24 – Chip War: Mastering Tech, Geopolitics & the China Challenge

00:00:00: Welcome to Berlin Side Out, the podcast that takes an expert look at how Germany sees the

00:00:05: world and the world sees Germany.

00:00:07: With me, Benjamin Tallis.

00:00:09: And me, Aaron Gash-Bernett.

00:00:11: Hello, and welcome back to Berlin Side Out, the Foreign Affairs podcast in association

00:00:20: with the German Council on Foreign Relations that takes an expert look at how Germany sees

00:00:25: the world and the world sees Germany.

00:00:27: I'm Aaron Gash-Bernett, a journalist and security analyst specializing in German politics and

00:00:33: foreign policy.

00:00:34: And I'm here with my friend and co-host, Benjamin Tallis, senior research fellow here at the

00:00:38: Council and head of its action group, Seitanbende.

00:00:42: Now Ben, regular Berlin Side Out listeners will know how important we think it is to

00:00:46: ensure that we're all first at least aware of the systemic competition that we're currently

00:00:51: in, in between liberal democracies on one side.

00:00:55: That includes Germany and authoritarian regimes like Russia and China on the other.

00:01:00: And that's because from that awareness, we can act strategically and proactively rather

00:01:04: than reacting to an authoritarian set agenda from the back foot, which we unfortunately

00:01:09: too often do.

00:01:12: Now that systemic struggle has military, economic and soft power fronts and having a plan for

00:01:17: how to use all those resources and power that democratic states have is part of the grand

00:01:22: strategy.

00:01:23: We've spoken about regularly on this podcast, including in detail a few episodes ago with

00:01:28: Maximilian Tehalla, Eileen Matler and Jakob Brass.

00:01:31: But there is a technological dimension to these strategic questions too, isn't there?

00:01:37: Yes, there certainly is.

00:01:38: And living in Germany, we're acutely aware of the need to master technological change

00:01:42: if not quite the reality of doing so at the moment.

00:01:46: And our guest today, Chris Miller, has done anyone who works in geopolitics an enormous

00:01:51: favour by making clear in the book, "Chip War," the interlinkages between technology, geopolitics,

00:01:58: geoeconomics, between the different parts of our societies and how absolutely crucial

00:02:04: the access to the technology, particularly semiconductors, that power our lives and

00:02:08: our economies is.

00:02:10: But moreover, to highlight the technological aspects of the race for power, the race for

00:02:15: more advanced technology, for the technology that keeps us safe and gives us a military

00:02:19: edge.

00:02:20: And it's a long history that Chris traces in wonderful detail through the Cold War

00:02:24: and into the post-Cold War period, right up to the present day.

00:02:28: And the systemic competition with China and also with Russia that we are engaging in.

00:02:32: And it's those intertwined histories of economics, politics, science, technology and military

00:02:38: affairs that really fascinated me about this book, which I can't recommend highly enough.

00:02:43: Rarely have I learned so much from a book I've enjoyed so much, I have to say.

00:02:48: And so to all our readers out there who have yet to have the pleasure, you have a treat

00:02:51: ahead of you.

00:02:52: But it's not just me who thinks that.

00:02:54: The book "Chip War" has been named "Business Book of the Year" by the Financial Times.

00:02:58: The Economist called it one of their book of the years.

00:03:01: As did Foreign Affairs, it's a New York Times bestseller.

00:03:03: I could go on.

00:03:04: The list of awards and accolades for Chris's work is long and distinguished.

00:03:08: Chris Miller is professor, an economic historian at the Fletcher School, the Global Affairs

00:03:13: Graduate School at Tufts University, as well as author of "Chip War," as we mentioned,

00:03:16: and several other books.

00:03:17: Do look him up.

00:03:18: Chris, it's a pleasure to see you again and to have you on Berlin's side out.

00:03:21: Thank you very much for the invitation to join you.

00:03:24: Thank you very much for joining us, Chris.

00:03:25: Now, many of our listeners might be familiar with China's historical claim, which it's

00:03:30: had since 1949, that Taiwan is a province of China.

00:03:34: It has no right to be its own state, and that it doesn't rule out force to take Taiwan.

00:03:39: Now, our listeners are also no strangers to the dangers of authoritarian states, threatening

00:03:43: democratic states motivated by imperial history.

00:03:48: But your book brings up another particularly noteworthy reason why China might want to

00:03:52: invade Taiwan.

00:03:54: As you argue, chips are the new oil.

00:03:58: This is a big central point that you make in the book, and Taiwanese chip manufacturers

00:04:05: lead the world right now in terms of manufacturing know-how.

00:04:09: So let's start by asking just how dominant is that Taiwanese know-how in terms of that

00:04:14: manufacturing, and is that a reason why we might be under appreciating the risk of China

00:04:20: trying to invade Taiwan potentially?

00:04:22: Well, it's definitely the case that Taiwan is the most important country when it comes

00:04:27: to manufacturing chips.

00:04:30: There's a Taiwanese company called TSMC, the Taiwan Semiconductor Manufacturing Company,

00:04:36: which is the world's largest chip maker, and also the world's most advanced chip maker

00:04:40: in terms of its ability to produce processor chips.

00:04:43: And advanced processor chips are basically everything.

00:04:45: They're in your phone, computer, they're in the telecoms infrastructure, they're in the

00:04:49: data centers that are increasingly important for training and deploying artificial intelligence

00:04:55: systems.

00:04:56: And when it comes to the most advanced chips, 90% of them are made by TSMC in Taiwan.

00:05:01: And when it comes to AI processors, almost 100% of them are made by TSMC in Taiwan.

00:05:07: And that's true for AI processors that are used in Asia, used in Europe, used in the

00:05:11: US, even used in China.

00:05:13: And so that means that Taiwan is really at the center of the world's technology supply

00:05:18: chains.

00:05:19: Most people don't realize it, but for almost every aspect of their daily lives, they rely

00:05:24: on TSMC chips whenever they touch a piece of technology.

00:05:27: And so it really is hard to understate Taiwan's economic and technological importance to the

00:05:33: entire world.

00:05:34: Right.

00:05:35: What you bring out very clearly in the book is the salience of that particular node in

00:05:39: what I think you rightly described as the incredibly intricate, incredibly complex and

00:05:43: efficient, yet incredibly vulnerable global supply chain that we've managed to build for

00:05:48: our most crucial technologies.

00:05:50: Could you talk us through a little bit how that came about and what its strengths and

00:05:55: its weaknesses are?

00:05:56: Well, I think you're right to illustrate the importance of the supply chain because Taiwan

00:06:00: is the manufacturer of all these critical chips, but they can't do it alone.

