1 00:00:00,800 --> 00:00:11,280 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. That's cool that they're 2 00:00:11,320 --> 00:00:12,639 Speaker 1: all standing desks though. 3 00:00:12,880 --> 00:00:13,399 Speaker 2: It is nice. 4 00:00:13,440 --> 00:00:15,480 Speaker 3: Yeah, they have like a little switch on the right 5 00:00:15,520 --> 00:00:17,800 Speaker 3: side that like it's because I when I had when 6 00:00:17,800 --> 00:00:19,639 Speaker 3: I asked for a standing desk in New York, I 7 00:00:19,720 --> 00:00:22,119 Speaker 3: got like a platform that was maybe a quarter the 8 00:00:22,160 --> 00:00:24,760 Speaker 3: size of my actual desk, yeah, which they put like 9 00:00:25,000 --> 00:00:28,400 Speaker 3: the screens basically, yeah, And I was like, this gives 10 00:00:28,400 --> 00:00:30,200 Speaker 3: me no workspace. 11 00:00:30,080 --> 00:00:31,880 Speaker 1: And then you have to like bend down if you 12 00:00:31,920 --> 00:00:33,800 Speaker 1: want to like write a notepad and paper. 13 00:00:34,040 --> 00:00:36,480 Speaker 3: Yeah. Yeah, So the DC desk definitely win on that front. 14 00:00:36,479 --> 00:00:38,879 Speaker 3: I think San Francisco are maybe the same, but I 15 00:00:38,880 --> 00:00:40,720 Speaker 3: haven't paid enough attention in other offices. 16 00:00:41,159 --> 00:00:44,360 Speaker 1: I kind of want to try a standing desk one day, 17 00:00:44,400 --> 00:00:48,120 Speaker 1: but I don't want to like loom over Joe Weird. 18 00:00:48,200 --> 00:00:49,960 Speaker 4: I think I'm intimidated enough. 19 00:00:51,520 --> 00:00:52,159 Speaker 2: But I think I'd be. 20 00:00:52,120 --> 00:00:54,120 Speaker 1: Annoyed if I was sat down and then like someone 21 00:00:54,200 --> 00:00:55,920 Speaker 1: was standing next to me. I don't know, I think 22 00:00:55,920 --> 00:00:56,520 Speaker 1: it would feel well. 23 00:00:56,560 --> 00:00:58,640 Speaker 3: It is a little bit of a posturing thing, I think. 24 00:00:59,000 --> 00:01:00,959 Speaker 3: And when I had a standing desk in New York, 25 00:01:01,000 --> 00:01:03,280 Speaker 3: I would like forget it existed for three weeks and 26 00:01:03,280 --> 00:01:05,319 Speaker 3: then I would make a whole show of standing for 27 00:01:05,360 --> 00:01:08,399 Speaker 3: an entire day and people are like, you never stand, Like, 28 00:01:08,520 --> 00:01:09,640 Speaker 3: what are you standing? 29 00:01:13,520 --> 00:01:16,880 Speaker 4: I did a deadlift one two, Jimmy, Okay, go. 30 00:01:18,640 --> 00:01:20,600 Speaker 1: Y up, Marges. 31 00:01:20,720 --> 00:01:22,800 Speaker 4: This isn't after School Special, except. 32 00:01:22,480 --> 00:01:25,039 Speaker 1: I've decided I'm going to base my entire personality going 33 00:01:25,040 --> 00:01:28,280 Speaker 1: forward on campaigning for a strategic pork reserve in the US. 34 00:01:28,360 --> 00:01:30,120 Speaker 4: Where's the best in posta? 35 00:01:30,280 --> 00:01:31,720 Speaker 1: These are the important question? 36 00:01:31,840 --> 00:01:33,240 Speaker 2: Is that robots taking over the world. 37 00:01:33,319 --> 00:01:33,479 Speaker 3: No. 38 00:01:33,560 --> 00:01:36,440 Speaker 5: I think that like in a couple of years, the 39 00:01:36,520 --> 00:01:38,720 Speaker 5: AI will do a really good job of making the 40 00:01:38,720 --> 00:01:42,200 Speaker 5: odd lotch podcast, And people say, I don't really need 41 00:01:42,240 --> 00:01:44,440 Speaker 5: to listen to Joe and Tracy anymore, But we do 42 00:01:44,600 --> 00:01:50,120 Speaker 5: have the perfect welcome to lots More where we catch 43 00:01:50,200 --> 00:01:52,600 Speaker 5: up with friends about what's going on right now. 44 00:01:52,760 --> 00:01:56,040 Speaker 1: Because even when Odd Lots is over, there's always lots 45 00:01:56,080 --> 00:01:57,160 Speaker 1: More and. 46 00:01:57,080 --> 00:01:59,320 Speaker 4: We really do have the perfect guest. 47 00:02:02,040 --> 00:02:04,760 Speaker 1: So we're talking about Chips, right, Chips. 48 00:02:04,640 --> 00:02:05,040 Speaker 2: I hope. 49 00:02:05,080 --> 00:02:06,680 Speaker 3: So yeah, that's what I know about. 50 00:02:06,800 --> 00:02:09,600 Speaker 5: So, uh, how's it going, McKenzie? 51 00:02:09,919 --> 00:02:12,240 Speaker 2: I am doing well. How are you guys doing great? 52 00:02:12,639 --> 00:02:14,519 Speaker 3: Yeah, I'm coming off of like the busiest month of 53 00:02:14,600 --> 00:02:16,000 Speaker 3: Chips news efforts. 54 00:02:15,600 --> 00:02:17,600 Speaker 1: You've had a lot of scoops. I feel like I 55 00:02:17,600 --> 00:02:19,600 Speaker 1: feel like I've seen your byline quite a lot. 56 00:02:20,160 --> 00:02:24,079 Speaker 3: There have been a couple of busy weeks and I'm yeah, 57 00:02:24,120 --> 00:02:26,679 Speaker 3: now I'm like recuperating. But unfortunately this is not I 58 00:02:26,760 --> 00:02:29,120 Speaker 3: mean fortunately, but unfortunately for my sleep schedule. This is 59 00:02:29,160 --> 00:02:30,919 Speaker 3: not a beat that really seems to ever rest. 60 00:02:31,240 --> 00:02:34,080 Speaker 5: So is all the chips sech money now dispersed? Like 61 00:02:34,360 --> 00:02:36,800 Speaker 5: where are we because it sort of feels like we 62 00:02:37,120 --> 00:02:38,359 Speaker 5: were like an end of. 63 00:02:38,360 --> 00:02:39,160 Speaker 4: Some stage here. 64 00:02:39,480 --> 00:02:42,800 Speaker 3: I would say we're at the end of stage one. 65 00:02:43,040 --> 00:02:45,800 Speaker 3: Commerce Secretary Gino Raimondo referred to it as the bottom 66 00:02:45,840 --> 00:02:48,200 Speaker 3: of the second inning at a Semaphore event in DC. 67 00:02:48,400 --> 00:02:50,480 Speaker 2: Recently, the department. 68 00:02:50,160 --> 00:02:54,840 Speaker 3: Has burned through about eighty five percent of the direct 69 00:02:54,840 --> 00:02:57,639 Speaker 3: grant funding that they set aside to convince them conducting 70 00:02:57,680 --> 00:03:00,680 Speaker 3: manufacturers to build more factories in the US. But that 71 00:03:00,720 --> 00:03:02,760 Speaker 3: doesn't mean that the money's actually out the door. These 72 00:03:02,760 --> 00:03:06,720 Speaker 3: are all preliminary agreements. There are seven agreements and ounce 73 00:03:06,760 --> 00:03:09,120 Speaker 3: so far, and then there's three and a half billion 74 00:03:09,160 --> 00:03:11,760 Speaker 3: set aside for this military chips program that we can 75 00:03:11,800 --> 00:03:14,600 Speaker 3: get into that all accounts for, Like eighty five percent 76 00:03:14,639 --> 00:03:17,440 Speaker 3: of the money is spoken for nearly eighty five percent. 77 00:03:17,960 --> 00:03:18,919 Speaker 2: But now all these. 