By all accounts, Soviet chip development was ahead of that of the US (Intel). Then one day a party official killed the project. At least the lead guy found his way to the US and to Intel and the rest, as they say, is history.
When Victor Belenko defected with his MiG-25 in 1976 the CIA found that it was still using vacuum tubes when the US hard introduced the F-14 two years earlier which had the world's first microprocessor. Although the existence of it was classified for decades and until recently it was thought the Intel 4004 was the first.
Why they were behind, I'm not sure. They were definitely ahead in some other places but the technological gap continued to increase the later you got into the cold war.
https://en.wikipedia.org/wiki/Mikoyan-Gurevich_MiG-25#Wester...
You can imagine state economy composed of 30-40 large corporations, like Walmart or LIDL running every grocery store, or Microsoft being the only software manufacturer. Remember stories of turf wars in Microsoft, between old and new technologies? Same thing was in the entire USSR.
Soviet government distributed investments, so you had to convince them. This was possible if you had a lot of political weight.
If you managed to get investment funds, your enterprise could not gain extra profit, because prices were regulated, and even if you were more efficient in production and over-produced for high demand, you did not own the extra money.
So, the prize for introducing a new product would be just a bonus and probably a state decoration. And it was often not worth the trouble fighting with the higher ranks in the ministry.
Another issue was central planning ahead of time. For instance, my father in his research institute would make demand plans for microchips and other electronic parts 2 years ahead (so that if there's more demand, the manufacturers have time to plan and budget for that).
This meant, it was really hard to introduce new hardware, and little incentive to try manufacturing new chips.
It was much easier to run the enterprise and do the plans as usually.
Google Soviet engineer Intel and look at https://en.m.wikipedia.org/wiki/Vladimir_Pentkovski
His achievement is overstated in Russia (mainly from the urban legend that his surname led to Pentium). He is a great engineer, but Intel never had a shortage of people of his caliber.
From his Wikepedia page:
> At the beginning of 1990s, he immigrated to United States where he worked at Intel and led the team that developed the architecture for the Pentium III processor
In the same manner that the US space program would have advanced without input from Wernher von Braun [2], the development of Pentium III would have happened minus Pentkovski, though their presence pushed development faster and in directions that the projects would have taken longer to reach without them.
[1] https://en.m.wikipedia.org/wiki/Pentium_III [2] https://en.m.wikipedia.org/wiki/Wernher_von_Braun