00:06:05: And in fact, many of the chips that Taiwan manufactures are actually designed by companies

00:06:10: outside of Taiwan, Apple, NVIDIA, AMD, Qualcomm.

00:06:14: It's actually largely US firms that are designing chips and then sending those designs in Taiwan

00:06:19: to get manufactured.

00:06:20: But the manufacturing process itself that occurs in Taiwan depends on inputs from Europe,

00:06:27: from Japan, and from the United States.

00:06:30: So for example, the ultra precise tools that are used to make chips come from the Netherlands

00:06:34: and Japan, as well as the US.

00:06:37: The materials that are used in chip making also come from these countries.

00:06:42: And so Taiwan is critically important, but on its own it can't do anything without its

00:06:47: relations with US and European and Japanese firms.

00:06:51: And so thinking about the entire supply chain is critically important.

00:06:55: The good news is that most of this advanced semiconductor supply chain actually does happen

00:07:00: in the US, in Europe, or in Japan.

00:07:03: The unfortunate news is that there's a surprising amount of concentration in Taiwan, and it's

00:07:09: become more concentrated in Taiwan just as the risk that I think China poses to Taiwan

00:07:14: has grown.

00:07:16: And that's the core of the problem.

00:07:17: Right.

00:07:18: And you say it's unfortunate, of course, the Taiwanese, some Taiwanese politicians, some

00:07:23: Taiwanese people talk about this as their silicon shield.

00:07:26: I think you're right to focus on the ways in which it is unfortunate.

00:07:30: I don't think it's at all unfortunate that Taiwan has developed this critical industry.

00:07:34: I think it's actually great for Taiwan, and in a lot of ways great for the world.

00:07:38: The problem is that our ability to defend Taiwan has been deteriorating at the very same

00:07:44: time as we become more reliant on Taiwan for the chips that power our entire technological

00:07:49: and industrial base.

00:07:50: And so if we had the ability to deter China at the level at which we could 30 years ago,

00:07:56: this wouldn't be a problem.

00:07:57: This would be nothing but a success story for Taiwan and for the rest of us who have benefited

00:08:01: from the ultra precise, capable, and efficient chips that Taiwan can produce.

00:08:06: The problem is that just as the geopolitical picture around Taiwan has darkened as Western

00:08:12: and US deterrence capabilities have, I think, eroded, we've also become more reliant at

00:08:17: the same time.

00:08:18: And so it's really the combination of this dependence plus critically the, I think,

00:08:22: growing Chinese threat to Taiwan that makes this such a problematic issue.

00:08:27: So then does our thinking around geopolitics need to change then?

00:08:33: Does our mindset need to change in order to have a blueprint for how we are to increase

00:08:37: those deterrence capabilities again?

00:08:39: So the quote again that we started the show with chips are the new oil is East Asia now

00:08:44: the new Middle East.

00:08:46: And how does that concentration that you've talked about of the semiconductor industry,

00:08:51: the geography of its knowhow and manufacturing, redraw potential geopolitical hotspots?

00:08:59: And how do our assumptions need to change about what the conflict of the future might

00:09:06: be?

00:09:07: Were that ever to come to pass?

00:09:08: Chris takes a moment to think that one through.

00:09:10: I'd just like to direct all of our listeners inquiries about that comparison to Aaron via

00:09:14: Twitter.

00:09:15: Thank you.

00:09:16: I think that is the right comparison to make.

00:09:18: We've all spent the last half century learning about the challenges posed by advanced economies

00:09:24: reliance on Middle Eastern oil.

00:09:27: And that's posed a whole set of geopolitical challenges, which have been very complex and

00:09:32: we've spent many decades debating how best to mitigate and balance these risks.

00:09:38: If you look at the chip industry, it's even more concentrated than oil production.

00:09:41: Saudi Arabia produces 10 or 15% of the world's oil depending on the year.

00:09:45: Taiwan produces 90% of the most advanced processors.

00:09:48: So there's even more concentration here.

00:09:51: And there's more concentration because the chip making process is harder than oil drilling.

00:09:55: Lots of countries can drill for oil.

00:09:56: There's some technological complexity, especially when it comes to fracking or horizontal drilling

00:10:01: or deep offshore, but the level of complexity is substantially less than in chip making.

00:10:08: And so I think that does mean that we've got to begin to realize that when we're thinking

00:10:13: about security in East Asia, it's not just about security dynamics that matter.

00:10:19: Certainly Taiwan security is important in its own right and it has huge implications for

00:10:23: the rest of the world order, but it also has huge economic implications too.

00:10:27: And I think you can't understand potential crises that might emerge in East Asia without

00:10:32: thinking about the economics alongside the security dynamics, just like you can't understand

00:10:37: any Middle Eastern crisis without thinking about how every government is trying to reason

00:10:42: through how oil price dynamics will shape other countries' reaction functions.

00:10:46: The same thing is true for chips and electronic supply chains in East Asia.

00:10:50: Right.

00:10:51: And just to give people a sense of this, of both the scale and the complexity involved,

00:10:55: you mentioned before the lithography machines that are used for producing these high-end

00:11:00: chips.

00:11:01: And Europe obviously has one of the global champions of that industry, ASML, the Dutch

00:11:05: conglomerate, which formed by basically buying up their entire supply chain in order to control

00:11:11: production processes to the level that was needed in order to make their world-beating

00:11:16: technology.

00:11:17: And if you look at where they source from over the world, it's really a sort of hyper-globalization

00:11:21: story that's been told, and it relies on that flat world of the 1990s, which then came to

00:11:27: pass through corporate structuring in the 2000s and the 2010s.

00:11:33: And this worked, and I think this is what your book brings out quite brilliantly as well,

00:11:37: this worked because of the scale involved.

00:11:38: If you think about the distances, the things involved have to travel.

00:11:41: It sometimes blows the mind to think this is a more efficient or cost-effective way

00:11:45: of doing things.

00:11:46: But I think one anecdote from your book that really brings this home, which I'm going to

00:11:51: just quote Sue to read is, to understand how much is involved in each one of these chips.

00:11:57: So you note that Apple sold 100 million iPhone 12s, each powered by this A14 processor chip,

00:12:06: which has 11.8 billion transistors carved into its silicon.

00:12:11: And I thought, yeah, this is amazing the way you brought this out, you say.

00:12:14: So in a matter of months, for just one of the dozen chips in an iPhone, TSMC in Taiwan

00:12:19: fabricated over one quintillion transistors.

00:12:24: And that's a number, as you say, with 18 zeros behind it.

