Speaker 1: Bloomberg Audio Studios, podcasts, radio news. That's cool that they're
Speaker 1: all standing desks though.
Speaker 2: It is nice.
Speaker 3: Yeah, they have like a little switch on the right
Speaker 3: side that like it's because I when I had when
Speaker 3: I asked for a standing desk in New York, I
Speaker 3: got like a platform that was maybe a quarter the
Speaker 3: size of my actual desk, yeah, which they put like
Speaker 3: the screens basically, yeah, And I was like, this gives
Speaker 3: me no workspace.
Speaker 1: And then you have to like bend down if you
Speaker 1: want to like write a notepad and paper.
Speaker 3: Yeah. Yeah, So the DC desk definitely win on that front.
Speaker 3: I think San Francisco are maybe the same, but I
Speaker 3: haven't paid enough attention in other offices.
Speaker 1: I kind of want to try a standing desk one day,
Speaker 1: but I don't want to like loom over Joe Weird.
Speaker 4: I think I'm intimidated enough.
Speaker 2: But I think I'd be.
Speaker 1: Annoyed if I was sat down and then like someone
Speaker 1: was standing next to me. I don't know, I think
Speaker 1: it would feel well.
Speaker 3: It is a little bit of a posturing thing, I think.
Speaker 3: And when I had a standing desk in New York,
Speaker 3: I would like forget it existed for three weeks and
Speaker 3: then I would make a whole show of standing for
Speaker 3: an entire day and people are like, you never stand, Like,
Speaker 3: what are you standing?
Speaker 4: I did a deadlift one two, Jimmy, Okay, go.
Speaker 1: Y up, Marges.
Speaker 4: This isn't after School Special, except.
Speaker 1: I've decided I'm going to base my entire personality going
Speaker 1: forward on campaigning for a strategic pork reserve in the US.
Speaker 4: Where's the best in posta?
Speaker 1: These are the important question?
Speaker 2: Is that robots taking over the world.
Speaker 3: No.
Speaker 5: I think that like in a couple of years, the
Speaker 5: AI will do a really good job of making the
Speaker 5: odd lotch podcast, And people say, I don't really need
Speaker 5: to listen to Joe and Tracy anymore, But we do
Speaker 5: have the perfect welcome to lots More where we catch
Speaker 5: up with friends about what's going on right now.
Speaker 1: Because even when Odd Lots is over, there's always lots
Speaker 1: More and.
Speaker 4: We really do have the perfect guest.
Speaker 1: So we're talking about Chips, right, Chips.
Speaker 2: I hope.
Speaker 3: So yeah, that's what I know about.
Speaker 5: So, uh, how's it going, McKenzie?
Speaker 2: I am doing well. How are you guys doing great?
Speaker 3: Yeah, I'm coming off of like the busiest month of
Speaker 3: Chips news efforts.
Speaker 1: You've had a lot of scoops. I feel like I
Speaker 1: feel like I've seen your byline quite a lot.
Speaker 3: There have been a couple of busy weeks and I'm yeah,
Speaker 3: now I'm like recuperating. But unfortunately this is not I
Speaker 3: mean fortunately, but unfortunately for my sleep schedule. This is
Speaker 3: not a beat that really seems to ever rest.
Speaker 5: So is all the chips sech money now dispersed? Like
Speaker 5: where are we because it sort of feels like we
Speaker 5: were like an end of.
Speaker 4: Some stage here.
Speaker 3: I would say we're at the end of stage one.
Speaker 3: Commerce Secretary Gino Raimondo referred to it as the bottom
Speaker 3: of the second inning at a Semaphore event in DC.
Speaker 2: Recently, the department.
Speaker 3: Has burned through about eighty five percent of the direct
Speaker 3: grant funding that they set aside to convince them conducting
Speaker 3: manufacturers to build more factories in the US. But that
Speaker 3: doesn't mean that the money's actually out the door. These
Speaker 3: are all preliminary agreements. There are seven agreements and ounce
Speaker 3: so far, and then there's three and a half billion
Speaker 3: set aside for this military chips program that we can
Speaker 3: get into that all accounts for, Like eighty five percent
Speaker 3: of the money is spoken for nearly eighty five percent.
Speaker 2: But now all these.
Speaker 3: Companies are entering these months long due diligence stages to
Speaker 3: actually reach a final term sheet, and then the money
Speaker 3: will only be dispersed when they hit key construction and
Speaker 3: production benchmarks, So it will actually take several years for
Speaker 3: all of the money to get out the door. And
Speaker 3: none of these companies have seen a single dime yet.
