1 00:00:10,080 --> 00:00:14,200 Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast. 2 00:00:14,280 --> 00:00:17,759 Speaker 1: I'm Joe Wisenthal and I'm Tracy Alloway. Tracy, you know, 3 00:00:17,840 --> 00:00:20,079 Speaker 1: one of the things we talk about and the themes 4 00:00:20,120 --> 00:00:22,560 Speaker 1: we come back to quite a lot, is just this 5 00:00:22,640 --> 00:00:25,400 Speaker 1: idea of like US government really all government, but I 6 00:00:25,440 --> 00:00:30,440 Speaker 1: guess sort of US centric government intervention active role in 7 00:00:30,480 --> 00:00:32,760 Speaker 1: the economy, which is something that I would say is 8 00:00:32,760 --> 00:00:37,160 Speaker 1: like characterized a lot of like early Biden policymaking so far, yes, 9 00:00:37,200 --> 00:00:40,479 Speaker 1: and a perhaps unappreciated role at certain times. So we 10 00:00:40,560 --> 00:00:42,919 Speaker 1: talked a lot about the history of Silicon Valley, yes, 11 00:00:43,040 --> 00:00:45,200 Speaker 1: and how there was a lot of US government money 12 00:00:45,240 --> 00:00:49,960 Speaker 1: that actually flowed into both that place and that industry 13 00:00:50,040 --> 00:00:53,120 Speaker 1: and that had a massive impact. And now fast forward 14 00:00:53,200 --> 00:00:56,000 Speaker 1: to you know, the post pandemic era, and it feels 15 00:00:56,000 --> 00:00:59,320 Speaker 1: like we're seeing a bit of a resurgence. Yeah, that's 16 00:00:59,320 --> 00:01:03,520 Speaker 1: a good thing. Your that reminder, Like it feels like, 17 00:01:03,840 --> 00:01:08,319 Speaker 1: you know, the US political appetite for public investment, public 18 00:01:08,360 --> 00:01:12,440 Speaker 1: direction of money and capital into certain industries, it ebbs 19 00:01:12,440 --> 00:01:15,920 Speaker 1: and flows. Sometimes that's really out of favor or that's 20 00:01:15,920 --> 00:01:18,759 Speaker 1: seen as anti capitalism or something like that. And clearly 21 00:01:19,000 --> 00:01:21,720 Speaker 1: least the last few years it's been sort of back 22 00:01:21,720 --> 00:01:23,760 Speaker 1: in favor or at least, you know, maybe even a 23 00:01:23,760 --> 00:01:26,280 Speaker 1: little bit under Trump. It's certainly under Biden in a 24 00:01:26,400 --> 00:01:30,040 Speaker 1: very significant way, both with the Chips Act and of 25 00:01:30,040 --> 00:01:34,160 Speaker 1: course the Inflation Reduction Act of seriously public investment and 26 00:01:34,200 --> 00:01:37,560 Speaker 1: the Infrastructure built public investment into different industries. Right. I 27 00:01:37,600 --> 00:01:39,640 Speaker 1: think we spoke about this with as recline the new 28 00:01:39,720 --> 00:01:43,319 Speaker 1: sort of supply side liberalism, this idea that the pandemic 29 00:01:43,440 --> 00:01:47,319 Speaker 1: really exposed a lot of fault lines in the economy 30 00:01:47,360 --> 00:01:49,800 Speaker 1: and also in supply chains, and now there's a lot 31 00:01:49,840 --> 00:01:53,120 Speaker 1: of attention focused on actually fixing those. And I'm glad 32 00:01:53,160 --> 00:01:57,440 Speaker 1: you mentioned one of the preeminent sort of set pieces 33 00:01:57,560 --> 00:02:00,880 Speaker 1: of this particular type of policy, which, of course the 34 00:02:01,000 --> 00:02:04,000 Speaker 1: Chips Act, So the Big Chips Act, other than the 35 00:02:04,360 --> 00:02:08,320 Speaker 1: Infrastructure Act, the Chips Act is the kind of I 36 00:02:08,360 --> 00:02:12,480 Speaker 1: guess the shining symbol of this new direction. Well, you 37 00:02:12,560 --> 00:02:15,160 Speaker 1: mentioned supply chains, and we did a lot of episodes 38 00:02:15,280 --> 00:02:18,240 Speaker 1: on broken chip supply chains, so this brings it together. 