00:12:27: Now to put that in context, last year, the chip industry produced more transistors than

00:12:31: the combined quantity of all goods produced by all other companies in all other industries

00:12:38: in all of human history.

00:12:41: And that is the scale that makes this global efficiency work.

00:12:45: And that's what we're dealing with.

00:12:46: So unscrambling those eggs is going to be pretty tricky, isn't it, Chris?

00:12:49: That's right.

00:12:50: And the goal, I think, is not to completely unscramble those eggs.

00:12:54: We've got to keep the scale dynamics in place, which is why when I hear political leaders

00:13:00: occasionally talk about self-sufficiency, I get very nervous.

00:13:03: Because self-sufficiency is not even a realistic goal, but trying to achieve it, I think, would

00:13:09: have vast and unfortunate consequences in terms of creating inefficiencies that would

00:13:15: slow technological progress and drive up costs.

00:13:18: The challenge is that we, of course, can't keep, I don't think, technology supply chains

00:13:23: structured in the way they are, both in terms of their entanglement with China and in terms

00:13:27: of the points of concentration they have right outside of China.

00:13:32: And so that is the balance that I think Western leaders are trying to strike right now.

00:13:36: Japanese leaders, European leaders, US leaders, is to do enough restructuring of supply chains

00:13:42: to gain more margin of security, but to not impose too great of cost on the industry that

00:13:47: would have the effect of slowing technological progress.

00:13:50: And so to me, that's why we've got to have as much coordination as possible between G7

00:13:58: countries and between close allies in making sure that we've got a shared space for supply

00:14:03: chains to develop even further, to have this division of labor between countries.

00:14:08: But we've also got limits when it comes to trade with countries that we can't trust.

00:14:13: And that's the balance that I think we are trying to strike right now.

00:14:16: And that comes actually to something that we've discussed on Berlin's side out several times,

00:14:20: the national security premium, or indeed, friend-shoring.

00:14:25: And when we talk about China, this word comes up a lot, the idea that we should trade more

00:14:31: with our friends and also have supply chains that are more integrated with our friends.

00:14:35: That, of course, brings up the question, who is a friend?

00:14:40: And where do you manufacture, for example?

00:14:43: But the other example that comes to mind here, too, is ASML in the Netherlands.

00:14:51: I mean, they were none too happy about the Dutch government restricting their sales into

00:14:57: the Chinese market.

00:14:58: And first, they couldn't sell their most advanced lithography machines, and they couldn't even

00:15:02: service machines that they had already sold in China.

00:15:04: And then they accused the US of putting its finger on the scale.

00:15:07: But how far apart are we really between the US and Europe, for example, in terms of how

00:15:14: we actually see friend-shoring when it comes to this industry in particular?

00:15:20: Where do you think the lay of the land is?

00:15:22: Well, I think there's a debate within Europe, within the United States, and also within Japan,

00:15:28: which is worth considering as well, between business and government as to what level of

00:15:35: friend-shoring makes sense.

00:15:37: I think business naturally wants to focus on efficiency.

00:15:40: Businesses naturally don't want to restructure supply chains unless they absolutely have to.

00:15:45: And so the same debate that's happening between ASML and the Dutch government is happening

00:15:48: between US chip firms and the US government and Japanese firms and the Japanese government.

00:15:53: So that's understandable.

00:15:55: It's good that businesses are making their voice heard to some extent.

00:15:58: Governments need to consider their interests.

00:16:01: But I think in all three of these regions, US, Japan, Europe, governments are much more

00:16:07: concerned than they were a couple of years ago about becoming too reliant on China or

00:16:11: areas that are exposed to China risk, partly because of the way China's changed in the

00:16:17: last couple of years, partly because the Russian invasion of Ukraine has made very real, I

00:16:24: think, the reality that authoritarian governments can do very dangerous and seemingly risky

00:16:30: things, and partly because the pandemic, although it wasn't related to geopolitical

00:16:35: shocks, did illustrate the extent to which supply chains for all types of goods, not

00:16:40: just advanced chips, have become so complex in ways that governments and even companies

00:16:45: only barely understand.

00:16:46: And so I think the governments have across the board been more willing to push towards

00:16:52: French shoring as a result.

00:16:53: I think in Europe, there's differences between countries, of course.

00:16:57: I think the Dutch are actually on one side of the spectrum in my experience and being

00:17:04: more skeptical of deep economic interconnections with China, more concerned about China in

00:17:10: a political sense.

00:17:11: I think if you look at some southern European countries and also Germany, you get a different

00:17:15: view.

00:17:16: I think Chancellor Scholz's visit to China not too long ago was a very different type

00:17:22: of visit than you saw when the Dutch Prime Minister visited earlier this year.

00:17:27: And so I think that does certainly stand out to me.

00:17:29: Indeed, a different approach is taken.

00:17:31: And you begin the book talking actually about the chip choke and how the US in particular

00:17:37: was able to put the squeeze on China to cut off their new oil.

00:17:41: Could you tell us a bit more about that and what levers we actually have that we can pull?

00:17:46: The US has been trying to pursue technology restrictions in two different spheres.

00:17:52: One is with regard to advanced AI chips, the types of chips that are used to train open

00:17:57: AI systems or anthropic systems, the most complex AI models.

00:18:02: And today these chips are produced largely by a couple of US firms and manufactured largely

00:18:06: in Taiwan.

00:18:07: And now since 2022, they've been illegal to transfer to China, at least referring to

00:18:12: the most advanced types of these chips.

00:18:14: The second type of restriction that the US has been imposing alongside the Dutch government

00:18:18: and alongside the Japanese government relates to chip making tools like the lithography

00:18:23: tools that ASML produces.

00:18:25: And the rationale here is that if China can buy the most advanced chip making tools, it

00:18:29: can then make the most advanced chips itself and then use them for whatever purposes it

00:18:34: likes.

00:18:35: And so the US strategy ultimately is described as being about Chinese military capabilities.

00:18:43: And that's true to an extent.

00:18:45: It's certainly the case that China will use whatever AI chips it has for military as

00:18:50: well as civilian capabilities.

00:18:52: And I think to really understand the US strategy, it's about something deeper, which is which

00:18:57: block is going to create the infrastructure on which the next generation of technology

00:19:02: is built.

00:19:03: The West has benefited from the fact that over the past half century, its companies have

00:19:08: largely built this critical technology infrastructure with one glaring exception, and that's Huawei

00:19:13: and the telecom space.

00:19:15: Now we're building a new generation of infrastructure for a world that will see AI be a primary driver

00:19:20: of productivity increases.

00:19:22: And so the question of, well, who builds this infrastructure is, I think, not just a technical

00:19:27: question nor an economic question.