Speaker 1: So we are speaking to our Bloomberg Collie Chips expert
Speaker 1: and reporter Mackenzie Hawkins. She's been on the show before,
Speaker 1: but we're trying to get an update on all these
Speaker 1: latest semiconductor headlines because I again going back to what
Speaker 1: I was saying earlier, there happened a lot of them
Speaker 1: kind of flying around and it's sort of hard to
Speaker 1: keep track. But I think the one that is probably
Speaker 1: freshest in my mind is the Intel drama. Can you
Speaker 1: maybe talk a little bit about that, Mackenzie. I want
Speaker 1: to understand, like, why does it count as drama the
Speaker 1: whole It seems to be very dramatic for people in
Speaker 1: this space. What's going on here?
Speaker 3: So a bit over a month ago, Intel one the
Speaker 3: largest grant from the ships ACKed program eight and a
Speaker 3: half billion dollars to support construction projects spanning four states,
Speaker 3: including this megafab that they're trying to build in Ohio,
Speaker 3: this massive expansion in Arizona. They have an advanced packaging
Speaker 3: project in New Mexico, which is the technology that fits
Speaker 3: chips together for use, and this really big R and
Speaker 3: D effort and organ which is where all of their
Speaker 3: R and D is housed. Intel has in many ways
Speaker 3: been a focal point of this program. It's the only
Speaker 3: US company that makes cutting edge logic semiconductor chips. Its
Speaker 3: main rivals in that space would be Taiwan Semi conduct
Speaker 3: Manufacturing Company and South Korea's Samsung, which also received billions
Speaker 3: and billions of dollars in ships ACKed grants over the
Speaker 3: past couple of months. But as the American leader and
Speaker 3: as you know, CEO, Pat Gelsinger has been so vocal
Speaker 3: about the chips ACKed from you know, encouraging the Biden
Speaker 3: administration and lawmakers to pass in the first place, you know,
Speaker 3: wanting to be the first company to get a really
Speaker 3: big award, which you know is the fourth company to
Speaker 3: get an award in general, but the first company to
Speaker 3: ink you know, multiple billions of dollars eight and a
Speaker 3: half billion dollars. There's been a lot of back and
Speaker 3: forth between officials and Intel over how much money this
Speaker 3: company should get.
Speaker 2: And a lot of drama.
Speaker 3: Ensued in late February early March. So Intel's award was
Speaker 3: supposed to be announced like the last Monday in February,
Speaker 3: was tentatively scheduled, and it was rescheduled for some White.
Speaker 2: House scheduling reasons.
Speaker 3: And that Thursday, the Pentagon informed the Commerce Department that
Speaker 3: they would be pulling out of their two and a
Speaker 3: half billion dollar commitment to this program called Secure Enclave.
Speaker 3: Now that's the three and a half billion dollar program
Speaker 3: for military chips that I referenced earlier. So originally the
Speaker 3: Commerce Department was supposed to put a billion, the Pentagon
Speaker 3: was supposed to put two point five billion, And the
Speaker 3: idea is that this would be dedicated government funding to
Speaker 3: produce cutting edge semiconductors with military and intelligence applications. And
Speaker 3: Intel was the sole intended recipient of that funding. But
Speaker 3: when the Pentagon pulled out of their portion, lawmakers then
Speaker 3: who were coming up actually against a government shutdown, They
Speaker 3: were trying to move appropriations bills for pretty much every
Speaker 3: single major federal agency that weekend. This single item whether
Speaker 3: to make the Commerce Department pay the full three and
Speaker 3: a half billion out of chipsacked funding drag negotiations over
Speaker 3: this broader budget and spending package several additional days. Ultimately,
Speaker 3: lawmakers directed the Commerce Department to spend three and a
Speaker 3: half billion dollars out of a total thirty nine billion
Speaker 3: dollars on this program from military chips, which we've reported
Speaker 3: Intel is the sole intended recipient.
Speaker 2: Now, I just like.
Speaker 5: Don't understand, like, you know, okay, you have this pot
Speaker 5: of money in different agencies within the government, Like how
Speaker 5: does the Defense Department You're like, you know what, We're
Speaker 5: not going to pay. We're just like, we're not doing this.
Speaker 5: I don't even understand how that happens, Like it does
Speaker 5: not seem like a very coordinated, unified government to something
Speaker 5: can just be like thrown up at the last second.
