World Book Day 2023
Today is World Book Day 2023. A global event designed to remind us of the true value of reading. Now, of course, many of us spend hours reading for work, but how often do we find the time to sit down and enjoy a really great book for leisure? Probably not often enough! Well, the good news is there are some fantastic books out there that can help us in the workplace while still being enjoyable reads. Our Industry Expert Tutors are constantly reading books and materials focussed around the industry, and today, we wanted to join in the World Book Day Celebrations by sharing a book review of one such book that is both work-related and enjoyable.
Book review; Chip War
Chip War (Chris Miller, Schriber 2022) is a wide-reaching, eminently readable examination of the supply chain for one of modern life’s most essential components, the semiconductor. Universally well received (The FT business book of the year 2022 among its many plaudits), it offers lessons in supply chain development, innovation, fragility, geopolitical pressures and the balance of supply and demand.
It begins with a history of the industry. Initially centred on California, via challenges from the Soviet Union and Japan, it became an Asian-centric industry (90% of the world’s premium logic chips are produced in Taiwan). We see the reasons for these shifts in manufacturing sites and why the major companies were happy to outsource this crucial component. For such a key component of modern life, there are relatively few companies capable of producing them to the required standards.
The Taiwanese Semiconductor Manufacturing Company (TSMC) is the biggest chip maker in the world by market value. As globalisation spread, the risk of such a focus was ignored due to the many benefits, namely the vast investment required for the “fab” facilities being borne by the outsourced supplier and the ability of the product design companies to specialise in design and marketing. The book details the rise and fall of the geographic hubs and the companies involved in this fast-moving industry.
The History
The history also elaborates on the industry’s supply and demand peaks and troughs. From natural disasters (the Asian floods of the 2010s and the Japanese Tsunami) to the surges in supply required for modern technology trends, it has never been an easy industry to forecast demand. Then came recent history and the pandemic. From the sudden rise in demand for PCs as workers adjust to a new way of working to the breaks in the physical supply chain impacting delivery, sudden shortages affected a range of industries, the most newsworthy being the car industry. Each has presented unique challenges, which the book elaborates on. In 2022, following the Covid supply shock, we are again in an era of oversupply and falling prices.
Then came the geopolitical shocks, which further swayed the industry’s development. Starting in the Trump era, with the blacklisting of Chinese firms, through to the current rush to self-sufficiency led by Europe and the US (led by legislation). The war in Ukraine has further highlighted the risks of such far-reaching chains for all aspects of our lives. The future is relatively uncertain. According to the EU, 1 trillion microchips were manufactured in 2020, with the EU delivering only 10% of this figure. The US has its CHIPS act (Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022), and the EU has followed suit.
“We often consider our industries fast-moving and cutting-edge”
The book tells an incredible tale. The business cycles in semiconductors seem to operate at breakneck speed, responding both to innovation and the many shocks that have hit supply. Churning out chips in huge volumes is the only way to recoup the significant investment (c£20 billion for an advanced fab facility). We often consider our industries fast-moving and cutting-edge, but few can compete with this essential component of modern life. It is a US-centric book, as would be expected. Still, it offers so many Supply Chain lessons – examples for a PESTLE analysis rolled into a relatively brief timescale and seen through the eyes of one industry.
Book review by Neil Finegan, IoSCM Education Team.
*WIN A FREE COPY OF CHIP WARS*
To be entered into the draw to win a FREE copy of Chip Wars look of for the next issue of Supply Chain Outlook, released later this month.
To find out more about World Book Day visit the official website here.