78 00:03:18,800 --> 00:03:22,280 Speaker 3: Companies are entering these months long due diligence stages to 79 00:03:22,360 --> 00:03:25,520 Speaker 3: actually reach a final term sheet, and then the money 80 00:03:25,520 --> 00:03:28,360 Speaker 3: will only be dispersed when they hit key construction and 81 00:03:28,400 --> 00:03:32,200 Speaker 3: production benchmarks, So it will actually take several years for 82 00:03:32,320 --> 00:03:33,880 Speaker 3: all of the money to get out the door. And 83 00:03:33,960 --> 00:03:36,320 Speaker 3: none of these companies have seen a single dime yet. 84 00:03:36,640 --> 00:03:40,480 Speaker 1: So we are speaking to our Bloomberg Collie Chips expert 85 00:03:40,520 --> 00:03:44,320 Speaker 1: and reporter Mackenzie Hawkins. She's been on the show before, 86 00:03:44,400 --> 00:03:46,600 Speaker 1: but we're trying to get an update on all these 87 00:03:46,680 --> 00:03:50,120 Speaker 1: latest semiconductor headlines because I again going back to what 88 00:03:50,160 --> 00:03:52,040 Speaker 1: I was saying earlier, there happened a lot of them 89 00:03:52,320 --> 00:03:56,000 Speaker 1: kind of flying around and it's sort of hard to 90 00:03:56,080 --> 00:03:59,720 Speaker 1: keep track. But I think the one that is probably 91 00:04:00,080 --> 00:04:04,440 Speaker 1: freshest in my mind is the Intel drama. Can you 92 00:04:04,480 --> 00:04:07,320 Speaker 1: maybe talk a little bit about that, Mackenzie. I want 93 00:04:07,320 --> 00:04:10,200 Speaker 1: to understand, like, why does it count as drama the 94 00:04:10,560 --> 00:04:14,400 Speaker 1: whole It seems to be very dramatic for people in 95 00:04:14,480 --> 00:04:16,159 Speaker 1: this space. What's going on here? 96 00:04:16,960 --> 00:04:22,040 Speaker 3: So a bit over a month ago, Intel one the 97 00:04:22,160 --> 00:04:25,160 Speaker 3: largest grant from the ships ACKed program eight and a 98 00:04:25,200 --> 00:04:30,799 Speaker 3: half billion dollars to support construction projects spanning four states, 99 00:04:30,839 --> 00:04:33,640 Speaker 3: including this megafab that they're trying to build in Ohio, 100 00:04:33,920 --> 00:04:37,640 Speaker 3: this massive expansion in Arizona. They have an advanced packaging 101 00:04:37,680 --> 00:04:40,520 Speaker 3: project in New Mexico, which is the technology that fits 102 00:04:40,560 --> 00:04:43,680 Speaker 3: chips together for use, and this really big R and 103 00:04:43,760 --> 00:04:45,480 Speaker 3: D effort and organ which is where all of their 104 00:04:45,600 --> 00:04:49,080 Speaker 3: R and D is housed. Intel has in many ways 105 00:04:49,080 --> 00:04:51,960 Speaker 3: been a focal point of this program. It's the only 106 00:04:52,520 --> 00:04:56,800 Speaker 3: US company that makes cutting edge logic semiconductor chips. Its 107 00:04:57,240 --> 00:05:00,000 Speaker 3: main rivals in that space would be Taiwan Semi conduct 108 00:05:00,160 --> 00:05:05,320 Speaker 3: Manufacturing Company and South Korea's Samsung, which also received billions 109 00:05:05,320 --> 00:05:07,440 Speaker 3: and billions of dollars in ships ACKed grants over the 110 00:05:07,440 --> 00:05:10,160 Speaker 3: past couple of months. But as the American leader and 111 00:05:10,200 --> 00:05:13,560 Speaker 3: as you know, CEO, Pat Gelsinger has been so vocal 112 00:05:13,560 --> 00:05:16,480 Speaker 3: about the chips ACKed from you know, encouraging the Biden 113 00:05:16,480 --> 00:05:19,400 Speaker 3: administration and lawmakers to pass in the first place, you know, 114 00:05:19,480 --> 00:05:21,920 Speaker 3: wanting to be the first company to get a really 115 00:05:21,960 --> 00:05:23,960 Speaker 3: big award, which you know is the fourth company to 116 00:05:23,960 --> 00:05:26,279 Speaker 3: get an award in general, but the first company to 117 00:05:26,360 --> 00:05:29,080 Speaker 3: ink you know, multiple billions of dollars eight and a 118 00:05:29,120 --> 00:05:31,880 Speaker 3: half billion dollars. There's been a lot of back and 119 00:05:31,920 --> 00:05:35,400 Speaker 3: forth between officials and Intel over how much money this 120 00:05:35,480 --> 00:05:36,800 Speaker 3: company should get. 121 00:05:37,240 --> 00:05:39,240 Speaker 2: And a lot of drama. 122 00:05:39,040 --> 00:05:43,040 Speaker 3: Ensued in late February early March. So Intel's award was 123 00:05:43,080 --> 00:05:46,160 Speaker 3: supposed to be announced like the last Monday in February, 124 00:05:46,240 --> 00:05:50,719 Speaker 3: was tentatively scheduled, and it was rescheduled for some White. 125 00:05:50,560 --> 00:05:51,719 Speaker 2: House scheduling reasons. 126 00:05:52,040 --> 00:05:57,359 Speaker 3: And that Thursday, the Pentagon informed the Commerce Department that 127 00:05:57,400 --> 00:06:00,480 Speaker 3: they would be pulling out of their two and a 128 00:06:00,560 --> 00:06:04,440 Speaker 3: half billion dollar commitment to this program called Secure Enclave. 129 00:06:04,880 --> 00:06:07,040 Speaker 3: Now that's the three and a half billion dollar program 130 00:06:07,080 --> 00:06:10,599 Speaker 3: for military chips that I referenced earlier. So originally the 131 00:06:10,640 --> 00:06:13,719 Speaker 3: Commerce Department was supposed to put a billion, the Pentagon 132 00:06:13,800 --> 00:06:16,039 Speaker 3: was supposed to put two point five billion, And the 133 00:06:16,120 --> 00:06:18,919 Speaker 3: idea is that this would be dedicated government funding to 134 00:06:18,960 --> 00:06:23,479 Speaker 3: produce cutting edge semiconductors with military and intelligence applications. And 135 00:06:23,640 --> 00:06:27,120 Speaker 3: Intel was the sole intended recipient of that funding. But 136 00:06:27,320 --> 00:06:31,640 Speaker 3: when the Pentagon pulled out of their portion, lawmakers then 137 00:06:31,720 --> 00:06:35,000 Speaker 3: who were coming up actually against a government shutdown, They 138 00:06:35,000 --> 00:06:39,159 Speaker 3: were trying to move appropriations bills for pretty much every 139 00:06:39,200 --> 00:06:44,760 Speaker 3: single major federal agency that weekend. This single item whether 140 00:06:44,960 --> 00:06:48,160 Speaker 3: to make the Commerce Department pay the full three and 141 00:06:48,200 --> 00:06:52,839 Speaker 3: a half billion out of chipsacked funding drag negotiations over 142 00:06:53,040 --> 00:06:57,840 Speaker 3: this broader budget and spending package several additional days. Ultimately, 143 00:06:57,960 --> 00:07:01,680 Speaker 3: lawmakers directed the Commerce Department to spend three and a 144 00:07:01,720 --> 00:07:04,640 Speaker 3: half billion dollars out of a total thirty nine billion 145 00:07:04,720 --> 00:07:08,160 Speaker 3: dollars on this program from military chips, which we've reported 146 00:07:08,200 --> 00:07:10,360 Speaker 3: Intel is the sole intended recipient. 147 00:07:11,400 --> 00:07:12,000 Speaker 2: Now, I just like. 148 00:07:12,040 --> 00:07:14,560 Speaker 5: Don't understand, like, you know, okay, you have this pot 149 00:07:14,600 --> 00:07:17,080 Speaker 5: of money in different agencies within the government, Like how 150 00:07:17,080 --> 00:07:19,280 Speaker 5: does the Defense Department You're like, you know what, We're 151 00:07:19,320 --> 00:07:21,320 Speaker 5: not going to pay. We're just like, we're not doing this. 152 00:07:21,400 --> 00:07:23,600 Speaker 5: I don't even understand how that happens, Like it does 153 00:07:23,640 --> 00:07:27,160 Speaker 5: not seem like a very coordinated, unified government to something 154 00:07:27,240 --> 00:07:29,240 Speaker 5: can just be like thrown up at the last second. 