Speaker 3: Like that, Oh well you said on me, Joe. I
Speaker 3: mean certainly there are folks on the hill who are
Speaker 3: very very upset about this. You might imagine that the
Speaker 3: Commerce Department, which has you know, they stood up a
Speaker 3: two hundred person team spanning everybody from bankers who came
Speaker 3: down from Wall Street to career bureaucrats in Washington to
Speaker 3: semiconductor industry experts to decide, Okay, we have thirty nine
Speaker 3: billion dollars in grants, plus there's some loans and loan
Speaker 3: guarantees and a tax credit program that will also provide
Speaker 3: significant funding in the companies, but thirty nine billion dollar
Speaker 3: and direct grants. Our goal is to get twenty percent
Speaker 3: of advanced logic tips produced in the US by the
Speaker 3: end of the decade. We want ship making clusters at
Speaker 3: least two of them to be bought back to the US,
Speaker 3: and we want to reduce reliance on Asia and better
Speaker 3: compete with China. So I mean, these folks have been
Speaker 3: working round the clock for months and months to figure
Speaker 3: out which companies have the most viable projects, how much
Speaker 3: money should be given to each company. And they think
Speaker 3: that they have a certain amount of money, and then
Speaker 3: they have two and a half billion dollars less of that,
Speaker 3: and so that triggers a whole other round of negotiations
Speaker 3: where they have to figure out, Okay, where are we
Speaker 3: going to pull this two and a half billion from?
Speaker 5: So did some entity get two and a half billion
Speaker 5: less than they might have expected?
Speaker 3: So we're still actually seeing the fallout. One direct consequence,
Speaker 3: it seems, is that the Commerce Department scrapped a funding
Speaker 3: opportunity and application process for commercial R and D facilities.
Speaker 3: So they released applications over a year ago for large
Speaker 3: scale manufacturing projects the type that we're seeing from Intel,
Speaker 3: from TSMC, from Samsung. There's also a smaller application process
Speaker 3: where they've set aside five hundred million dollars, so really
Speaker 3: a small amount of this overall funding pool for manufacturing
Speaker 3: projects and supply chain projects with under three hundred million
Speaker 3: in expenditors from the company. There was originally intended to
Speaker 3: be a third application process still from that thirty nine
Speaker 3: billion dollar funding pool for commercial research and development projects,
Speaker 3: and they canceled that in late March. They attributed that
Speaker 3: to the recent congressional appropriations decision, which was a reference
Speaker 3: to this Secure Enclave program. And we've already actually started
Speaker 3: to see some industry fallout. Applied Materials had planned to
Speaker 3: build a four billion dollar R and D facility in California.
Speaker 2: They're now saying, we're not so sure.
Speaker 1: So you touched on the reasoning for the Secure Enclave project,
Speaker 1: but I think there's been quite a lot of criticism
Speaker 1: over like why have it at all? And I was
Speaker 1: reading I can't remember where it was, but there was
Speaker 1: a quote from it was a Department of Defense person
Speaker 1: or a Congressional aid or something, and they basically said,
Speaker 1: we have systems for getting the military the sensitive chips
Speaker 1: that they need already, which sounds very ominous. It sounds
Speaker 1: very like we have ways of dealing with you kind of,
Speaker 1: But why do you need to carve out that special
Speaker 1: funding for military applications at all?
Speaker 2: It's a great question.
Speaker 3: There is certainly a lot of disagreement in Washington about
Speaker 3: whether this program is necessary and whether it's smart to
Speaker 3: rely on one singular company. There's a separate program that's
Speaker 3: existed for quite some time called a Trusted Foundry program,
Speaker 3: where basically US officials go and vet a factory, say okay,
Speaker 3: this is secure, we trust it as part of a
Speaker 3: military and intelligence supply chain. And the biggest company that's
Speaker 3: part of that program is Global Foundriies. And so when
Speaker 3: we first reported this whole Pentagon Commerce Congress funding squabble,
Speaker 3: Global Founderies went on the record and talk to.
Speaker 2: Us about it.
Speaker 3: So there are certainly folks here who think it's not
Speaker 3: a great idea to align on one company. It's also
Speaker 3: maybe not a great idea to rely on of the
Speaker 3: three big logic chip makers, the company that lags behind
Speaker 3: its peers. But there's an acceptance that if we're going
Speaker 3: to do this, if we're going to have this secure
Speaker 3: facility within a facility for chips that are going into
Speaker 3: our most sensitive intelligence military applications, they have to come
Speaker 3: from an American company. So if you want a dedicated
Speaker 3: supply chain for cutting edge chips for the Pentagon, you
Speaker 3: almost have to go to Intel. And so that's the
Speaker 3: question that folks have been wrestling with, and I think
Speaker 3: that it points to a broader reality sort of shaping
Speaker 3: the entire chips program, is that, you know, Intel has
Speaker 3: fallen off over the past decade and a half in
Speaker 3: terms of its technology advancement compared to TSMC and SMSUNG,
Speaker 3: but it's also the only American company that competes at
Speaker 3: the cutting edge in logic chips. And so you know,
Speaker 3: while there is all this back and forth, Raimondo, the
Speaker 3: Commerce Secretary, has all so called Intel an American champion company.