39 00:02:18,280 --> 00:02:20,399 Speaker 1: But here's the other thing that I think is key, 40 00:02:20,520 --> 00:02:22,839 Speaker 1: which is that if this is gonna if there's gonna 41 00:02:22,880 --> 00:02:26,600 Speaker 1: be momentum on this front, if active public investment into 42 00:02:26,720 --> 00:02:29,960 Speaker 1: industry is going to be something that sustained. And now, 43 00:02:30,080 --> 00:02:33,120 Speaker 1: just like a two year, a couple bills passed, there's 44 00:02:33,120 --> 00:02:35,720 Speaker 1: a big question like, isn't being done well? Are people 45 00:02:35,800 --> 00:02:38,840 Speaker 1: happy with the results? And I presume if people are 46 00:02:38,840 --> 00:02:41,480 Speaker 1: happy with the results and people see change, then maybe 47 00:02:41,520 --> 00:02:44,119 Speaker 1: there's more momentum. And if people are like, oh, this 48 00:02:44,200 --> 00:02:46,440 Speaker 1: is what happens every time the government and gets involved 49 00:02:46,440 --> 00:02:49,880 Speaker 1: in some industry and it's red tape and cost overruns 50 00:02:49,960 --> 00:02:53,200 Speaker 1: and wasted taxpayer money and so forth, then that really 51 00:02:53,280 --> 00:02:56,440 Speaker 1: sort of like kneecaps any momentum. Yeah, and it feels 52 00:02:56,480 --> 00:02:59,720 Speaker 1: like the stakes are quite high for this particular program 53 00:02:59,720 --> 00:03:04,000 Speaker 1: the sacked because it is, you know, symbolic in many ways. 54 00:03:04,160 --> 00:03:06,400 Speaker 1: First of all, there is always an I would say, 55 00:03:06,480 --> 00:03:10,400 Speaker 1: a almost knee jerk suspicion of government spending from you 56 00:03:10,760 --> 00:03:14,800 Speaker 1: certain parts of America. But then secondly, this particular bill, 57 00:03:14,919 --> 00:03:18,200 Speaker 1: I believe it did come with some new sort of 58 00:03:18,200 --> 00:03:23,280 Speaker 1: conditions attached to it, requirements that companies receiving government funding 59 00:03:23,480 --> 00:03:27,400 Speaker 1: have sufficient childcare things like that, and that has garnered 60 00:03:27,400 --> 00:03:30,920 Speaker 1: additional scrutiny recently. So there are lots of questions over 61 00:03:31,000 --> 00:03:34,200 Speaker 1: exactly how this is being implemented and how we'll measure 62 00:03:34,200 --> 00:03:37,240 Speaker 1: its success. You mentioned scrutiny. I think some of it's 63 00:03:37,280 --> 00:03:41,080 Speaker 1: from our own colleagues at the Bloomberg opinion side. There's 64 00:03:41,120 --> 00:03:43,440 Speaker 1: a headline eight days ago, fifty two billion dollars ship 65 00:03:43,480 --> 00:03:46,640 Speaker 1: making plan is racing towards failure. That was the opinion 66 00:03:46,680 --> 00:03:50,360 Speaker 1: side of the House. That's not our opinion. Nonetheless, this 67 00:03:50,440 --> 00:03:52,960 Speaker 1: is the question, So let's have this question. Look where 68 00:03:53,000 --> 00:03:55,840 Speaker 1: are we that this bill was passed last August. We're 69 00:03:55,880 --> 00:03:58,240 Speaker 1: already seen a lot of activity in the way, but 70 00:03:58,320 --> 00:04:01,520 Speaker 1: how's it actually going. I'm very excited about our guests. 