00:19:29: It's fundamentally a political question.

00:19:31: The US is focused on making sure that it's Western companies that are doing this.

00:19:36: And it's worth underscoring.

00:19:38: It's not just US firms that are part of this infrastructure.

00:19:41: It's the Taiwanese who actually make the chips.

00:19:43: It's the Dutch that make the machines that make the chips.

00:19:46: And so I think seeing this as a broader Western strategy is actually the accurate way to look

00:19:53: at what the US has been trying to accomplish and pushing its companies and also its friends

00:19:59: towards a more restrictive strategy.

00:20:00: Absolutely.

00:20:01: And Chris, for how long do we have the edge in the current system?

00:20:04: How far away is China from actually achieving Silicon sovereignty?

00:20:08: I would say first off that the restrictions that are currently in place have already slowed

00:20:12: China's progress.

00:20:14: It's now been six years since Dutch regulations have prohibited Chinese firms from acquiring

00:20:20: the most advanced lithography tools that are used to make the most advanced chips.

00:20:25: And if China had been able to buy those tools six years ago, it would be in a much, much

00:20:29: stronger position than it is today.

00:20:32: Because it can't buy those tools.

00:20:34: China's leading chipmaker is around five years behind the TSMC of Taiwan in terms of its

00:20:39: ability to manufacture advanced chips.

00:20:42: And I think the Western goal is to keep that gap in place.

00:20:45: And five years might not sound like much because the quality of chips doubles every two years.

00:20:51: Five years is two and a half generations of differential ballpark terms.

00:20:56: And so the US is trying, alongside the Dutch and the Japanese, to hold back China's progress.

00:21:02: But I think it's equally important, probably more important to focus on the fact that most

00:21:06: Western governments are also doubling down on their efforts to spur technological progress.

00:21:11: Because ultimately, you're not going to win if you only hold China back.

00:21:15: More important than that even is racing more rapidly forward yourself.

00:21:17: And that's what efforts like the EU Chips Act and the US Chips Act are partly intended

00:21:22: to achieve.

00:21:23: This is, in some ways, nothing new.

00:21:25: And I think that's something that the book brings out very well as well.

00:21:28: Is that technology gap that existed in the Cold War time?

00:21:31: I mean, you very, very well illustrate how the Soviet strategy of copy it, steal the

00:21:36: technology and copy it, actually condemned them to relative backwardness throughout the

00:21:40: whole Cold War and kept them five years behind, roughly speaking, which, as you say, is a

00:21:44: world away in terms of the tech that was there.

00:21:47: But of course, also, that was a time when the US was trying to maximize its competitive

00:21:51: advantage economically, as well as in the military race against the Soviets, as well

00:21:56: as in that geopolitical competition.

00:21:59: And it came together with questions of, again, who are our friends?

00:22:01: Because of course, Silicon Valley only really took off when they shifted production to Japan.

00:22:06: That's right.

00:22:07: And it is, I think, important to note that the chip industry has been internationalized

00:22:13: since essentially day one.

00:22:14: The first chips were invented in 1958-59.

00:22:17: The first offshore assembly facility was set up in Hong Kong in 1963.

00:22:23: So from almost day one, there have been trans-Pacific ties that have been critical to the structure

00:22:30: of the industry.

00:22:31: And Europe's played a very big role from the earliest stage.

00:22:34: And as we noted before, that's been key to technological progress.

00:22:37: Having this division of labor between different companies and different countries.

00:22:42: And it's meant that we've always had to think about chip strategy in the context of other

00:22:47: markets and other friends.

00:22:49: And this worked out relatively straightforwardly until pretty recently, because there was commercial

00:22:54: competition between US firms, Japanese firms, and German firms, and Korean firms.

00:23:00: But most of the technology leaders were in friendly countries.

00:23:04: The difference now over the past couple of years is that Chinese firms have become real

00:23:08: technology challengers.

00:23:10: And they've become technology challengers at the exact same time as China's government

00:23:13: has become a systemic challenger to Western leadership in the world and the Western dominated

00:23:20: world order.

00:23:21: And so you can't see this today simply as commercial competition.

00:23:24: And I often hear people describe what's happening as a trade war.

00:23:29: And that completely misunderstands the stakes.

00:23:32: There's no strategic interest of the United States or of Europe in promoting this company

00:23:36: or that company, except that these companies are critical in laying down the infrastructure

00:23:40: on which the rest of economy and society depend.

00:23:43: And so it's not just about corporate earnings in this quarter or that quarter.

00:23:47: It's not about the trade deficit or the trade surplus.

00:23:50: It's about who gets to write the rules of the next generation of technology.

00:23:53: And I want that to be companies that are based in countries with similar sets of values and

00:23:57: not China.

00:23:58: Right.

00:23:59: And you mentioned just now sort of something that I almost see is the value of friendship

00:24:06: between Western countries and technological leaders in those countries, this kind of

00:24:12: exchange between the democratic world when it comes to this particular industry.

00:24:16: And that seems to give us an edge in this particular case, at least so far.

00:24:21: You have argued before that Chinese chipmanking is becoming more Soviet in a way and that its

00:24:28: own authoritarian politics in contrast to cooperation could actually hamper its ability

00:24:34: to catch up to the know-how in democratic countries.

00:24:37: And so what makes you say this?

00:24:40: Does liberal democracy have an advantage here when it comes to staying ahead on chips?

00:24:44: We should differentiate somewhat between liberal democracies and market economies.

00:24:49: I think market economies probably are the key driver of advantage rather than liberal

00:24:55: democracy.

00:24:57: But I think democracy does explain why property rights are more durable in the West than they

00:25:03: have been in China.

00:25:04: And if you look at one of the key challenges to China's tech sector over the last five

00:25:08: years has been the politically driven crackdown on Chinese tech companies, whereby the fact

00:25:14: that China doesn't have the rule of law has in fact undermined property rights, discouraged

00:25:19: investment in China's own tech sector.

00:25:21: So there is a linkage between the democratic aspect and the actual effective functioning

00:25:28: of a free market.

00:25:30: I think, however, we shouldn't rest on that as the key source of our advantage.

00:25:36: I think it's probably true that over the long run, if you had two equal systems in terms

00:25:42: of capabilities, the liberal free market economy went out over the statist economy without

00:25:47: the rule of law.

00:25:48: And I think we're in the midst of a really tough competition regardless.

00:25:52: And that's even considering the fact that US plus Europe plus Japan GDP is substantially

00:25:58: larger than China's.

00:26:00: The reality is China's got very successful firms.

00:26:03: It's got very impressive engineers.