Speaker 3: In some ways, the US government doesn't have a choice
Speaker 3: but to make and tell the face of this program,
Speaker 3: but they've also tried to be very clear that this
Speaker 3: is not a subsidy program that's for just one company.
Speaker 3: The goal is not to spread the money to thin
Speaker 3: so that it's ineffective, but to strategically try to secure
Speaker 3: investments from the top manufacturers all over the world. And
Speaker 3: the US is actually the only country of you know,
Speaker 3: dozens of governments that are doing similar semiconductor substy efforts,
Speaker 3: the US is the only one secure investments from the
Speaker 3: top five chip companies. So that does speak volumes about
Speaker 3: the interest that you know, global competitors in this space
Speaker 3: have in American funding opportunities and in the growing semi
Speaker 3: conductor ecosystem here.
Speaker 5: You know, there was a big story recently, I think
Speaker 5: it's in the rest of world about TSMC in Arizona,
Speaker 5: but there's you know, this is a big concern generally,
Speaker 5: which is like, Okay, it's great, we're going to build
Speaker 5: all these factories, but what about local environmental regulations, what
Speaker 5: about labor regulation, what about lack of.
Speaker 4: Talent, etc.
Speaker 5: To do all this stuff? Like generally, what is your
Speaker 5: sense about these various big the big projects that are
Speaker 5: going up in terms of like essentially how hard we
Speaker 5: make it for them in this country to build new things.
Speaker 3: It's a very real concern. I mean, you know, hypothetical
Speaker 3: money is great, but these factories actually have to get built,
Speaker 3: and we have seen some hiccups along the way. I
Speaker 3: mean there have been delays at TSMC, there was a
Speaker 3: delay at Samsung. The companies, of course say that, you know,
Speaker 3: these are tens of billions of dollars worth of capital expenditures.
Speaker 3: These are projects that take years to stand up. Moving
Speaker 3: our timeline back by a quarter maybe isn't that big
Speaker 3: of a deal, but you know, to the TSMC example
Speaker 3: in particular, the company had a lot of issues with
Speaker 3: local unions in Arizona over the summer. They said in
Speaker 3: July that they were delaying the start of production at
Speaker 3: their first of what is now three fabs that they're
Speaker 3: building in Arizona because there are not enough skilled workers
Speaker 3: in Arizona. And this was specifically workers who are going
Speaker 3: to install the most high end equipment, equipment that TSMC says,
Speaker 3: we've actually only had experience installing in Taiwan, so we
Speaker 3: need to bring Taiwanese workers over to help handle this.
Speaker 3: You might imagine that did not go over particularly well
Speaker 3: with the Arizona Building and Trades Council. There was a
Speaker 3: petition to stop the Taiwanese workers from coming. There were
Speaker 3: all sorts of allegations of safety and mismanagement issues. Those
Speaker 3: are somewhat resolved in Arizona. The Building and Trades Council
Speaker 3: and the company reached a labor accord in December, and
Speaker 3: their construction as of now is on schedule with that
Speaker 3: delayed timeline for the first fab, which is set to
Speaker 3: open in twenty twenty five. They're also building a second facility.
Speaker 3: Originally that was supposed to open in twenty twenty six.
Speaker 3: They said in January that it would open in twenty
Speaker 3: twenty seven or twenty twenty eight. We now know that
Speaker 3: it'll be in twenty twenty eight. They're evaluating market conditions.
Speaker 3: They also said that the level of technology they'd produce
Speaker 3: would depend on the level of US grants that they receive.
Speaker 3: They are going to produce their most.
Speaker 2: Cutting edge technology in Arizona.