155 00:07:28,960 --> 00:07:31,360 Speaker 3: Like that, Oh well you said on me, Joe. I 156 00:07:31,400 --> 00:07:34,480 Speaker 3: mean certainly there are folks on the hill who are 157 00:07:34,640 --> 00:07:37,160 Speaker 3: very very upset about this. You might imagine that the 158 00:07:37,200 --> 00:07:39,640 Speaker 3: Commerce Department, which has you know, they stood up a 159 00:07:39,640 --> 00:07:43,640 Speaker 3: two hundred person team spanning everybody from bankers who came 160 00:07:43,680 --> 00:07:47,280 Speaker 3: down from Wall Street to career bureaucrats in Washington to 161 00:07:47,360 --> 00:07:51,080 Speaker 3: semiconductor industry experts to decide, Okay, we have thirty nine 162 00:07:51,080 --> 00:07:53,680 Speaker 3: billion dollars in grants, plus there's some loans and loan 163 00:07:53,680 --> 00:07:57,040 Speaker 3: guarantees and a tax credit program that will also provide 164 00:07:57,360 --> 00:08:00,000 Speaker 3: significant funding in the companies, but thirty nine billion dollar 165 00:08:00,200 --> 00:08:04,120 Speaker 3: and direct grants. Our goal is to get twenty percent 166 00:08:04,240 --> 00:08:06,600 Speaker 3: of advanced logic tips produced in the US by the 167 00:08:06,720 --> 00:08:09,680 Speaker 3: end of the decade. We want ship making clusters at 168 00:08:09,760 --> 00:08:12,960 Speaker 3: least two of them to be bought back to the US, 169 00:08:13,440 --> 00:08:15,760 Speaker 3: and we want to reduce reliance on Asia and better 170 00:08:15,800 --> 00:08:18,440 Speaker 3: compete with China. So I mean, these folks have been 171 00:08:18,480 --> 00:08:21,800 Speaker 3: working round the clock for months and months to figure 172 00:08:21,800 --> 00:08:25,080 Speaker 3: out which companies have the most viable projects, how much 173 00:08:25,120 --> 00:08:27,000 Speaker 3: money should be given to each company. And they think 174 00:08:27,040 --> 00:08:28,800 Speaker 3: that they have a certain amount of money, and then 175 00:08:28,800 --> 00:08:30,560 Speaker 3: they have two and a half billion dollars less of that, 176 00:08:30,800 --> 00:08:32,800 Speaker 3: and so that triggers a whole other round of negotiations 177 00:08:32,840 --> 00:08:34,439 Speaker 3: where they have to figure out, Okay, where are we 178 00:08:34,480 --> 00:08:36,080 Speaker 3: going to pull this two and a half billion from? 179 00:08:36,440 --> 00:08:39,040 Speaker 5: So did some entity get two and a half billion 180 00:08:39,120 --> 00:08:40,880 Speaker 5: less than they might have expected? 181 00:08:41,480 --> 00:08:46,280 Speaker 3: So we're still actually seeing the fallout. One direct consequence, 182 00:08:46,320 --> 00:08:50,160 Speaker 3: it seems, is that the Commerce Department scrapped a funding 183 00:08:50,160 --> 00:08:53,920 Speaker 3: opportunity and application process for commercial R and D facilities. 184 00:08:54,480 --> 00:08:57,960 Speaker 3: So they released applications over a year ago for large 185 00:08:58,000 --> 00:09:00,959 Speaker 3: scale manufacturing projects the type that we're seeing from Intel, 186 00:09:01,000 --> 00:09:05,200 Speaker 3: from TSMC, from Samsung. There's also a smaller application process 187 00:09:05,200 --> 00:09:07,880 Speaker 3: where they've set aside five hundred million dollars, so really 188 00:09:07,880 --> 00:09:11,920 Speaker 3: a small amount of this overall funding pool for manufacturing 189 00:09:11,960 --> 00:09:15,600 Speaker 3: projects and supply chain projects with under three hundred million 190 00:09:15,760 --> 00:09:19,160 Speaker 3: in expenditors from the company. There was originally intended to 191 00:09:19,160 --> 00:09:22,360 Speaker 3: be a third application process still from that thirty nine 192 00:09:22,400 --> 00:09:26,319 Speaker 3: billion dollar funding pool for commercial research and development projects, 193 00:09:26,720 --> 00:09:29,800 Speaker 3: and they canceled that in late March. They attributed that 194 00:09:29,920 --> 00:09:33,560 Speaker 3: to the recent congressional appropriations decision, which was a reference 195 00:09:33,600 --> 00:09:37,360 Speaker 3: to this Secure Enclave program. And we've already actually started 196 00:09:37,400 --> 00:09:40,680 Speaker 3: to see some industry fallout. Applied Materials had planned to 197 00:09:40,800 --> 00:09:44,280 Speaker 3: build a four billion dollar R and D facility in California. 198 00:09:44,640 --> 00:09:46,520 Speaker 2: They're now saying, we're not so sure. 199 00:09:47,360 --> 00:09:52,040 Speaker 1: So you touched on the reasoning for the Secure Enclave project, 200 00:09:52,160 --> 00:09:54,120 Speaker 1: but I think there's been quite a lot of criticism 201 00:09:54,280 --> 00:09:57,120 Speaker 1: over like why have it at all? And I was 202 00:09:57,160 --> 00:09:59,679 Speaker 1: reading I can't remember where it was, but there was 203 00:09:59,720 --> 00:10:03,280 Speaker 1: a quote from it was a Department of Defense person 204 00:10:03,360 --> 00:10:05,800 Speaker 1: or a Congressional aid or something, and they basically said, 205 00:10:05,920 --> 00:10:09,240 Speaker 1: we have systems for getting the military the sensitive chips 206 00:10:09,280 --> 00:10:12,079 Speaker 1: that they need already, which sounds very ominous. It sounds 207 00:10:12,160 --> 00:10:14,360 Speaker 1: very like we have ways of dealing with you kind of, 208 00:10:14,720 --> 00:10:17,880 Speaker 1: But why do you need to carve out that special 209 00:10:17,880 --> 00:10:19,960 Speaker 1: funding for military applications at all? 210 00:10:20,480 --> 00:10:21,600 Speaker 2: It's a great question. 211 00:10:21,960 --> 00:10:24,960 Speaker 3: There is certainly a lot of disagreement in Washington about 212 00:10:24,960 --> 00:10:27,600 Speaker 3: whether this program is necessary and whether it's smart to 213 00:10:27,679 --> 00:10:31,640 Speaker 3: rely on one singular company. There's a separate program that's 214 00:10:31,960 --> 00:10:35,000 Speaker 3: existed for quite some time called a Trusted Foundry program, 215 00:10:35,040 --> 00:10:39,040 Speaker 3: where basically US officials go and vet a factory, say okay, 216 00:10:39,160 --> 00:10:41,280 Speaker 3: this is secure, we trust it as part of a 217 00:10:41,320 --> 00:10:44,760 Speaker 3: military and intelligence supply chain. And the biggest company that's 218 00:10:44,800 --> 00:10:47,319 Speaker 3: part of that program is Global Foundriies. And so when 219 00:10:47,320 --> 00:10:52,360 Speaker 3: we first reported this whole Pentagon Commerce Congress funding squabble, 220 00:10:52,720 --> 00:10:54,880 Speaker 3: Global Founderies went on the record and talk to. 221 00:10:54,880 --> 00:10:55,440 Speaker 2: Us about it. 222 00:10:55,840 --> 00:10:58,920 Speaker 3: So there are certainly folks here who think it's not 223 00:10:58,960 --> 00:11:01,679 Speaker 3: a great idea to align on one company. It's also 224 00:11:01,800 --> 00:11:04,200 Speaker 3: maybe not a great idea to rely on of the 225 00:11:04,280 --> 00:11:07,840 Speaker 3: three big logic chip makers, the company that lags behind 226 00:11:08,120 --> 00:11:10,960 Speaker 3: its peers. But there's an acceptance that if we're going 227 00:11:11,000 --> 00:11:13,080 Speaker 3: to do this, if we're going to have this secure 228 00:11:13,200 --> 00:11:16,959 Speaker 3: facility within a facility for chips that are going into 229 00:11:17,040 --> 00:11:20,480 Speaker 3: our most sensitive intelligence military applications, they have to come 230 00:11:20,480 --> 00:11:22,840 Speaker 3: from an American company. So if you want a dedicated 231 00:11:22,880 --> 00:11:26,600 Speaker 3: supply chain for cutting edge chips for the Pentagon, you 232 00:11:26,720 --> 00:11:29,120 Speaker 3: almost have to go to Intel. And so that's the 233 00:11:29,200 --> 00:11:31,400 Speaker 3: question that folks have been wrestling with, and I think 234 00:11:31,400 --> 00:11:36,000 Speaker 3: that it points to a broader reality sort of shaping 235 00:11:36,000 --> 00:11:40,240 Speaker 3: the entire chips program, is that, you know, Intel has 236 00:11:40,840 --> 00:11:43,560 Speaker 3: fallen off over the past decade and a half in 237 00:11:43,640 --> 00:11:48,600 Speaker 3: terms of its technology advancement compared to TSMC and SMSUNG, 238 00:11:48,800 --> 00:11:52,679 Speaker 3: but it's also the only American company that competes at 239 00:11:52,679 --> 00:11:56,000 Speaker 3: the cutting edge in logic chips. And so you know, 240 00:11:56,360 --> 00:11:59,040 Speaker 3: while there is all this back and forth, Raimondo, the 241 00:11:59,040 --> 00:12:02,480 Speaker 3: Commerce Secretary, has all so called Intel an American champion company. 