71 00:04:01,600 --> 00:04:05,000 Speaker 1: We're going to be speaking with Mike Schmidt, director of 72 00:04:05,080 --> 00:04:08,320 Speaker 1: the Chips Program Office, as well as Todd Fisher, chief 73 00:04:08,360 --> 00:04:11,560 Speaker 1: Investment Officer of the Chip Program Office. I didn't even 74 00:04:11,600 --> 00:04:15,880 Speaker 1: know CIOs were a role within government, so that's interesting anyway. 75 00:04:16,000 --> 00:04:18,240 Speaker 1: Mike and Todd, thank you so much for coming on 76 00:04:18,279 --> 00:04:22,159 Speaker 1: Odd Lot. Thank you, thank you Joe, thank you Tracy 77 00:04:22,240 --> 00:04:24,800 Speaker 1: for having us. Really I'm a big fan of the podcast, 78 00:04:24,880 --> 00:04:27,200 Speaker 1: so very excited to be on. This is Mike Schmidt, 79 00:04:27,200 --> 00:04:30,200 Speaker 1: I'm the director of the Program Office, and Todd is 80 00:04:30,240 --> 00:04:33,680 Speaker 1: our chief investment officer. And we're excited to be here 81 00:04:33,680 --> 00:04:38,040 Speaker 1: to talk chips. Fortunately, your listeners won't won't need us 82 00:04:38,080 --> 00:04:41,720 Speaker 1: to explain how critical chips are, given all the all 83 00:04:41,760 --> 00:04:44,080 Speaker 1: the episodes you've already done on it, but just to 84 00:04:44,160 --> 00:04:48,000 Speaker 1: lay that foundation, chips are critical to virtually every technology 85 00:04:48,000 --> 00:04:51,120 Speaker 1: that underpins modern life, anything with an on off switch, 86 00:04:51,560 --> 00:04:57,480 Speaker 1: automobiles and medical devices, but also satellite communications and military technology. 87 00:04:57,640 --> 00:05:00,520 Speaker 1: They're going to be foundational to the technolo algies that 88 00:05:00,560 --> 00:05:05,080 Speaker 1: will fundamentally shape society and geopolitics in the coming years, 89 00:05:05,160 --> 00:05:09,560 Speaker 1: things like artificial intelligence, biotech, and clean energy, and so 90 00:05:09,839 --> 00:05:13,080 Speaker 1: you know, we the US have long been a leader 91 00:05:13,120 --> 00:05:16,719 Speaker 1: in chip design and R and D, and that's a really, 92 00:05:16,760 --> 00:05:20,720 Speaker 1: really good thing, but we've fallen significantly behind and manufacturing. 93 00:05:20,720 --> 00:05:23,880 Speaker 1: We account for only about ten percent of global semiconductor 94 00:05:23,920 --> 00:05:27,840 Speaker 1: production today, down from several times that a few decades ago, 95 00:05:28,400 --> 00:05:31,560 Speaker 1: especially where some is on the advanced chips, the leading 96 00:05:31,600 --> 00:05:35,400 Speaker 1: edge chips, where we produce functionally none of that today. 97 00:05:36,040 --> 00:05:38,720 Speaker 1: And so at commerce we have fifty billion to address 98 00:05:38,760 --> 00:05:42,080 Speaker 1: this problem. Thirty nine billion is that for manufacturing incentives, 99 00:05:42,400 --> 00:05:45,120 Speaker 1: eleven billions for R and D. Todd and I are 100 00:05:45,360 --> 00:05:48,400 Speaker 1: are on that incentive side. On that thirty nine billion side, 101 00:05:48,400 --> 00:05:52,600 Speaker 1: and we view ourselves fundamentally as managing a thirty nine 102 00:05:52,720 --> 00:05:57,000 Speaker 1: billion dollar