Speaker 3: So there's, you know, maybe some feeling in Washington that
Speaker 3: was part of a negotiating tactic, but they have certainly
Speaker 3: seen delays. You know, the second company to receive a
Speaker 3: chips ACKed award Microchip Technology a couple of days later
Speaker 3: said that they were going to shut down their factory
Speaker 3: for a couple of weeks because they're trying to match
Speaker 3: market demand. And you know, their concern is not finishing
Speaker 3: the expansion that the federal government is funding. Their concern
Speaker 3: is meeting their customers where they are. This is an
Speaker 3: industry that goes through crazy booms and crazy bus and
Speaker 3: so whether this is all funny money or real money
Speaker 3: will depend on whether the companies see sufficient demand for
Speaker 3: the chips that they are going to produce. You know,
Speaker 3: Micron has said we could spend up to one hundred
Speaker 3: billion dollars in upstate New York to produce high bandwidth
Speaker 3: memory chips. Right now, we're committing to fifty, we're committing
Speaker 3: to two fabs. Certainly, local officials in New York would
Speaker 3: like to see a sprawling semic conductor complex that at
Speaker 3: umployed nine thousand people. They might get half of that from.
Speaker 1: This was always sort of one of the criticisms of
Speaker 1: this particular project, the idea that yes, you can build
Speaker 1: fabs and spend billions of dollars doing it, but if
Speaker 1: the customers aren't there, or if there isn't a reliable
Speaker 1: source of demand, then it doesn't really amount to a
Speaker 1: sustainable business model. Have you seen anything like on the
Speaker 1: policy side in terms of addressing that aspect of it.
Speaker 1: Are people talking about that a little bit more in
Speaker 1: recent months?
Speaker 3: I mean, there's certainly a recognition, you know, especially when
Speaker 3: we get stories coming out about delays at these major projects.
Speaker 3: There's a recognition that it's not going to be a
Speaker 3: linear path to the US producing some significant market share
Speaker 3: of advanced semiconductors. There's also a recognition that this artificial
Speaker 3: intelligence boom is going to drive massive global demand for
Speaker 3: these chips. I mean, you have some key executives in
Speaker 3: that space. Sam Altman and OpenAI of course come to
Speaker 3: mind saying, you know, we need as many of these
Speaker 3: chips as we can get. Altman is on a tear raising,
Speaker 3: you know, billions and billions of dollars to try to
Speaker 3: stand up factories across the world to produce these chips.
Speaker 3: So I don't know that there's necessarily concern here that
Speaker 3: all of a sudden interest is going.
Speaker 2: To drop off.
Speaker 3: But there are also so many different types of semiconductor
Speaker 3: technology that this program is trying to fund that each
Speaker 3: deal with their own market conditions. So, you know, we
Speaker 3: spent a lot of time talking about advanced semiconductors, like
Speaker 3: the type that Intel and TSMC are going to manufacture,
Speaker 3: but there are also older generation chips, the type that
Speaker 3: still go in your phone and your fridge and in
Speaker 3: weapons systems, and there is a smaller amount of money
Speaker 3: in the chips actually the side for that, but the
Speaker 3: government is still going to try to find production of
Speaker 3: those chips as well.
Speaker 5: This is what I wanted to ask you about because
Speaker 5: one of the ironies here, one of the strange things
Speaker 5: is sort of I think chip vulnerability. I'm sure people
Speaker 5: in the space have been talking about it for a
Speaker 5: long time, but I think it came on many people's
Speaker 5: radar in twenty twenty when the car companies couldn't get
Speaker 5: ships and couldn't make cars.
Speaker 1: Those are not definitely when it came on our radar.
Speaker 4: Yeah, certainly us.
Speaker 5: Maybe I'm just projecting on everyone else, but okay, came
Speaker 5: on the outlaws radar. Those are not particularly advanced chips
Speaker 5: that the car companies couldn't get. They're like pretty lagging edge,
Speaker 5: And there is does seem to be this other concern
Speaker 5: that the real risk is not that the US gets
Speaker 5: cut off from the leading ed chips, but that the
Speaker 5: Chinese companies, which maybe not be at the cutting edge
Speaker 5: because they don't have the same access to you know
Speaker 5: whatever ASML's equipment, but they're doing extremely well. It sounds
Speaker 5: like in the lagging edge chips like in many areas,
Speaker 5: probably much more cost competitive than the current options that
Speaker 5: you know for whatever. How much concern is there in
Speaker 5: DC that's like, okay, this project, Yes, it's a you
Speaker 5: know that twenty percent market share in leading edge technology,
Speaker 5: but meanwhile we have this big sort of bubbling dependency
Speaker 5: and challenge on the lagging edge side, which goes into
Speaker 5: every product we use.