242 00:12:02,760 --> 00:12:05,319 Speaker 3: In some ways, the US government doesn't have a choice 243 00:12:05,320 --> 00:12:08,040 Speaker 3: but to make and tell the face of this program, 244 00:12:08,360 --> 00:12:10,880 Speaker 3: but they've also tried to be very clear that this 245 00:12:11,080 --> 00:12:14,200 Speaker 3: is not a subsidy program that's for just one company. 246 00:12:14,280 --> 00:12:16,080 Speaker 3: The goal is not to spread the money to thin 247 00:12:16,200 --> 00:12:19,880 Speaker 3: so that it's ineffective, but to strategically try to secure 248 00:12:19,920 --> 00:12:23,360 Speaker 3: investments from the top manufacturers all over the world. And 249 00:12:23,840 --> 00:12:26,360 Speaker 3: the US is actually the only country of you know, 250 00:12:26,480 --> 00:12:30,439 Speaker 3: dozens of governments that are doing similar semiconductor substy efforts, 251 00:12:30,760 --> 00:12:32,640 Speaker 3: the US is the only one secure investments from the 252 00:12:32,640 --> 00:12:35,840 Speaker 3: top five chip companies. So that does speak volumes about 253 00:12:36,200 --> 00:12:39,240 Speaker 3: the interest that you know, global competitors in this space 254 00:12:39,320 --> 00:12:42,040 Speaker 3: have in American funding opportunities and in the growing semi 255 00:12:42,040 --> 00:12:43,240 Speaker 3: conductor ecosystem here. 256 00:12:43,800 --> 00:12:46,360 Speaker 5: You know, there was a big story recently, I think 257 00:12:46,360 --> 00:12:49,359 Speaker 5: it's in the rest of world about TSMC in Arizona, 258 00:12:49,400 --> 00:12:52,160 Speaker 5: but there's you know, this is a big concern generally, 259 00:12:52,760 --> 00:12:54,760 Speaker 5: which is like, Okay, it's great, we're going to build 260 00:12:54,760 --> 00:12:58,000 Speaker 5: all these factories, but what about local environmental regulations, what 261 00:12:58,120 --> 00:13:01,000 Speaker 5: about labor regulation, what about lack of. 262 00:13:01,000 --> 00:13:02,040 Speaker 4: Talent, etc. 263 00:13:02,440 --> 00:13:05,560 Speaker 5: To do all this stuff? Like generally, what is your 264 00:13:05,679 --> 00:13:08,719 Speaker 5: sense about these various big the big projects that are 265 00:13:08,720 --> 00:13:12,199 Speaker 5: going up in terms of like essentially how hard we 266 00:13:12,320 --> 00:13:15,680 Speaker 5: make it for them in this country to build new things. 267 00:13:16,320 --> 00:13:19,480 Speaker 3: It's a very real concern. I mean, you know, hypothetical 268 00:13:19,520 --> 00:13:22,760 Speaker 3: money is great, but these factories actually have to get built, 269 00:13:23,880 --> 00:13:27,480 Speaker 3: and we have seen some hiccups along the way. I 270 00:13:27,480 --> 00:13:31,880 Speaker 3: mean there have been delays at TSMC, there was a 271 00:13:31,920 --> 00:13:35,160 Speaker 3: delay at Samsung. The companies, of course say that, you know, 272 00:13:35,760 --> 00:13:39,160 Speaker 3: these are tens of billions of dollars worth of capital expenditures. 273 00:13:39,200 --> 00:13:41,520 Speaker 3: These are projects that take years to stand up. Moving 274 00:13:41,520 --> 00:13:43,520 Speaker 3: our timeline back by a quarter maybe isn't that big 275 00:13:43,520 --> 00:13:46,640 Speaker 3: of a deal, but you know, to the TSMC example 276 00:13:46,679 --> 00:13:49,200 Speaker 3: in particular, the company had a lot of issues with 277 00:13:49,280 --> 00:13:52,560 Speaker 3: local unions in Arizona over the summer. They said in 278 00:13:52,640 --> 00:13:55,560 Speaker 3: July that they were delaying the start of production at 279 00:13:55,640 --> 00:13:58,160 Speaker 3: their first of what is now three fabs that they're 280 00:13:58,200 --> 00:14:01,800 Speaker 3: building in Arizona because there are not enough skilled workers 281 00:14:01,840 --> 00:14:04,719 Speaker 3: in Arizona. And this was specifically workers who are going 282 00:14:04,760 --> 00:14:09,120 Speaker 3: to install the most high end equipment, equipment that TSMC says, 283 00:14:09,120 --> 00:14:11,600 Speaker 3: we've actually only had experience installing in Taiwan, so we 284 00:14:11,640 --> 00:14:14,320 Speaker 3: need to bring Taiwanese workers over to help handle this. 285 00:14:14,400 --> 00:14:18,080 Speaker 3: You might imagine that did not go over particularly well 286 00:14:18,360 --> 00:14:20,600 Speaker 3: with the Arizona Building and Trades Council. There was a 287 00:14:20,600 --> 00:14:23,360 Speaker 3: petition to stop the Taiwanese workers from coming. There were 288 00:14:23,400 --> 00:14:27,040 Speaker 3: all sorts of allegations of safety and mismanagement issues. Those 289 00:14:27,080 --> 00:14:30,840 Speaker 3: are somewhat resolved in Arizona. The Building and Trades Council 290 00:14:31,040 --> 00:14:35,680 Speaker 3: and the company reached a labor accord in December, and 291 00:14:35,800 --> 00:14:38,680 Speaker 3: their construction as of now is on schedule with that 292 00:14:38,720 --> 00:14:41,440 Speaker 3: delayed timeline for the first fab, which is set to 293 00:14:41,480 --> 00:14:45,200 Speaker 3: open in twenty twenty five. They're also building a second facility. 294 00:14:45,400 --> 00:14:47,840 Speaker 3: Originally that was supposed to open in twenty twenty six. 295 00:14:47,880 --> 00:14:50,120 Speaker 3: They said in January that it would open in twenty 296 00:14:50,160 --> 00:14:52,200 Speaker 3: twenty seven or twenty twenty eight. We now know that 297 00:14:52,240 --> 00:14:55,840 Speaker 3: it'll be in twenty twenty eight. They're evaluating market conditions. 298 00:14:55,880 --> 00:14:58,440 Speaker 3: They also said that the level of technology they'd produce 299 00:14:58,480 --> 00:15:01,080 Speaker 3: would depend on the level of US grants that they receive. 300 00:15:01,760 --> 00:15:03,240 Speaker 3: They are going to produce their most. 301 00:15:03,120 --> 00:15:05,080 Speaker 2: Cutting edge technology in Arizona. 