investment program on behalf of taxpayers. But our 103 00:05:57,040 --> 00:06:01,120 Speaker 1: return is not financial. Our return is apply chain resilience 104 00:06:01,440 --> 00:06:05,080 Speaker 1: and in advancing are our economic and national security. And 105 00:06:05,120 --> 00:06:07,320 Speaker 1: I think we're off a pretty good start here, right. Well, 106 00:06:07,320 --> 00:06:09,679 Speaker 1: I was gonna say, you know, Tracy mentioned the beginning, 107 00:06:09,800 --> 00:06:12,000 Speaker 1: there's a big symbolic element but also just like a 108 00:06:12,080 --> 00:06:15,280 Speaker 1: very real element. You mentioned the geopolitics, which is like 109 00:06:15,320 --> 00:06:19,159 Speaker 1: the stakes are literally very high, but for all modern 110 00:06:19,200 --> 00:06:22,440 Speaker 1: life of whether you know, the US always has a 111 00:06:22,760 --> 00:06:28,360 Speaker 1: ongoing supply of sort of advanced in less advanced chips. So, Mike, 112 00:06:28,440 --> 00:06:30,320 Speaker 1: that was a really good intro to the sort of 113 00:06:30,320 --> 00:06:33,040 Speaker 1: stakes involved. But why don't we bring in Todd and 114 00:06:33,279 --> 00:06:36,400 Speaker 1: maybe um Todd you could explain, you know, Joe alluded 115 00:06:36,440 --> 00:06:38,960 Speaker 1: to this in the intro, but what does the chief 116 00:06:39,000 --> 00:06:43,960 Speaker 1: Investment Officer of the Chips Program Office actually do? Thank you, Tracy, 117 00:06:44,000 --> 00:06:45,839 Speaker 1: it's really great to be here. I'm also a big 118 00:06:45,839 --> 00:06:51,359 Speaker 1: fan of your show. We college chief investment officer. The 119 00:06:51,520 --> 00:06:56,040 Speaker 1: role is basically to figure out how to effectively invest 120 00:06:56,120 --> 00:06:58,680 Speaker 1: and allocate the thirty nine billion dollars that we have 121 00:06:59,279 --> 00:07:03,240 Speaker 1: to a complish our overall goals and vision for success. 122 00:07:03,279 --> 00:07:06,280 Speaker 1: So I spent my career, I spent thirty years in 123 00:07:06,279 --> 00:07:10,560 Speaker 1: the financial industry, twenty five years at KKR, basically making investments, 124 00:07:10,560 --> 00:07:14,200 Speaker 1: sitting on investment committees, etc. And given that this is 125 00:07:14,240 --> 00:07:17,920 Speaker 1: a new government program that really hasn't been done in 126 00:07:17,960 --> 00:07:21,720 Speaker 1: this way in many decades, that concept of creating a 127 00:07:21,800 --> 00:07:25,080 Speaker 1: chief investment Officer and an investment office to think about 128 00:07:25,120 --> 00:07:28,040 Speaker 1: the way we are allocating this money seem to make 129 00:07:28,040 --> 00:07:30,000 Speaker 1: sense to us. I was just going to jump in 130 00:07:30,040 --> 00:07:32,720 Speaker 1: and maybe explain a little bit of like the broader 131 00:07:32,840 --> 00:07:35,400 Speaker 1: theory of the case in terms of how we're building 132 00:07:35,400 --> 00:07:38,600 Speaker 1: the team, because fundamentally, we have two objectives here right 133 00:07:39,080 --> 00:07:41,680 Speaker 1: Number one, we need to make a set of investments 134 00:07:41,680 --> 00:07:44,160 Speaker 1: that are advancing our economic and national security. So we 135 00:07:44,200 --> 00:07:46,400 Speaker 1: have a set of strategic objectives. But then we have 136 00:07:46,440 --> 00:07:49,400 Speaker 1: to do so in a way that is safeguarding taxpayer 137 00:07:49,480 --> 00:07:53,000 Speaker 1: dollars and really getting good deal. So we built our 138 00:07:53,040 --> 00:07:58,960 Speaker 1: office here around chief strategy Officer managing strategy, technology and policy. 