00:26:05: It's got extraordinary focus on this issue.

00:26:07: And so pretending that we can do nothing because our system is better, I think is a recipe for

00:26:12: failure.

00:26:13: I think if you want to win the competition, you've got to compete.

00:26:15: Right.

00:26:16: And I think, again, this is a recurring debate that comes up through the book is how to actually

00:26:20: harness those different sources of our power, how to align them in ways that are advantageous

00:26:24: to us rather than our enemies to really make good on that promise that is there, that we

00:26:29: We can't just rest on our laurels, but we actually have to activate this advantage.

00:26:32: I'd like to hear a bit more from you, Christopher, how that was done at various stages during

00:26:37: in the past.

00:26:38: Be that through Bill Perry's offset strategy and actually sort of giving a boost to the

00:26:43: Silicon industry there, or earlier in the very beginning of the semiconductor industry.

00:26:50: How those different aspects of US society, be that education, science, technology, military,

00:26:55: and then the market came to actually give the US the advantage in the first place, the

00:26:59: US and the West, I should say.

00:27:01: I think I would start by looking at the question of who funds new innovations in this sector.

00:27:07: We're used to, I think, in the software space, having big venture capital funds, funding

00:27:13: new companies that then go on to create apps or social media platforms.

00:27:18: But in the semiconductor space and the broader tech hardware space, what you find is that

00:27:24: governments are much more important in terms of putting up funds because the capital requirements

00:27:29: are larger, the technology is more complex, there's a longer time from innovation to reaching

00:27:34: a market.

00:27:35: So, dating back all the way to the start of the chip industry, it was NASA, for example,

00:27:40: the US Space Agency, or it was the Department of Defense that were funding the core technology

00:27:45: development.

00:27:46: That was critical to making it possible to improve technology enough to the point where

00:27:51: companies could pick it up and then introduce it to a broad civilian market.

00:27:55: And I think to some extent over the past couple of decades, we have collectively in the West

00:28:02: under-invested in this type of technological development, in part because a lot of the

00:28:06: reason we were doing more of it was due to Cold War competition.

00:28:11: It was Cold War competition that induced Western governments to put money in this sphere and

00:28:15: when geopolitical competition seemed to temporarily go away in the '90s and 2000s.

00:28:20: So to some of the funding dried up.

00:28:22: I think that is starting to change and we've got to make sure that persists because that

00:28:26: funding is really critical for early stage technological development.

00:28:31: The second thing is there's long been a sort of implicit assumption in Western circles

00:28:39: that if we pursue free markets, everyone else must be pursuing them too.

00:28:44: And so I often, for example, in the space of the chip industry, see concerns about Western

00:28:50: governments starting a subsidy race by supporting chip investments over the past couple of years

00:28:56: via the EU CHIPS Act and the US CHIPS Act.

00:28:58: And of course, you would only think that the West was starting a subsidy race if you knew

00:29:02: nothing about China's chip policies.

00:29:05: And in fact, there's been a subsidy race ongoing for a long time.

00:29:07: We've just only decided to compete in it in the last couple of years.

00:29:12: And so there too, I think you've got to look very carefully at the roles governments are

00:29:15: playing.

00:29:16: Would it be great if we had a level playing field in the chip industry and China was playing

00:29:20: with the same rules?

00:29:21: That would be great.

00:29:22: But it's not the world we live in.

00:29:23: And so I think we've got to be realistic.

00:29:24: If China is going to subsidize to an extraordinary degree, chip facilities will understandably

00:29:29: move to high subsidy locations.

00:29:31: And so that's the second sphere where government policy really does play an absolutely critical

00:29:36: role.

00:29:37: And understanding the nature of that geopolitical challenge as well as the playing field, as

00:29:40: you put it, seems to be key in being able to encapsulate that in a strategic thinking

00:29:45: that can prioritize these kind of connections between those different sectors that really

00:29:49: gave the advantage to the semiconductor industry in the West during the Cold War is our challenge

00:29:55: renewed in different circumstances, it would seem.

00:29:58: Now, I did mention this term offset, and that's been a consistent theme of using technology

00:30:03: to offset other disadvantages or the advantages of others.

00:30:07: And in the 1970s, that was the feeling that the need in the West to offset the growing

00:30:13: nuclear forces of the Soviet Union, but also there are their superior conventional capabilities,

00:30:17: they could outmatch or overmatch NATO's conventional capabilities.

00:30:22: We heard the term offset again used in the Obama administration.

00:30:27: Was that actually successful in offsetting the advantages that others were building,

00:30:31: or do we need a new offset again now?

00:30:33: Well, I think we're actually still in the process of developing the offset that was

00:30:38: set off in the late Obama administration.

00:30:41: I think it's certainly true that Western defense establishments partly because of the perceived

00:30:48: lack of geopolitical competition, partly because of their focus on counterterrorism in the

00:30:53: 2000s have not been thinking hard enough until recently about the ways that new types of

00:30:59: technology will change warfare.

00:31:01: I think that has changed dramatically, especially given the shock of the Russia-Ukraine war.

00:31:07: But in order to succeed in updating the way Western militaries fight to next generation

00:31:13: technological capabilities, we need sustained investments and sustained focus over a long

00:31:18: period of time.

00:31:19: And I think on the investment side, we're starting to see this happening in Europe and

00:31:24: the US.

00:31:25: In terms of focus, I think one of the key challenges is that it's one thing to spend more money,

00:31:29: it's another thing to convince the bureaucracy to do things in different ways.

00:31:33: And militaries are very big bureaucracies and it takes a lot of sustained political focus

00:31:38: to get them to shift their priorities.

00:31:41: And that's where I think you need very senior political leadership that are making sure that

00:31:45: militaries aren't taking their new resources and buying old systems, but rather taking

00:31:49: their new resources and buying new systems that will be useful in new ways.

00:31:55: And we see this to some extent, but I think there's a lot of work to be done.

00:31:58: And it's particularly important that I think we're very careful in any limitations we impose

00:32:04: on the use of new technologies.

00:32:07: Western publics are understandably nervous when they hear about space as a new domain

00:32:12: for military competition or semi-autonomous systems being deployed in the military sphere.

00:32:18: But the reality is, these are the places where new technologies are going to be most impactful

00:32:24: and our adversaries are going to not be constrained by any moral considerations that we might be

00:32:28: buying.

00:32:29: So we must be careful, but we also, I think, must not be overly constrained and prevent

00:32:35: our militaries from developing the capabilities that they ultimately need to defend us.

00:32:39: This is an interesting point.

00:32:40: The British architectural theorist Jonathan Meads once said that necessity may be the

00:32:44: mother of invention, but war is its birth mother.