302 00:15:05,280 --> 00:15:07,800 Speaker 3: So there's, you know, maybe some feeling in Washington that 303 00:15:07,960 --> 00:15:12,320 Speaker 3: was part of a negotiating tactic, but they have certainly 304 00:15:12,360 --> 00:15:15,680 Speaker 3: seen delays. You know, the second company to receive a 305 00:15:15,760 --> 00:15:19,960 Speaker 3: chips ACKed award Microchip Technology a couple of days later 306 00:15:20,120 --> 00:15:22,160 Speaker 3: said that they were going to shut down their factory 307 00:15:22,160 --> 00:15:25,000 Speaker 3: for a couple of weeks because they're trying to match 308 00:15:25,040 --> 00:15:29,240 Speaker 3: market demand. And you know, their concern is not finishing 309 00:15:29,280 --> 00:15:32,240 Speaker 3: the expansion that the federal government is funding. Their concern 310 00:15:32,520 --> 00:15:35,560 Speaker 3: is meeting their customers where they are. This is an 311 00:15:35,640 --> 00:15:39,040 Speaker 3: industry that goes through crazy booms and crazy bus and 312 00:15:39,160 --> 00:15:42,520 Speaker 3: so whether this is all funny money or real money 313 00:15:42,560 --> 00:15:45,920 Speaker 3: will depend on whether the companies see sufficient demand for 314 00:15:46,040 --> 00:15:47,800 Speaker 3: the chips that they are going to produce. You know, 315 00:15:47,880 --> 00:15:51,640 Speaker 3: Micron has said we could spend up to one hundred 316 00:15:51,680 --> 00:15:55,040 Speaker 3: billion dollars in upstate New York to produce high bandwidth 317 00:15:55,040 --> 00:15:58,280 Speaker 3: memory chips. Right now, we're committing to fifty, we're committing 318 00:15:58,280 --> 00:16:01,320 Speaker 3: to two fabs. Certainly, local officials in New York would 319 00:16:01,360 --> 00:16:03,320 Speaker 3: like to see a sprawling semic conductor complex that at 320 00:16:03,400 --> 00:16:09,760 Speaker 3: umployed nine thousand people. They might get half of that from. 321 00:16:18,760 --> 00:16:21,400 Speaker 1: This was always sort of one of the criticisms of 322 00:16:21,440 --> 00:16:24,160 Speaker 1: this particular project, the idea that yes, you can build 323 00:16:24,360 --> 00:16:28,040 Speaker 1: fabs and spend billions of dollars doing it, but if 324 00:16:28,080 --> 00:16:30,920 Speaker 1: the customers aren't there, or if there isn't a reliable 325 00:16:30,960 --> 00:16:35,120 Speaker 1: source of demand, then it doesn't really amount to a 326 00:16:35,160 --> 00:16:39,280 Speaker 1: sustainable business model. Have you seen anything like on the 327 00:16:39,320 --> 00:16:42,800 Speaker 1: policy side in terms of addressing that aspect of it. 328 00:16:42,880 --> 00:16:45,680 Speaker 1: Are people talking about that a little bit more in 329 00:16:45,800 --> 00:16:46,760 Speaker 1: recent months? 330 00:16:47,360 --> 00:16:51,320 Speaker 3: I mean, there's certainly a recognition, you know, especially when 331 00:16:51,320 --> 00:16:55,160 Speaker 3: we get stories coming out about delays at these major projects. 332 00:16:55,200 --> 00:16:58,360 Speaker 3: There's a recognition that it's not going to be a 333 00:16:58,480 --> 00:17:03,120 Speaker 3: linear path to the US producing some significant market share 334 00:17:03,280 --> 00:17:08,240 Speaker 3: of advanced semiconductors. There's also a recognition that this artificial 335 00:17:08,280 --> 00:17:11,840 Speaker 3: intelligence boom is going to drive massive global demand for 336 00:17:11,920 --> 00:17:14,320 Speaker 3: these chips. I mean, you have some key executives in 337 00:17:14,359 --> 00:17:17,040 Speaker 3: that space. Sam Altman and OpenAI of course come to 338 00:17:17,040 --> 00:17:19,360 Speaker 3: mind saying, you know, we need as many of these 339 00:17:19,440 --> 00:17:22,679 Speaker 3: chips as we can get. Altman is on a tear raising, 340 00:17:22,880 --> 00:17:24,920 Speaker 3: you know, billions and billions of dollars to try to 341 00:17:24,960 --> 00:17:27,720 Speaker 3: stand up factories across the world to produce these chips. 342 00:17:28,160 --> 00:17:30,880 Speaker 3: So I don't know that there's necessarily concern here that 343 00:17:31,240 --> 00:17:32,840 Speaker 3: all of a sudden interest is going. 344 00:17:32,640 --> 00:17:33,359 Speaker 2: To drop off. 345 00:17:33,720 --> 00:17:37,640 Speaker 3: But there are also so many different types of semiconductor 346 00:17:37,720 --> 00:17:40,359 Speaker 3: technology that this program is trying to fund that each 347 00:17:40,400 --> 00:17:42,440 Speaker 3: deal with their own market conditions. So, you know, we 348 00:17:42,520 --> 00:17:45,480 Speaker 3: spent a lot of time talking about advanced semiconductors, like 349 00:17:45,480 --> 00:17:48,600 Speaker 3: the type that Intel and TSMC are going to manufacture, 350 00:17:49,200 --> 00:17:52,840 Speaker 3: but there are also older generation chips, the type that 351 00:17:52,960 --> 00:17:56,040 Speaker 3: still go in your phone and your fridge and in 352 00:17:56,119 --> 00:17:59,360 Speaker 3: weapons systems, and there is a smaller amount of money 353 00:17:59,359 --> 00:18:00,960 Speaker 3: in the chips actually the side for that, but the 354 00:18:01,000 --> 00:18:03,119 Speaker 3: government is still going to try to find production of 355 00:18:03,119 --> 00:18:03,960 Speaker 3: those chips as well. 356 00:18:04,280 --> 00:18:06,280 Speaker 5: This is what I wanted to ask you about because 357 00:18:06,359 --> 00:18:09,080 Speaker 5: one of the ironies here, one of the strange things 358 00:18:09,160 --> 00:18:13,320 Speaker 5: is sort of I think chip vulnerability. I'm sure people 359 00:18:13,480 --> 00:18:14,800 Speaker 5: in the space have been talking about it for a 360 00:18:14,840 --> 00:18:16,960 Speaker 5: long time, but I think it came on many people's 361 00:18:17,040 --> 00:18:20,479 Speaker 5: radar in twenty twenty when the car companies couldn't get 362 00:18:20,480 --> 00:18:21,680 Speaker 5: ships and couldn't make cars. 363 00:18:21,920 --> 00:18:24,280 Speaker 1: Those are not definitely when it came on our radar. 364 00:18:24,119 --> 00:18:24,840 Speaker 4: Yeah, certainly us. 365 00:18:24,880 --> 00:18:28,120 Speaker 5: Maybe I'm just projecting on everyone else, but okay, came 366 00:18:28,160 --> 00:18:32,440 Speaker 5: on the outlaws radar. Those are not particularly advanced chips 367 00:18:32,520 --> 00:18:35,719 Speaker 5: that the car companies couldn't get. They're like pretty lagging edge, 368 00:18:36,080 --> 00:18:38,680 Speaker 5: And there is does seem to be this other concern 369 00:18:38,760 --> 00:18:42,040 Speaker 5: that the real risk is not that the US gets 370 00:18:42,080 --> 00:18:45,280 Speaker 5: cut off from the leading ed chips, but that the 371 00:18:45,600 --> 00:18:48,440 Speaker 5: Chinese companies, which maybe not be at the cutting edge 372 00:18:48,520 --> 00:18:51,040 Speaker 5: because they don't have the same access to you know 373 00:18:51,080 --> 00:18:55,879 Speaker 5: whatever ASML's equipment, but they're doing extremely well. It sounds 374 00:18:55,920 --> 00:18:59,120 Speaker 5: like in the lagging edge chips like in many areas, 375 00:18:59,160 --> 00:19:02,840 Speaker 5: probably much more cost competitive than the current options that 376 00:19:02,960 --> 00:19:05,760 Speaker 5: you know for whatever. How much concern is there in 377 00:19:05,840 --> 00:19:08,960 Speaker 5: DC that's like, okay, this project, Yes, it's a you 378 00:19:08,960 --> 00:19:12,120 Speaker 5: know that twenty percent market share in leading edge technology, 379 00:19:12,480 --> 00:19:16,160 Speaker 5: but meanwhile we have this big sort of bubbling dependency 380 00:19:16,359 --> 00:19:19,120 Speaker 5: and challenge on the lagging edge side, which goes into 381 00:19:19,119 --> 00:19:20,000 Speaker 5: every product we use. 382 00:19:20,880 --> 00:19:23,119 Speaker 3: The short answer is there's a lot of concern. The 383 00:19:23,160 --> 00:19:25,800 Speaker 3: Director of the National Economic Council, Lalel Brainerd has been 384 00:19:25,840 --> 00:19:29,520 Speaker 3: talking about Chinese overcapacity in a range of sectors. That 385 00:19:29,640 --> 00:19:33,000 Speaker 3: was a big theme of the Treasury Secretary's recent trip 386 00:19:33,040 --> 00:19:36,560 Speaker 3: to China, and older generation or so called legacy chips 387 00:19:36,600 --> 00:19:38,879 Speaker 3: are certainly a part of that. You know, the US 388 00:19:39,480 --> 00:19:43,399 Speaker 3: cut China off from the most advanced semiconductor chips and 389 00:19:43,520 --> 00:19:47,440 Speaker 3: semiconductor manufacturing equipment in twenty twenty two, with these sweeping 390 00:19:47,480 --> 00:19:51,040 Speaker 3: export controls. Then they got Japan and the Netherlands, two 391 00:19:51,119 --> 00:19:54,680 Speaker 3: key allies in the supply chain, on board, with relatively 392 00:19:54,720 --> 00:19:57,359 Speaker 3: the same type of restrictions, although there are some key 393 00:19:57,440 --> 00:20:00,400 Speaker 3: differences in loopholes that officials are now pressing. The US 394 00:20:00,440 --> 00:20:02,560 Speaker 3: officials are now pressing allies to try to close those. 