Speaker 3: The short answer is there's a lot of concern. The
Speaker 3: Director of the National Economic Council, Lalel Brainerd has been
Speaker 3: talking about Chinese overcapacity in a range of sectors. That
Speaker 3: was a big theme of the Treasury Secretary's recent trip
Speaker 3: to China, and older generation or so called legacy chips
Speaker 3: are certainly a part of that. You know, the US
Speaker 3: cut China off from the most advanced semiconductor chips and
Speaker 3: semiconductor manufacturing equipment in twenty twenty two, with these sweeping
Speaker 3: export controls. Then they got Japan and the Netherlands, two
Speaker 3: key allies in the supply chain, on board, with relatively
Speaker 3: the same type of restrictions, although there are some key
Speaker 3: differences in loopholes that officials are now pressing. The US
Speaker 3: officials are now pressing allies to try to close those.
Speaker 3: China's response was, Okay, We're going to double down where
Speaker 3: we can. You know, they had already been building massive,
Speaker 3: massive semiconductor manufacturing capacity. The many experts say that US
Speaker 3: restrictions only incentivize them to double down on that. They're
Speaker 3: still pursuing the cutting edge. You know, we spent a
Speaker 3: lot of time this year also thinking about Huawei and
Speaker 3: their chip making ambitions. Their top chip maker, Smith has
Speaker 3: reached a seven nanometer capacity, which is certainly considered advanced.
Speaker 2: Not quite as advanced.
Speaker 3: As you know, the type of chips that will be
Speaker 3: made in the US, but ahead o where the US
Speaker 3: wanted China to be. But China is outpacing the rest
Speaker 3: of the world multiple times over in capacity for older
Speaker 3: generation chips. The US is actually weighing tariffs on Chinese
Speaker 3: chip makers that produce these chips because they say, if
Speaker 3: China dumps these chips on global markets. This could be
Speaker 3: disastrous for US companies that also manufacture them. I mean,
Speaker 3: Texas Instruments is a big one, Global foundry is a
Speaker 3: big one. But the reality is that is not where
Speaker 3: the lions share of the money from the Chips Act
Speaker 3: is going. So you have this tariffs based approach, you
Speaker 3: also have some domestic subsidies. There's sort of a two
Speaker 3: billion dollars set aside specifically for older generation ships in
Speaker 3: the US Substate program. RAYMONDO has said that they will
Speaker 3: do quote multiples of that. They're already actually almost at
Speaker 3: that amount. They've allocated nearly like one point six one
Speaker 3: point seven billion to an older generation or legacy chips
Speaker 3: so far. But it's a limited pool of money. You
Speaker 3: have to decide where you're going to spend it. And
Speaker 3: they also US officials feel a real and pressing threat
Speaker 3: of having the capacity for advanced chips concentrated in Asia.
Speaker 3: To go back to your question about environmental permitting, I
Speaker 3: spoke with Congressman Mike McCall about this yesterday, because there
Speaker 3: was this effort in Congress last year to exempt some
Speaker 3: of these major projects from federal environmental permitting standards over
Speaker 3: concerns that Raymondo told me could delay projects for months,
Speaker 3: if not years. That effort died because of it died
Speaker 3: last year because of some actually internal Republican opposition. It
Speaker 3: seems that there's maybe some new life being breathed into
Speaker 3: that bill now. But this was really striking to me
Speaker 3: what the Congressman said, if China invades Taiwan and TSMC,
Speaker 3: we can't be filling out environmental compliance paperwork. And that's
Speaker 3: really the threat that the US feels on this is that,
Speaker 3: you know, such a large share of the most advanced
Speaker 3: tips in the world or manufacturing in Taiwan that is
Speaker 3: one of the most geopolitically risky regions in the world,
Speaker 3: and if we lost access to those chips, the global
Speaker 3: economy woul grind.
Speaker 5: To a halt.
Speaker 1: Joe, I think I mentioned this to you, but while
Speaker 1: you were visiting your mom recently, I went to go
Speaker 1: visit my dad, which means I am now full of
Speaker 1: right wing talking points. But I had the most surreal
Speaker 1: conversation with him where he was complaining that the US
Speaker 1: doesn't make enough stuff anymore. And then I asked him
Speaker 1: when he thought about things like the Chips Act or
Speaker 1: the Infrastructure Act and things like that, and then he
Speaker 1: started he basically started complaining that the money hadn't been
Speaker 1: spent yet, which for someone who was complaining about the
Speaker 1: deficit like five minutes before, was kind of yeah, surreal,
Speaker 1: I would put it. But Ken, no, no, not at all.