00:32:47: And actually understanding where this is going at the moment in Ukraine and the lessons that

00:32:51: are being learned is key if we are to retain an advantage.

00:32:54: And there are German companies working on this, there are others working on this.

00:32:57: But as we know, the German Titan vendor has been certainly slow to embrace the new.

00:33:03: The main spending on defense is on an old shopping list already from the mid-2010s.

00:33:07: It's not necessarily on the new kind of shaping technologies that we would need to maintain

00:33:12: an edge.

00:33:13: And Aaron, that does rather raise the question of what's expected of allies in this regard,

00:33:17: doesn't it?

00:33:18: Absolutely.

00:33:19: And we've spoken before about the Gulf that exists between the US and Europe on even de-risking

00:33:28: from China, how exactly, you know, and more American voices are in favor of sort of a

00:33:35: full decoupling or towards a full decoupling, we should say, simply because what that dependence

00:33:42: could do to us as the West should, that Chinese actually take steps to invade Taiwan for potentially

00:33:49: the reason of taking control of something like a chip supply chain.

00:33:54: That is a new incentive that goes on top of its territorial claim as we were discussing

00:33:59: at the beginning of the show.

00:34:00: But if the rubber does really meet the road on this, if an American warship is sunk by

00:34:07: the Chinese and the Taiwan Strait, if China starts making moves to actually invade Taiwan,

00:34:13: what do you think the US's actual expectations of Europe would be?

00:34:19: I think one of the challenges of thinking through severe crises and shocks like this

00:34:26: is that it's very difficult to predict how people's mental maps of what is possible changes.

00:34:32: I think if you'd asked almost any European leader on February 20th, 2022, what their

00:34:39: plausible responses would be to a full-scale Russian-Ukraine war, I don't think any of

00:34:44: them would have predicted the types of steps they were willing to take two weeks later.

00:34:47: And I think China-Taiwan dynamics have the same really fundamental uncertainties involved.

00:34:52: I think there are people in Europe who think it might be possible for Europe to sort of

00:34:57: stand aside in the case of a crisis like that.

00:35:01: In my view, that would be impossible for political reasons, for economic reasons, for military

00:35:07: reasons.

00:35:08: Any sort of war between China and the United States would draw in basically every region

00:35:13: of the world if they liked it or not.

00:35:16: And I think as a result of that, it's in Europe's interest to start thinking seriously about

00:35:21: how Europe would manage because neutrality would be impossible in a context in which economic

00:35:29: supply chains were completely disrupted, in which there was a war that would be fought

00:35:34: not just in one theater, but probably in multiple geographic theaters, and in which Europe would

00:35:39: find itself damaged, even if it was not directly participating in a way that would push it

00:35:44: towards participation.

00:35:46: And so I think all that suggests that Europe does need to start thinking about this issue

00:35:51: very carefully.

00:35:53: And to think that you can just stand aside, I think Ms. Reads, both the scope of disruption

00:35:59: in purely in economic terms that Europe would face, but also the extent that the US and

00:36:04: China would both be pushing extraordinarily heavily on Europe to take steps.

00:36:08: And Europe couldn't simply do nothing.

00:36:10: You've spoken just now, made it an excellent point, I think, suddenly what was inconceivable

00:36:15: for is now a very real.

00:36:18: But the drawback of acting that way is, again, you act reactively, not proactively in any

00:36:24: kind of strategic sense.

00:36:26: And right now, evidence from Europe indicates that we are extremely unprepared for what

00:36:32: might happen if tensions with China, over Taiwan, or anything else were to increase.

00:36:38: So what kind of steps do you think are necessary to start considering then, so that we're not

00:36:44: consistently caught on the back foot all the time, should something like this happen?

00:36:49: I think that the first is for European political leaders and also business leaders to start

00:36:55: doing their own scenarios.

00:36:56: What would happen if, again, in the US, there's been a real mental change, mental shift over

00:37:03: the past couple of years as both government think tanks and companies have started doing

00:37:09: scenarios of crises in the Taiwan Straits.

00:37:12: And that has sensitized, I think, a lot of people to just how dramatic the costs could

00:37:17: be and just how far reaching the impact would be.

00:37:20: And there certainly are people in Europe thinking through these issues.

00:37:24: But my sense is that the number of European political leaders who have participated in

00:37:28: a Taiwan Straits war game is substantially lower than the number of American or Japanese

00:37:32: leaders who have done so.

00:37:35: And once you start participating and thinking through the second and third order conflicts,

00:37:39: you begin to realize that this issue ought to be higher up on your priority list because

00:37:43: the magnitude of impact it would have on you is quite large.

00:37:47: I think the second issue is that there are a lot of people, especially in the business

00:37:52: world, but I think also, at least in certain countries in political and policy debates

00:37:58: as well, who think that the risk of a crisis involving China, whether Taiwan focused, Philippines

00:38:04: focused, India focused, is approximately zero.

00:38:08: In their mental models, they assign a 0% probability and then they don't have to think about it.

00:38:13: And I don't know what the probability is, but it's not zero.

00:38:17: And so once you start thinking about the probability being 5% or 10%, suddenly the magnitude is

00:38:22: so large, you've got to start incorporating the expected value into all of your calculations.

00:38:28: And that I think is a second really important conclusion from participating in these war

00:38:33: games.

00:38:34: It doesn't take a sort of bolt from the blue or a real political surprise to reach a crisis.

00:38:40: You can just follow forward current political dynamics between China and the Philippines,

00:38:44: where there are Chinese maritime militia naval ships daily facing off against Filipino ships

00:38:50: over disputed underwater island formations, shooting each other with water cannons.

00:38:55: It's not hard to imagine how that could spiral in a very dangerous direction very quickly.

00:38:59: I take your point a step further actually and say they assign a zero possibility because

00:39:04: they don't want to think about what the potential outcome of a non-zero possibility would be

00:39:09: of that happening because they don't want the answer.

00:39:11: This is also why not to participate in the war game or thinking it through because that

00:39:15: would require a level of change that they're not willing to deliver.

00:39:18: And I think in Germany that goes for the chancellery and there's a serious question in Germany,

00:39:22: are we seeing a divergence between those multinational companies, notionally German still, who are

00:39:27: banking on being too big and too German to be allowed to fail, should the balloon go

00:39:33: up in the Taiwan Strait, and Germany's people.

00:39:36: Is that a dynamic that you see in other places as well?

00:39:39: I mean, obviously this is a contested field.

00:39:41: No, I think that is present in basically all of the G7 economies.