395 00:20:03,160 --> 00:20:06,320 Speaker 3: China's response was, Okay, We're going to double down where 396 00:20:06,359 --> 00:20:09,560 Speaker 3: we can. You know, they had already been building massive, 397 00:20:09,640 --> 00:20:14,880 Speaker 3: massive semiconductor manufacturing capacity. The many experts say that US 398 00:20:15,000 --> 00:20:17,640 Speaker 3: restrictions only incentivize them to double down on that. They're 399 00:20:17,640 --> 00:20:19,560 Speaker 3: still pursuing the cutting edge. You know, we spent a 400 00:20:19,600 --> 00:20:21,840 Speaker 3: lot of time this year also thinking about Huawei and 401 00:20:21,880 --> 00:20:25,280 Speaker 3: their chip making ambitions. Their top chip maker, Smith has 402 00:20:25,359 --> 00:20:30,600 Speaker 3: reached a seven nanometer capacity, which is certainly considered advanced. 403 00:20:30,640 --> 00:20:32,280 Speaker 2: Not quite as advanced. 404 00:20:31,840 --> 00:20:33,320 Speaker 3: As you know, the type of chips that will be 405 00:20:33,359 --> 00:20:35,520 Speaker 3: made in the US, but ahead o where the US 406 00:20:35,600 --> 00:20:39,160 Speaker 3: wanted China to be. But China is outpacing the rest 407 00:20:39,200 --> 00:20:42,240 Speaker 3: of the world multiple times over in capacity for older 408 00:20:42,280 --> 00:20:46,800 Speaker 3: generation chips. The US is actually weighing tariffs on Chinese 409 00:20:46,880 --> 00:20:50,200 Speaker 3: chip makers that produce these chips because they say, if 410 00:20:50,320 --> 00:20:53,679 Speaker 3: China dumps these chips on global markets. This could be 411 00:20:53,800 --> 00:20:57,120 Speaker 3: disastrous for US companies that also manufacture them. I mean, 412 00:20:57,359 --> 00:21:00,399 Speaker 3: Texas Instruments is a big one, Global foundry is a 413 00:21:00,400 --> 00:21:03,880 Speaker 3: big one. But the reality is that is not where 414 00:21:03,920 --> 00:21:06,680 Speaker 3: the lions share of the money from the Chips Act 415 00:21:06,720 --> 00:21:09,960 Speaker 3: is going. So you have this tariffs based approach, you 416 00:21:10,080 --> 00:21:13,280 Speaker 3: also have some domestic subsidies. There's sort of a two 417 00:21:13,320 --> 00:21:16,840 Speaker 3: billion dollars set aside specifically for older generation ships in 418 00:21:16,880 --> 00:21:20,000 Speaker 3: the US Substate program. RAYMONDO has said that they will 419 00:21:20,000 --> 00:21:23,400 Speaker 3: do quote multiples of that. They're already actually almost at 420 00:21:23,400 --> 00:21:26,800 Speaker 3: that amount. They've allocated nearly like one point six one 421 00:21:26,800 --> 00:21:30,399 Speaker 3: point seven billion to an older generation or legacy chips 422 00:21:30,400 --> 00:21:33,240 Speaker 3: so far. But it's a limited pool of money. You 423 00:21:33,320 --> 00:21:35,080 Speaker 3: have to decide where you're going to spend it. And 424 00:21:35,119 --> 00:21:39,439 Speaker 3: they also US officials feel a real and pressing threat 425 00:21:39,440 --> 00:21:43,760 Speaker 3: of having the capacity for advanced chips concentrated in Asia. 426 00:21:44,240 --> 00:21:46,800 Speaker 3: To go back to your question about environmental permitting, I 427 00:21:46,920 --> 00:21:50,640 Speaker 3: spoke with Congressman Mike McCall about this yesterday, because there 428 00:21:50,720 --> 00:21:54,239 Speaker 3: was this effort in Congress last year to exempt some 429 00:21:54,320 --> 00:21:58,240 Speaker 3: of these major projects from federal environmental permitting standards over 430 00:21:58,359 --> 00:22:02,199 Speaker 3: concerns that Raymondo told me could delay projects for months, 431 00:22:02,320 --> 00:22:05,640 Speaker 3: if not years. That effort died because of it died 432 00:22:05,720 --> 00:22:09,639 Speaker 3: last year because of some actually internal Republican opposition. It 433 00:22:09,720 --> 00:22:12,240 Speaker 3: seems that there's maybe some new life being breathed into 434 00:22:12,240 --> 00:22:14,879 Speaker 3: that bill now. But this was really striking to me 435 00:22:14,920 --> 00:22:18,200 Speaker 3: what the Congressman said, if China invades Taiwan and TSMC, 436 00:22:18,440 --> 00:22:22,040 Speaker 3: we can't be filling out environmental compliance paperwork. And that's 437 00:22:22,160 --> 00:22:25,480 Speaker 3: really the threat that the US feels on this is that, 438 00:22:25,960 --> 00:22:28,760 Speaker 3: you know, such a large share of the most advanced 439 00:22:28,800 --> 00:22:31,639 Speaker 3: tips in the world or manufacturing in Taiwan that is 440 00:22:31,680 --> 00:22:34,800 Speaker 3: one of the most geopolitically risky regions in the world, 441 00:22:35,040 --> 00:22:39,000 Speaker 3: and if we lost access to those chips, the global 442 00:22:39,040 --> 00:22:40,120 Speaker 3: economy woul grind. 443 00:22:39,880 --> 00:22:40,320 Speaker 5: To a halt. 444 00:22:40,920 --> 00:22:43,280 Speaker 1: Joe, I think I mentioned this to you, but while 445 00:22:43,320 --> 00:22:45,960 Speaker 1: you were visiting your mom recently, I went to go 446 00:22:46,040 --> 00:22:48,679 Speaker 1: visit my dad, which means I am now full of 447 00:22:48,920 --> 00:22:52,000 Speaker 1: right wing talking points. But I had the most surreal 448 00:22:52,119 --> 00:22:55,880 Speaker 1: conversation with him where he was complaining that the US 449 00:22:56,000 --> 00:22:59,800 Speaker 1: doesn't make enough stuff anymore. And then I asked him 450 00:22:59,840 --> 00:23:02,960 Speaker 1: when he thought about things like the Chips Act or 451 00:23:03,080 --> 00:23:06,080 Speaker 1: the Infrastructure Act and things like that, and then he 452 00:23:06,160 --> 00:23:10,440 Speaker 1: started he basically started complaining that the money hadn't been 453 00:23:10,760 --> 00:23:13,800 Speaker 1: spent yet, which for someone who was complaining about the 454 00:23:13,840 --> 00:23:19,160 Speaker 1: deficit like five minutes before, was kind of yeah, surreal, 455 00:23:19,400 --> 00:23:24,120 Speaker 1: I would put it. But Ken, no, no, not at all. 456 00:23:24,960 --> 00:23:27,240 Speaker 1: Although actually that reminds me. My mom did listen to 457 00:23:27,320 --> 00:23:31,000 Speaker 1: a recent episode, the one we did on agriculture, and 458 00:23:31,080 --> 00:23:33,600 Speaker 1: she got mad at me because she said that I did, 459 00:23:33,640 --> 00:23:36,880 Speaker 1: in fact have fresh fruit in my school lunches, not 460 00:23:37,000 --> 00:23:39,520 Speaker 1: just fruit roll ups. So I feel the need to 461 00:23:39,560 --> 00:23:42,240 Speaker 1: correct the record there, Mom, in case you're