I have a friend who works for TSMC. She has an American PhD in Engineering.

One day some years ago, I asked her do you think the Chinese have some secret factory in China that’s not part of the commercial market making copies of Intel chips for their own internal use?

Please note she is in the business of making chips, so I was seeking expert opinion.

Guess what?

She actually laughed.

I have known her for many years so it was ok appearing silly in front of her.

Over a cup of coffee, she explained that cutting edge tech are organization-level problems, incredibly hard. The Steve Jobs/Jonny Ive rock star image of tech is totally wrong. The lone genius/revolutionary gets nothing done on the tech level without a huge team backing him.

She said, look at an Intel chip. You can buy it as a commodity. X-Ray it, dismantle it. Study the hundreds or thousands of publicly available patents. Obtain the x86 instruction sets, etc.

Can you make a copy?

Her answer was no. Because even if you have the design, and know how the chip is supposed to work, you don’t have the ecosystem to manufacture, troubleshoot, and test the darn thing.

The chip is the product, but what about the tools to make it? The software, machines and controls, and more importantly, the institutional knowledge to operate them.

She shared things are so complex today there are tens of post-graduate level engineers running around just to troubleshoot the manufacturing in her one department alone. Merely testing and binning the finished chips is a huge challenge on its own that one can write books about.

Translation: It is cheaper to buy Intel chips by the box.

Espionage and copying is over-rated. The patent office exists to teach other people how to make things. Most of the time, espionage isn’t conducted by copying hard disks. It is achieved by hiring away the best talents, preferably in teams.

The rest of the world call it free market economics.

Even a humble toaster oven today requires an industrial complex to bring to market. From advanced materials to silicon chips to 3d design and performance modeling.

China’s true “espionage” was building this giant industrial complex that is now past the tipping point. It’s too big and important in the global supply chain to do anything about. China educated her people, and continuously equipped them with better tools and knowledge as they moved up the value chain.

People and training make the difference. Not so much patents or blueprints.