00:39:45: You've got a smaller number of companies in basically every country that are making up

00:39:49: a larger share of foreign direct investment into China.

00:39:53: In Europe, the numbers are really quite shocking how half of FDI is produced by just 10 or

00:39:59: so companies.

00:40:01: And those companies, when they invest in China, the aim is to have future corporate profits

00:40:06: coming from China.

00:40:09: Those corporate profits accrue to the shareholders who are often international rather than German

00:40:14: in the case of German companies or French in the case of French companies.

00:40:18: And it does bring substantial risk that their investments could go to zero, just like the

00:40:22: Russia investments did.

00:40:24: Now, again, if you apply your 0% probability, you end up with some value on those investments.

00:40:29: But if you apply a 10% probability or 20% probability, your scenario planning would

00:40:34: look quite different.

00:40:36: And that's why I think in addition to both governments and the policy community more

00:40:40: generally putting a bit of pressure on companies to take risks seriously, to actually properly

00:40:45: price risks, I think there is also a role for regulation and legislation in inducing

00:40:51: companies to undertake similar types of risk assessments and scenario planning.

00:40:59: And I do worry that there are some countries and some industries where CEOs have gotten

00:41:04: away for too long with pricing risks at zeros and they're by taking, I think, irresponsible

00:41:09: steps that, as you suggest, do eventually leave taxpayers potentially on the hook for

00:41:14: bailing them out.

00:41:15: Indeed, the pursuit of that private profit ends up with an externalized social risk for

00:41:19: which we are exposed to, which are those who could deal with it and are not doing.

00:41:23: And what we know from Germany is the China strategy in particular leaves all this very

00:41:26: deliberately up to companies.

00:41:29: And a lot of those companies are saying, thanks very much, zero possibility, off we go, as

00:41:33: we were before.

00:41:35: But there is investment in other ways as well.

00:41:38: We see investment coming, for example, from TSMC into Germany.

00:41:42: And we also see chip manufacturing in Europe being given a boost.

00:41:45: Is your feeling that we're on the right track there or are we still in the business of picking

00:41:48: winners in a rather unstrategic way?

00:41:50: I think I do see the evidence of increased cross-border chip industry investments as a

00:41:55: very positive sign.

00:41:57: I think first it's a reminder that although it's true there's a number of Western businesses

00:42:01: that invest a lot in China, Western countries invest a lot more in each other.

00:42:06: And there's really no comparison.

00:42:08: The amount of European FDI into the US or US FDI into Europe is substantially above

00:42:13: either region's FDI into China.

00:42:16: That's critically important to keep in mind.

00:42:19: I also think that I occasionally hear people talk about de-globalization.

00:42:24: And in the chip industry, I see no evidence of that.

00:42:26: I see US firms investing in Ireland and Germany in Israel.

00:42:31: I see Japanese firms investing more in Taiwan.

00:42:34: I see Taiwanese firms investing in Japan and the US and Germany.

00:42:38: And so de-globalization does not remotely describe what we're seeing right now.

00:42:42: I think we are seeing a deliberate effort to reduce reliance on China, that's for sure.

00:42:48: But I think rightly so, both businesses and governments have tried to make this not about

00:42:53: self-sufficiency, not about de-globalization.

00:42:55: And we're beginning to see in at least certain segments creation of a political block that

00:43:02: maps onto an economic block.

00:43:03: And to me, that's a world that seems much less risky than the one we currently live in.

00:43:08: Right, absolutely.

00:43:09: It's that rethinking of what do we mean by the globe in globalization and who's part

00:43:12: of that or not that I think is one of the key geopolitical and geo-economic acts of

00:43:16: this time.

00:43:18: One thing that struck me in the book was not only was I actually able to now finally understand

00:43:21: what a silicon chip is, what a semiconductor is composed of.

00:43:25: So you managed to make the technology understandable.

00:43:27: But also you managed to humanize it.

00:43:29: And you did so through talking through the stories of the players involved.

00:43:32: And there really were some characters involved in this in the business of creating semiconductors

00:43:38: and inventing them in the first place, as well as then in marketing them.

00:43:42: Could you talk us through some of your favorite characters you came across in this book?

00:43:45: And I'm thinking of people like Bob Norris, Andy Grove, Pat Haggerty, Morris Chang.

00:43:51: Morris Chang is the person who is most underestimated in terms of his importance and who illustrates

00:43:57: in a lot of ways the development of the chip industries.

00:44:01: One in mainland China before the revolution fled when the communists took power in '49

00:44:06: enrolled at Harvard, then MIT, and was really present at the creation of the chip industry.

00:44:11: Worked for Texas Instruments for many decades, held a top secret US security clearance for

00:44:16: his work on defense electronics, and then moved to Taiwan in 1987 to found a TSMC and

00:44:22: helped it grow to become the world's largest chip maker.

00:44:25: And so I think his life illustrates on the one hand the really deep connections between

00:44:30: the chip industry and East Asia that were present from the beginning, represents the

00:44:35: globalized nature of the chip industry, and also represents, I think, some of the challenges

00:44:43: that the West faces in trying to navigate its reliance on TSMC and Taiwan.

00:44:49: Because there are people like him who are not replaceable.

00:44:54: They have human capital and expertise and networks that make it very difficult to imagine

00:44:59: shifting the geographic footprint of the chip industry in a short period of time.

00:45:04: And that's really critical to remember.

00:45:06: Chips are built by machines and by factories, but they're ultimately built by people.

00:45:11: And where those people live and where their networks exist is just as important as any

00:45:17: decision about investment policy in terms of shaping the industry.

00:45:19: Right.

00:45:20: And indeed also where those people got their habitats, where they got their founding qualities

00:45:24: of their own lives, their situated folk in particular places, of course.

00:45:28: And Chang's background as an immigrant into the US and then a migrant into Taiwan again,

00:45:34: a bit of a Steve Jobs figure in some ways that he retired from the business, then had

00:45:38: to come back to save it, drag it back up to his value base.

00:45:41: But there was also another migrant, Andy Grove, Andras Groff, who had a fascinating story.

00:45:46: Perhaps you tell us a little bit about him.

00:45:48: He was born in Budapest, fled after the communists took power as well, arrived penniless in New

00:45:55: York in the mid fifties, got a degree in engineering and started working at Intel right when it

00:46:04: was being founded in the late 1960s and ended up becoming the CEO of Intel throughout the

00:46:11: 1980s and made it at the time the world's largest and most successful chip firm.

00:46:17: And I think he illustrates alongside Morris Chang the extent to which the chip industry

00:46:23: really has always drawn from an international talent pool.

