying to catch up to where we are and where some of our allies in in asia, like the taiwanese or the koreans, are. But setting aside that, i think the us method or the western capitalistic method has obvious benefits. Its produced the innovation that you mentioned, the innovation that led to the emergence of a chip. And its spread across society, its driven down costs in a really tremendous fashion today weve got Computing Power that costs one billionth of what it did, 60 years ago. So the Cost Reduction is is really extraordinary. But the chinese have some assets as well. For one thing, most of the Electronics Systems that chips get put into, whether its smartphones or computers or servers, are actually assembled in china. So the chips are imported from abroad, from korea, from taiwan, from the us. China spends more money every year importing chips than it does importing oil, but theyre assembled in china. And so china has some influence in how they are used and they get in a final system. So thats one advantage that china has that we dont have. Second is that china is pouring tons of money into their Semiconductor Industry. Its hard to get an exact figure, but its certainly in the many tens of billions of dollars and probably in the hundreds of billions of dollars over this decade. And so even if chinas success rate is pretty low, the amount of money that theyre pouring in is going to guarantee them some successes. And so the challenge we face is not only to have a higher success rate than china, but have a such a better rate of success that were able to counteract the fact that theyre spending a lot more money than we are. And so thats really the structure of the race today. And i think although the chinese have made many errors along the way and all of theres a lot of inefficiency in their system, it would be wrong to write them off if if any country has shown in the last 40 years that theyve got a lot of capabilities, that theyve got a government that is willing to put any resources necessary towards achieving its goals. Its chinas. And so it would be wrong just to rest on our laurels to say our system has worked in the past, effort will work flawlessly in the future. And i think we need to be focusing again on making sure, a, how can we jump ahead, increase the speed of innovation, but also be how can we make sure that chinas not taking advantage of our technology as its trying to overtake us . Yup. Yup. And of course, my question is a little bit of a trick question, because for the free market purists who would say that innovation comes out of a purely free market environment, the chaos of Silicon Valley and all of the stories that you tell, the reality is that this industry would never have gotten off the ground in the United States had the pentagon not really dumped immense amounts, not only basic research through darpa and stuff, but in the early days of semiconductor, it was really the pentagon was the only customer. Right. And they were,