Speaker 1: Although actually that reminds me. My mom did listen to
Speaker 1: a recent episode, the one we did on agriculture, and
Speaker 1: she got mad at me because she said that I did,
Speaker 1: in fact have fresh fruit in my school lunches, not
Speaker 1: just fruit roll ups. So I feel the need to
Speaker 1: correct the record there, Mom, in case you're listening, thank
Speaker 1: you for the berries that I did in fact have
Speaker 1: in my lunch. Anyway, Mackenzie, I kind of wanted to
Speaker 1: ask you about the politic politicization aspect of all of this,
Speaker 1: like how much is that kind of complicating some of
Speaker 1: the story and some of the roll out, like it
Speaker 1: was a Bible part is in. You know, it had
Speaker 1: bipartisan support, the Chips Act, But it feels like as
Speaker 1: the money is actually getting dispersed, politics are creeping back
Speaker 1: into it.
Speaker 2: That's certainly the case.
Speaker 3: I mean, the most recent announcement was a six point
Speaker 3: one billion dollar grant for Micron, which is also in
Speaker 3: line to receive more.
Speaker 2: Than that in loans.
Speaker 3: And President Biden, when he went to upstate New York
Speaker 3: to announce that, called out Republicans who had been taking
Speaker 3: credit for the project coming to Upstate New York but
Speaker 3: voted against the Chips Act. You know, this was a
Speaker 3: bipartisan piece of legislation. There have been squabbles throughout from
Speaker 3: key champions saying, Okay, why are we giving so much
Speaker 3: to X company? Should we really be thinking about building
Speaker 3: child care facilities and having labor peace agreements if our
Speaker 3: concern is this is a national security program and we
Speaker 3: actually need to get the money out the door. You know,
Speaker 3: it's people like to take credit for things that seem
Speaker 3: to be successful. Senator Chuck Schumer, the Majority leader, his
Speaker 3: press really about the Micron award called it Schumer's Chips
Speaker 3: and Science Act. There are certainly senators who would say, actually,
Speaker 3: I was very involved as well. You know, this is
Speaker 3: a major part of the Biden administration's economic message. It's
Speaker 3: not just the Ship's Act. There's also the Inflation Reduction Act,
Speaker 3: which is a signature climate law, and the bipartisan Infrastructure Law,
Speaker 3: and these sort of three legs of the stool, if
Speaker 3: you will, are the core pillars of Bidenomics. This massive
Speaker 3: wave of industrial policy in a way that the US
Speaker 3: hasn't really pursued for over a generation. And there are
Speaker 3: lots of different goals attached. You know, Chips and science
Speaker 3: passed in a bipartisan way because it is a national
Speaker 3: security program. You know, we've discussed the risks that US
Speaker 3: leaders feel both on the lagging edge, you know, mature
Speaker 3: ship side, and also on the cutting edge side with
Speaker 3: that concentration in East Asia. But it's also an economic
Speaker 3: revitalization program. It's a jobs program, you know, by and
Speaker 3: talks about how he wants these to be good jobs,
Speaker 3: good paying jobs, good paying union jobs. There's actually an
Speaker 3: effort to reach a labor peace agreement for this massive
Speaker 3: micron facility. It would be only the third chip facility
Speaker 3: in the country to have a union if they're successful.
Speaker 5: Okay, it's the bottom of the second inning.
Speaker 4: You know, your job never ends. What's next? What are
Speaker 4: you watching for next?
Speaker 2: Well, they still have some money to spend.
Speaker 3: Okay, you know, these four big grants are certainly going
Speaker 3: to catch the most attention, but there's about six billion
Speaker 3: dollars left. That's not a small amount of money, right,
Speaker 3: and they need to make really strategic decisions about Okay,
Speaker 3: there are you know, a couple of big names still
Speaker 3: floating out there that you know, maybe we'll get some
Speaker 3: larger awards, but then there are six hundred statements of
Speaker 3: interest in this funding.
Speaker 2: You know, we're talking.
Speaker 3: About a lot of smaller skill projects. You know, there's
Speaker 3: all this conversation about this sort of valley of death
Speaker 3: in tech entrepreneurship. You know, we we support stuff that's
Speaker 3: ready for commercial production. There's also this cutting edge R
Speaker 3: and D that's happening. But what about companies that are
Speaker 3: just trying to get over the line, just trying to
Speaker 3: be able to stand up their factory, you know, employing
Speaker 3: forty people, employing one hundred people, making one hundred and
Speaker 3: fifty million dollar investment in the US, rather than a
Speaker 3: sixty five billion dollar investment in the US, which is
Speaker 3: what TSMC is doing. And so there will be a
Speaker 3: second wave of awards and a lot smaller denominations.