00:46:27: If you look at the founders of key chip companies in the US, for example, or in Asia, if you

00:46:33: look at the key innovators behind technological improvements, new transistor designs, new

00:46:39: chemicals, a really surprising share are immigrants.

00:46:43: And I think that's a dynamic that is very important to keep in mind today as governments

00:46:47: tighten up rules over talent flows, for example.

00:46:51: They need to make sure they don't tighten them too far and limit the ability to attract

00:46:56: talent that still remains, I think, key to retaining on top psychologically.

00:47:00: That's it.

00:47:01: We're in a competition for talent as well as a geopolitical competition and the two

00:47:04: are highly connected.

00:47:05: So to leverage the advantage of our free societies, we actually have to let freedom breathe.

00:47:09: But tell me one more thing.

00:47:10: Where are the women in this story?

00:47:12: Well, the chip industry deserves a fair amount of criticism for the fact that it has been

00:47:17: extraordinarily male dominated.

00:47:18: And actually, women have played a very large role in chip production processes, but largely

00:47:23: in the assembly and the test proportions.

00:47:26: If you look at the factories that were assembling chips in the early decades of the chip industry,

00:47:33: it was largely women on the assembly lines.

00:47:36: But it was not largely women in the design process or in the leadership positions.

00:47:40: And even today, I think the chip industry is, I would give it low marks compared to most

00:47:45: other industries in terms of women in the executive positions or prominent female leaders.

00:47:51: I think Lisa Sue of AMD, current CEO, is one very important exception.

00:47:56: But I think the chip industry has a long way to go when it comes to achieving gender equality

00:48:01: goals.

00:48:02: Again, another key element of leveraging our advantage, just to round that out, what I

00:48:06: found particularly admirable or one of the many things I found admirable about Chris Miller's

00:48:10: book, Chip Warp, is the way that he follows and traces the story of those characters as

00:48:14: a way of tracing technological development, geopolitical competition, the economic ups

00:48:20: and downs of particular firms, but also countries involved.

00:48:24: And this process of rebuilding Intel that Andy Grove undertook, which detailed in his

00:48:29: famous book called Only the Paranoid Will Survive, great book title.

00:48:33: This is a recurring cycle, of course, in business.

00:48:35: And we have to be able to take the stories from that, take the lessons from that forward.

00:48:39: But keeping sight of the people involved, I think, is something that Chris does particularly

00:48:43: well for someone who's operating at that level of geopolitical and geoeconomic sophistication.

00:48:48: One small example close to the beginning of the book, we introduced to a person called

00:48:52: Jay Lathrop, who actually invented the lithography techniques that are now absolutely crucial

00:48:57: to producing silicon chips, to producing the semiconductors that are in all of our technology.

00:49:03: It was recognized at the time, this was such a breakthrough, that he was still actually

00:49:07: working for the army before he went to go and take a corporate job.

00:49:10: And the army paid him $25,000 in cash for this discovery.

00:49:14: And that was back in the late '50s.

00:49:17: And this is a technological breakthrough that changed the world as we know it.

00:49:21: At the very end of the book, Chris comes back into this story of Jay Lathrop, talking about

00:49:26: moving his family to Texas, to Austin, to work for Texas Instruments.

00:49:32: And we're told they were still in the old car.

00:49:34: They hadn't actually brought the new station wagon, which that $25,000 would eventually

00:49:38: give to the family.

00:49:40: So it's picking up all the way through those developments that are personal, as well as

00:49:43: economic, political, and technological, and scientific.

00:49:47: So highly recommend to read Chris Miller's book, Chip War, and we'll be following up

00:49:51: on some of those themes in the remainder of this season of Burlinside Out and in our future

00:49:56: endeavors.

00:49:57: Absolutely.

00:49:58: Thanks so much to Chris Miller, author of Chip War, for joining us.

00:50:01: And one thing that is very clear in both the book and also our chat with him today is that's

00:50:06: why he calls it Chip War.

00:50:07: The systemic competition element that is at work here.

00:50:12: And we heard a lot in this particular episode about how that's relevant when we consider

00:50:17: China and the threat that China poses to Taiwan in particular, but also to the security of

00:50:25: really the globe and our own Western societies in its own various ways.

00:50:30: But there's another element to this as well.

00:50:32: It's not simply the threat that China poses.

00:50:34: There's a little bit of an indirect thing that we can follow here when it comes to the

00:50:39: systemic competition elements of chips.

00:50:41: And that is that there is actually a Russian element to this as well.

00:50:46: The Russian military is getting access to Western chips usually actually by buying them

00:50:51: from China.

00:50:53: And those chips are obviously being used to wage war against Ukraine.

00:50:59: And that is obviously has huge implications for our own security.

00:51:04: So when we think about this chip war, there's other theaters that it pops up, not simply

00:51:08: in East Asia, of course.

00:51:11: So when we're talking about going for victory in a place like Ukraine, another thing that

00:51:19: we really need to consider, I would say, is the tightening of sanctions and export controls

00:51:25: on these chips.

00:51:26: How are these Western chips that are in China going to Russia and directly affecting the

00:51:31: war in Ukraine and our own European security?

00:51:33: We have to be conscious of this in all aspects because we've seen the use that chips can

00:51:38: be put to be that re-equipping dumb bombs to make them into smart bombs, guided bombs,

00:51:43: which the Russians have been using, even taking things, chips from washing machines or so

00:51:47: on.

00:51:48: So we really have to have a global view of this to make sure that we are restricting

00:51:52: Russia's capability to wage war and certainly stopping its capability to win war on all

00:51:58: the fronts where it exists.

00:52:00: That's why we have to consider chip war in a full global context.

00:52:04: That's all for this episode of Berlin's Side Out.

00:52:06: Thank you very much to our guest today, Chris Miller, for joining us.

00:52:09: You can find information on his book, Chip War, in our show notes.

00:52:13: Thank you also to our project assistant, Yulia Stukla, our technical producer, Hendrik Banna,

00:52:17: and the DJP team.

00:52:19: Joining us over the next few weeks, we had to talent for the Leonard Mary Conference

00:52:23: and bring you the talk of the town straight from there, as well as our upcoming episodes

00:52:27: on what's needed for Ukrainian victory, the pillars of victory, if you will, and the

00:52:32: role Russia's nuclear blackmail is playing into current German and Western strategic

00:52:37: choices.

00:52:39: For now, though, from Berlin, Auf Wiedersehen and Tschüss.

00:52:42: [MUSIC PLAYING]

00:52:45: [MUSIC PLAYING]

00:52:48: [MUSIC PLAYING]

00:52:52: [MUSIC PLAYING]

00:52:55: [BLANK_AUDIO]