Behind the Markets Podcast: The Chip War

Global Head of Research

We were excited to have the opportunity to have Chris Miller, Associate Professor of International History at the Fletcher School at Tufts, as a guest on the show. He has just written the book, Chip War: The Fight for the World’s Most Critical Technology, which is really a tour de force, taking the reader through the history of semiconductor developments and why the current supply chain looks the way that it does.

Of course, it culminates where we are today, with everyone feeling the geopolitical tension between China and the U.S. and wondering what might happen with respect to Taiwan.

To summarize some of the points in our discussion:

  • Professor Miller talked briefly about his experience looking at Russian history and how he started thinking about chips as a result of considering the miniaturization of electronics. Human history sees a lot of progress come from developing weapons; in this case, the focus was on miniaturizing circuits in missile guidance systems. We see the difference between U.S. technology and Russian technology even today on the battlefield in Ukraine—it’s clear that the U.S. technological approach won out on this matter.
  • We talked about a big transformation that Intel undertook in the 1980s. One takeaway that people should have when thinking about chips is that there are many different types, and a primary demarcation is between memory chips and logic chips. In the 1980s, the world was beefing up its production capacity of memory chips—to the extent that they were almost becoming a commodity. At that time, production capacity was growing much faster in Asia and it was part of what we thought of then as ‘Japan, Inc.’ Intel had started its journey as a company making memory chips, but in one of the boldest steps ever taken by a silicon valley CEO, Andy Grove abandoned the memory chip focus and shifted to logic chips—the types of central processing units that you find in laptops and desktops today. This decision led to us hearing things like the ‘Intel Inside’ marketing campaign in the years to follow, but it was an incredibly difficult decision at the time.
  • We were able to briefly discuss extreme ultraviolet lithography (EUV). Lithography is the process through which light can be used to etch the different designs in silicon wafers. In the early days of chips, different types of camera lenses were used and certain parts of the process could be done by hand. Today, we are dealing with etching structures on silicon that are smaller than COVID-19 virus particles. Bombarding molten tin with high-powered lasers to create plasma that emits light of 13.5 nanometers in wavelength—when you read about it, it seems almost like magic, and yet this is the process behind the 4 and 5-nanometer technology in Apple’s newest chips, for example. ASML is the only company that produces the machines that can run this process, and no semiconductor fabrication company is able to use them as well as Taiwan Semiconductor Manufacturing Co. (TSMC).
  • Finally, you cannot talk about a book titled Chip War without talking about Taiwan. Professor Miller noted that roughly one-third of the world’s computing power, per year, comes out of Taiwan. The world as we know it today, at least in technology, could not function in the same fashion if access to Taiwan disappeared quickly. Professor Miller also noted that even if these companies, like TSMC or Samsung, are building factories all of the world, it remains to be seen how much of the most advanced capabilities are taken outside of Taiwan or South Korea. These countries want to maintain importance and relevance, even if the world also now understands the benefit of more robust supply chains.

The full discussion is available below, or on any of the normal podcast distribution outlets. We’d also note that many different megatrends or just the fact that the world is creating more data every year—all of this depends on a strong foundation of semiconductor technology. Even if these companies have not seen strong share price performance recently, the need for these building blocks is always there.

The WisdomTree Artificial Intelligence and Innovation Fund (WTAI) has a specific semiconductor exposure focused on those firms that see their chips heavily used within artificial intelligence.



Christopher Gannatti is an employee of WisdomTree UK Limited, a European subsidiary of WisdomTree Asset Management, Inc.’s parent company, WisdomTree Investments, Inc.

As of October 4, 2022, WTAI held 0%, 1.20%, 0% and 1.63% of its weight in Intel, ASML, TSMC and Samsung, respectively. Holdings are subject to change.

For definitions of additional terms in this blog and podcast, please visit the glossary.

Important Risks Related to this Article

There are risks associated with investing, including the possible loss of principal. The Fund invests in companies primarily involved in the investment theme of artificial intelligence (AI) and innovation. Companies engaged in AI typically face intense competition and potentially rapid product obsolescence. These companies are also heavily dependent on intellectual property rights and may be adversely affected by loss or impairment of those rights. Additionally, AI companies typically invest significant amounts of spending on research and development, and there is no guarantee that the products or services produced by these companies will be successful. Companies that are capitalizing on innovation and developing technologies to displace older technologies or create new markets may not be successful. The Fund invests in the securities included in, or representative of, its Index regardless of their investment merit and the Fund does not attempt to outperform its Index or take defensive positions in declining markets. The composition of the Index is governed by an Index Committee and the Index may not perform as intended. Please read the Fund’s prospectus for specific details regarding the Fund’s risk profile.

Related Funds

WisdomTree Artificial Intelligence and Innovation Fund


About the Contributor
Global Head of Research

Christopher Gannatti began at WisdomTree as a Research Analyst in December 2010, working directly with Jeremy Schwartz, CFA®, Director of Research. In January of 2014, he was promoted to Associate Director of Research where he was responsible to lead different groups of analysts and strategists within the broader Research team at WisdomTree. In February of 2018, Christopher was promoted to Head of Research, Europe, where he was based out of WisdomTree’s London office and was responsible for the full WisdomTree research effort within the European market, as well as supporting the UCITs platform globally. In November 2021, Christopher was promoted to Global Head of Research, now responsible for numerous communications on investment strategy globally, particularly in the thematic equity space. Christopher came to WisdomTree from Lord Abbett, where he worked for four and a half years as a Regional Consultant. He received his MBA in Quantitative Finance, Accounting, and Economics from NYU’s Stern School of Business in 2010, and he received his bachelor’s degree from Colgate University in Economics in 2006. Christopher is a holder of the Chartered Financial Analyst Designation.