Speaker 2: So that's one thing.
Speaker 3: I think the permitting, the environmental permitting is a really
Speaker 3: big deal. Certainly if this permitting exemption actually has the
Speaker 3: life that Mike McCall thinks that it does. That would
Speaker 3: solve a lot of headaches for companies. It would also
Speaker 3: probably catch a lot of flat from environmental groups who
Speaker 3: point out rightfully so that this is an industry that
Speaker 3: uses toxic chemicals, that has a carbon footprint that's expected
Speaker 3: to double by twenty thirty. We need to be thinking
Speaker 3: about the environmental and sustainability costs with this dustrial build out.
Speaker 3: But whether companies are able to navigate permitting processes at
Speaker 3: the federal and at the state and local level will
Speaker 3: directly affect when these factories are able to open. And
Speaker 3: I would say maybe the biggest thing is workforce development,
Speaker 3: which is not something that we've touched on a ton,
Speaker 3: but is probably the single thing that comes up the
Speaker 3: most when I talk to everyone from executives down to
Speaker 3: administrators of community college programs. There was a great story,
Speaker 3: a great piece in the Washington Post recently about workforce
Speaker 3: training efforts for semiconductor technicians in Arizona, and there are
Speaker 3: lots of different approaches here. One that was mentioned in
Speaker 3: that story was this so called quick Start program, which
Speaker 3: is like a two week training program that Intel has
Speaker 3: worked to set up with community colleges in the area
Speaker 3: because you know, this is very high tech stuff, but
Speaker 3: it doesn't necessarily require a PhD to work in these factories.
Speaker 3: You know, there's all different types of workers that are
Speaker 3: needed to make these projects successful. Technician training program, you know,
Speaker 3: got a ton of national press when it was first announced.
Speaker 3: I visited in i want to say September or October,
Speaker 3: and I was told that only twenty percent of the
Speaker 3: graduates of that program had secured positions because of the
Speaker 3: simple fact that these factories are not yet open and
Speaker 3: these are two week training programs, and so you can
Speaker 3: imagine somebody who does this training program in twenty twenty
Speaker 3: three and then, you know, three years later, when there
Speaker 3: is an abundance of factory jobs available, they.
Speaker 2: Don't remember what they learned in two weeks.
Speaker 3: There's also efforts to do much longer, you know, year
Speaker 3: long training programs. There are efforts to you know, get
Speaker 3: young kids excited about semi conductor manufacturing. You know, there's
Speaker 3: all this talk about this is not like the sexy
Speaker 3: thing to work in in tech, and people are trying to.
Speaker 2: Make it the sexy thing to work in.
Speaker 3: There is a lot of workforce efforts happening on you know,
Speaker 3: we talked a lot about the three thirty nine billion
Speaker 3: dollar Chips Act program. There's eleven billion dollars at aside
Speaker 3: for research and development, and there are a lot of
Speaker 3: workforce efforts that they're trying to say up on that front.
Speaker 3: But you know, the US is tens of thousands of
Speaker 3: workers short, and these factories will not produce chips if
Speaker 3: there are not people to staff them.
Speaker 1: I feel like fab factories trying to get over the line.
Speaker 1: It's very relatable. They're just trying to get over the line.
Speaker 5: Tracy, Have I told you my idea for a name
Speaker 5: of a semiconductor company?
Speaker 1: No, what, Well, I'm not.
Speaker 5: It would be it would be called Fabulous Semiconductors, but
Speaker 5: the U would be like an apostrophe, would look like
Speaker 5: Fabless Semiconductors. I think that'd be a really cool name
Speaker 5: for a company, don't you think?
Speaker 1: All Right, if someone ends up using that, you're going
Speaker 1: to have to like pay a copyright due to Joe.
Speaker 4: Or maybe fabu less.
Speaker 5: I think actually that would probably be the fabu Less
Speaker 5: would be the name of my fabulous Simmi.
Speaker 1: Okay, okay, well, maybe you can apply to the Chips
Speaker 1: Act for some fund.
Speaker 5: Just on the basis, on the basis of having a
Speaker 5: good name itself.
Speaker 4: Yeah, do it all right?
Speaker 2: Well, best of luck, you have six hundred competitors.
Speaker 3: Thank you.
Speaker 5: Lots More is produced by Carmen Rodriguez and Dashel Bennett,
Speaker 5: with help from Moses Ondam and Kill Brooks.
Speaker 1: Our sound engineer is Blake Maples. Sage Bauman is the
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