listening, thank 462 00:23:42,280 --> 00:23:44,119 Speaker 1: you for the berries that I did in fact have 463 00:23:44,200 --> 00:23:46,760 Speaker 1: in my lunch. Anyway, Mackenzie, I kind of wanted to 464 00:23:46,800 --> 00:23:52,520 Speaker 1: ask you about the politic politicization aspect of all of this, 465 00:23:52,760 --> 00:23:56,840 Speaker 1: like how much is that kind of complicating some of 466 00:23:56,880 --> 00:23:59,439 Speaker 1: the story and some of the roll out, like it 467 00:23:59,480 --> 00:24:01,480 Speaker 1: was a Bible part is in. You know, it had 468 00:24:01,520 --> 00:24:05,359 Speaker 1: bipartisan support, the Chips Act, But it feels like as 469 00:24:05,440 --> 00:24:09,240 Speaker 1: the money is actually getting dispersed, politics are creeping back 470 00:24:09,240 --> 00:24:09,679 Speaker 1: into it. 471 00:24:10,600 --> 00:24:11,640 Speaker 2: That's certainly the case. 472 00:24:11,720 --> 00:24:14,680 Speaker 3: I mean, the most recent announcement was a six point 473 00:24:14,760 --> 00:24:18,560 Speaker 3: one billion dollar grant for Micron, which is also in 474 00:24:18,640 --> 00:24:19,720 Speaker 3: line to receive more. 475 00:24:19,600 --> 00:24:20,600 Speaker 2: Than that in loans. 476 00:24:20,680 --> 00:24:23,840 Speaker 3: And President Biden, when he went to upstate New York 477 00:24:23,920 --> 00:24:28,159 Speaker 3: to announce that, called out Republicans who had been taking 478 00:24:28,200 --> 00:24:30,520 Speaker 3: credit for the project coming to Upstate New York but 479 00:24:30,640 --> 00:24:33,600 Speaker 3: voted against the Chips Act. You know, this was a 480 00:24:33,720 --> 00:24:37,720 Speaker 3: bipartisan piece of legislation. There have been squabbles throughout from 481 00:24:37,800 --> 00:24:40,840 Speaker 3: key champions saying, Okay, why are we giving so much 482 00:24:40,880 --> 00:24:43,760 Speaker 3: to X company? Should we really be thinking about building 483 00:24:43,840 --> 00:24:47,760 Speaker 3: child care facilities and having labor peace agreements if our 484 00:24:47,800 --> 00:24:49,960 Speaker 3: concern is this is a national security program and we 485 00:24:50,000 --> 00:24:52,399 Speaker 3: actually need to get the money out the door. You know, 486 00:24:52,440 --> 00:24:55,840 Speaker 3: it's people like to take credit for things that seem 487 00:24:55,920 --> 00:24:59,399 Speaker 3: to be successful. Senator Chuck Schumer, the Majority leader, his 488 00:24:59,480 --> 00:25:03,760 Speaker 3: press really about the Micron award called it Schumer's Chips 489 00:25:03,760 --> 00:25:07,680 Speaker 3: and Science Act. There are certainly senators who would say, actually, 490 00:25:07,680 --> 00:25:10,239 Speaker 3: I was very involved as well. You know, this is 491 00:25:10,280 --> 00:25:14,320 Speaker 3: a major part of the Biden administration's economic message. It's 492 00:25:14,359 --> 00:25:17,160 Speaker 3: not just the Ship's Act. There's also the Inflation Reduction Act, 493 00:25:17,160 --> 00:25:20,760 Speaker 3: which is a signature climate law, and the bipartisan Infrastructure Law, 494 00:25:20,800 --> 00:25:23,600 Speaker 3: and these sort of three legs of the stool, if 495 00:25:23,640 --> 00:25:27,280 Speaker 3: you will, are the core pillars of Bidenomics. This massive 496 00:25:27,320 --> 00:25:30,160 Speaker 3: wave of industrial policy in a way that the US 497 00:25:30,240 --> 00:25:35,240 Speaker 3: hasn't really pursued for over a generation. And there are 498 00:25:35,240 --> 00:25:38,400 Speaker 3: lots of different goals attached. You know, Chips and science 499 00:25:38,720 --> 00:25:41,919 Speaker 3: passed in a bipartisan way because it is a national 500 00:25:41,960 --> 00:25:45,960 Speaker 3: security program. You know, we've discussed the risks that US 501 00:25:46,080 --> 00:25:49,840 Speaker 3: leaders feel both on the lagging edge, you know, mature 502 00:25:49,920 --> 00:25:52,240 Speaker 3: ship side, and also on the cutting edge side with 503 00:25:52,240 --> 00:25:56,200 Speaker 3: that concentration in East Asia. But it's also an economic 504 00:25:56,320 --> 00:26:00,159 Speaker 3: revitalization program. It's a jobs program, you know, by and 505 00:26:00,160 --> 00:26:02,200 Speaker 3: talks about how he wants these to be good jobs, 506 00:26:02,240 --> 00:26:06,080 Speaker 3: good paying jobs, good paying union jobs. There's actually an 507 00:26:06,080 --> 00:26:09,359 Speaker 3: effort to reach a labor peace agreement for this massive 508 00:26:09,359 --> 00:26:12,399 Speaker 3: micron facility. It would be only the third chip facility 509 00:26:12,560 --> 00:26:16,400 Speaker 3: in the country to have a union if they're successful. 510 00:26:16,840 --> 00:26:18,760 Speaker 5: Okay, it's the bottom of the second inning. 511 00:26:19,240 --> 00:26:22,040 Speaker 4: You know, your job never ends. What's next? What are 512 00:26:22,080 --> 00:26:24,200 Speaker 4: you watching for next? 513 00:26:24,520 --> 00:26:25,800 Speaker 2: Well, they still have some money to spend. 514 00:26:25,920 --> 00:26:28,240 Speaker 3: Okay, you know, these four big grants are certainly going 515 00:26:28,320 --> 00:26:31,600 Speaker 3: to catch the most attention, but there's about six billion 516 00:26:31,640 --> 00:26:34,719 Speaker 3: dollars left. That's not a small amount of money, right, 517 00:26:35,280 --> 00:26:38,199 Speaker 3: and they need to make really strategic decisions about Okay, 518 00:26:38,280 --> 00:26:40,399 Speaker 3: there are you know, a couple of big names still 519 00:26:40,400 --> 00:26:42,639 Speaker 3: floating out there that you know, maybe we'll get some 520 00:26:42,760 --> 00:26:46,960 Speaker 3: larger awards, but then there are six hundred statements of 521 00:26:47,000 --> 00:26:48,440 Speaker 3: interest in this funding. 522 00:26:48,480 --> 00:26:49,280 Speaker 2: You know, we're talking. 523 00:26:49,160 --> 00:26:52,360 Speaker 3: About a lot of smaller skill projects. You know, there's 524 00:26:52,359 --> 00:26:56,080 Speaker 3: all this conversation about this sort of valley of death 525 00:26:56,320 --> 00:26:59,920 Speaker 3: in tech entrepreneurship. You know, we we support stuff that's 526 00:27:00,080 --> 00:27:03,240 Speaker 3: ready for commercial production. There's also this cutting edge R 527 00:27:03,280 --> 00:27:06,440 Speaker 3: and D that's happening. But what about companies that are 528 00:27:06,480 --> 00:27:08,840 Speaker 3: just trying to get over the line, just trying to 529 00:27:08,840 --> 00:27:11,879 Speaker 3: be able to stand up their factory, you know, employing 530 00:27:12,119 --> 00:27:15,320 Speaker 3: forty people, employing one hundred people, making one hundred and 531 00:27:15,320 --> 00:27:19,119 Speaker 3: fifty million dollar investment in the US, rather than a 532 00:27:19,240 --> 00:27:22,200 Speaker 3: sixty five billion dollar investment in the US, which is 533 00:27:22,240 --> 00:27:25,280 Speaker 3: what TSMC is doing. And so there will be a 534 00:27:25,320 --> 00:27:29,280 Speaker 3: second wave of awards and a lot smaller denominations. 535 00:27:29,280 --> 00:27:30,080 Speaker 2: So that's one thing. 536 00:27:30,119 --> 00:27:33,959 Speaker 3: I think the permitting, the environmental permitting is a really 537 00:27:34,000 --> 00:27:38,919 Speaker 3: big deal. Certainly if this permitting exemption actually has the 538 00:27:38,960 --> 00:27:41,760 Speaker 3: life that Mike McCall thinks that it does. That would 539 00:27:41,880 --> 00:27:44,280 Speaker 3: solve a lot of headaches for companies. It would also 540 00:27:44,320 --> 00:27:46,720 Speaker 3: probably catch a lot of flat from environmental groups who 541 00:27:46,760 --> 00:27:51,480 Speaker 3: point out rightfully so that this is an industry that 542 00:27:51,760 --> 00:27:55,640 Speaker 3: uses toxic chemicals, that has a carbon footprint that's expected 543 00:27:55,640 --> 00:27:57,560 Speaker 3: to double by twenty thirty. We need to be thinking 544 00:27:57,600 --> 00:28:00,880 Speaker 3: about the environmental and sustainability costs with this dustrial build out. 545 00:28:01,280 --> 00:28:04,880 Speaker 3: But whether companies are able to navigate permitting processes at 546 00:28:04,880 --> 00:28:08,119 Speaker 3: the federal and at the state and local level will 547 00:28:08,320 --> 00:28:12,240 Speaker 3: directly affect when these factories are able to open. And 548 00:28:12,440 --> 00:28:16,040 Speaker 3: I would say maybe the biggest thing is workforce development, 549 00:28:16,080 --> 00:28:17,880 Speaker 3: which is not something that we've touched on a ton, 550 00:28:18,040 --> 00:28:20,639 Speaker 3: but is probably the single thing that comes up the 551 00:28:20,640 --> 00:28:24,720 Speaker 3: most when I talk to everyone from executives down to 552 00:28:24,880 --> 00:28:28,719 Speaker 3: administrators of community college programs. There was a great story, 553 00:28:29,280 --> 00:28:31,920 Speaker 3: a great piece in the Washington Post recently about workforce 554 00:28:31,960 --> 00:28:36,359 Speaker 3: training efforts for semiconductor technicians in Arizona, and there are 555 00:28:36,400 --> 00:28:39,040 Speaker 3: lots of different approaches here. One that was mentioned in 556 00:28:39,080 --> 00:28:42,800 Speaker 3: that story was this so called quick Start program, which 557 00:28:42,840 --> 00:28:45,239 Speaker 3: is like a two week training program that Intel has 558 00:28:45,280 --> 00:28:47,600 Speaker 3: worked to set up with community colleges in the area 559 00:28:48,000 --> 00:28:50,520 Speaker 3: because you know, this is very high tech stuff, but 560 00:28:50,560 --> 00:28:53,960 Speaker 3: it doesn't necessarily require a PhD to work in these factories. 561 00:28:53,960 --> 00:28:56,880 Speaker 3: You know, there's all different types of workers that are 562 00:28:56,920 --> 00:29:02,240 Speaker 3: needed to make these projects successful. Technician training program, you know, 563 00:29:02,400 --> 00:29:05,040 Speaker 3: got a ton of national press when it was first announced. 564 00:29:05,480 --> 00:29:09,040 Speaker 3: I visited in i want to say September or October, 565 00:29:09,680 --> 00:29:12,200 Speaker 3: and I was told that only twenty percent of the 566 00:29:12,200 --> 00:29:16,480 Speaker 3: graduates of that program had secured positions because of the 567 00:29:16,520 --> 00:29:19,440 Speaker 3: simple fact that these factories are not yet open and 568 00:29:20,120 --> 00:29:22,000 Speaker 3: these are two week training programs, and so you can 569 00:29:22,040 --> 00:29:24,640 Speaker 3: imagine somebody who does this training program in twenty twenty 570 00:29:24,640 --> 00:29:29,000 Speaker 3: three and then, you know, three years later, when there 571 00:29:29,080 --> 00:29:30,760 Speaker 3: is an abundance of factory jobs available, they. 572 00:29:30,720 --> 00:29:32,240 Speaker 2: Don't remember what they learned in two weeks. 573 00:29:32,520 --> 00:29:34,960 Speaker 3: There's also efforts to do much longer, you know, year 574 00:29:34,960 --> 00:29:38,600 Speaker 3: long training programs. There are efforts to you know, get 575 00:29:38,720 --> 00:29:41,840 Speaker 3: young kids excited about semi conductor manufacturing. You know, there's 576 00:29:41,840 --> 00:29:43,920 Speaker 3: all this talk about this is not like the sexy 577 00:29:44,000 --> 00:29:46,680 Speaker 3: thing to work in in tech, and people are trying to. 578 00:29:46,680 --> 00:29:48,239 Speaker 2: Make it the sexy thing to work in. 579 00:29:48,600 --> 00:29:51,160 Speaker 3: There is a lot of workforce efforts happening on you know, 580 00:29:51,200 --> 00:29:53,280 Speaker 3: we talked a lot about the three thirty nine billion 581 00:29:53,320 --> 00:29:56,320 Speaker 3: dollar Chips Act program. There's eleven billion dollars at aside 582 00:29:56,320 --> 00:29:58,640 Speaker 3: for research and development, and there are a lot of 583 00:29:58,640 --> 00:30:00,920 Speaker 3: workforce efforts that they're trying to say up on that front. 584 00:30:01,040 --> 00:30:05,640 Speaker 3: But you know, the US is tens of thousands of 585 00:30:05,760 --> 00:30:10,640 Speaker 3: workers short, and these factories will not produce chips if 586 00:30:10,680 --> 00:30:12,600 Speaker 3: there are not people to staff them. 587 00:30:12,880 --> 00:30:16,440 Speaker 1: I feel like fab factories trying to get over the line. 588 00:30:16,920 --> 00:30:19,880 Speaker 1: It's very relatable. They're just trying to get over the line. 589 00:30:20,240 --> 00:30:22,480 Speaker 5: Tracy, Have I told you my idea for a name 590 00:30:22,520 --> 00:30:24,480 Speaker 5: of a semiconductor company? 591 00:30:24,600 --> 00:30:26,720 Speaker 1: No, what, Well, I'm not. 592 00:30:26,800 --> 00:30:29,959 Speaker 5: It would be it would be called Fabulous Semiconductors, but 593 00:30:30,000 --> 00:30:32,640 Speaker 5: the U would be like an apostrophe, would look like 594 00:30:32,680 --> 00:30:35,320 Speaker 5: Fabless Semiconductors. I think that'd be a really cool name 595 00:30:35,320 --> 00:30:36,720 Speaker 5: for a company, don't you think? 596 00:30:36,760 --> 00:30:39,760 Speaker 1: All Right, if someone ends up using that, you're going 597 00:30:39,840 --> 00:30:42,360 Speaker 1: to have to like pay a copyright due to Joe. 598 00:30:42,440 --> 00:30:43,800 Speaker 4: Or maybe fabu less. 599 00:30:44,760 --> 00:30:46,960 Speaker 5: I think actually that would probably be the fabu Less 600 00:30:47,080 --> 00:30:49,000 Speaker 5: would be the name of my fabulous Simmi. 601 00:30:49,400 --> 00:30:51,720 Speaker 1: Okay, okay, well, maybe you can apply to the Chips 602 00:30:51,720 --> 00:30:52,920 Speaker 1: Act for some fund. 603 00:30:52,920 --> 00:30:55,480 Speaker 5: Just on the basis, on the basis of having a 604 00:30:55,480 --> 00:30:56,360 Speaker 5: good name itself. 605 00:30:56,440 --> 00:30:57,600 Speaker 4: Yeah, do it all right? 606 00:30:57,920 --> 00:30:59,720 Speaker 2: Well, best of luck, you have six hundred competitors. 607 00:30:59,720 --> 00:31:00,000 Speaker 3: Thank you. 608 00:31:06,360 --> 00:31:09,480 Speaker 5: Lots More is produced by Carmen Rodriguez and Dashel Bennett, 609 00:31:09,520 --> 00:31:11,680 Speaker 5: with help from Moses Ondam and Kill Brooks. 610 00:31:12,080 --> 00:31:15,240 Speaker 1: Our sound engineer is Blake Maples. Sage Bauman is the 611 00:31:15,280 --> 00:31:16,680 Speaker 1: head of Bloomberg Podcasts. 612 00:31:17,160 --> 00:31:20,480 Speaker 5: Please rate, review, and subscribe to Odd, Lots and lots 613 00:31:20,520 --> 00:31:23,479 Speaker 5: More on your favorite podcast platforms. 614 00:31:23,120 --> 00:31:25,880 Speaker 1: And remember that Bloomberg subscribers can listen to all our 615 00:31:25,920 --> 00:31:30,560 Speaker 1: podcasts ad free by connecting through Apple Podcasts. Thanks for listening.