139 00:07:59,600 --> 00:08:02,200 Speaker 1: That's more and Dwyer, she comes from the senior leadership 140 00:08:02,200 --> 00:08:05,680 Speaker 1: of the Defense Department and the Office of Science Technology Policy, 141 00:08:05,920 --> 00:08:10,040 Speaker 1: and then Todd bringing his considerable financial commercial expertise as 142 00:08:10,040 --> 00:08:12,720 Speaker 1: the Investment Office, you know, gives us a way of 143 00:08:12,800 --> 00:08:16,760 Speaker 1: kind of like mediating a conversation and coming up with 144 00:08:16,800 --> 00:08:20,400 Speaker 1: an overall approach that is kind of advance both the 145 00:08:20,440 --> 00:08:24,360 Speaker 1: tastpayer protection side of the equation but also the kind 146 00:08:24,360 --> 00:08:27,560 Speaker 1: of strategic and economic Well let me ask, and you know, 147 00:08:27,640 --> 00:08:32,000 Speaker 1: with a sort of traditional investment CIO, like, it's fairly 148 00:08:32,080 --> 00:08:34,480 Speaker 1: easy to measure did they do a good job or 149 00:08:34,520 --> 00:08:36,600 Speaker 1: not because you can look at returns, maybe you can 150 00:08:36,600 --> 00:08:38,480 Speaker 1: look at volatility and a few things. It's like, oh 151 00:08:38,520 --> 00:08:41,480 Speaker 1: this this investor made money, or they at least avoided 152 00:08:41,559 --> 00:08:45,960 Speaker 1: losing money, etc. Obviously, as you mentioned Mike and Todd, 153 00:08:45,960 --> 00:08:47,800 Speaker 1: both of you, you know, it's different with public money 154 00:08:47,840 --> 00:08:50,120 Speaker 1: because the goal is to foster an industry and the 155 00:08:50,160 --> 00:08:54,120 Speaker 1: goal is to build something that creates sort of positive externalities. 156 00:08:54,559 --> 00:08:57,840 Speaker 1: But still, I mean, I wonder, are the hard benchmarks 157 00:08:58,000 --> 00:09:01,439 Speaker 1: that we can look at in terms of taxpayer money 158 00:09:01,559 --> 00:09:05,199 Speaker 1: well spent? Are the hard benchmarks in terms of how 159 00:09:05,360 --> 00:09:08,360 Speaker 1: much chip production is happening in the United States today 160 00:09:08,880 --> 00:09:11,360 Speaker 1: Verse twenty twenty eight, Verse twenty thirty three that we 161 00:09:11,400 --> 00:09:15,439 Speaker 1: could say if we don't hit these levels it was unsuccessful, 162 00:09:15,480 --> 00:09:17,720 Speaker 1: or if we do hit these levels that to success. 163 00:09:17,760 --> 00:09:20,079 Speaker 1: What can the public look that to know whether it's 164 00:09:20,120 --> 00:09:22,800 Speaker 1: working or not. We've spend a lot of time thinking 165 00:09:22,840 --> 00:09:26,679 Speaker 1: about this. I mean, we fundamentally believe that we've been 166 00:09:26,760 --> 00:09:29,960 Speaker 1: entrusted with a very large sum of taxpayer money and 167 00:09:30,120 --> 00:09:35,240 Speaker 1: it's a public investment in private industry without recent president 168 00:09:35,360 --> 00:09:38,920 Speaker 1: in terms of its scale and its strategic significance, and 169 00:09:38,960 --> 00:09:40,800 Speaker 1: so we think we kind of owe it to the 170 00:09:40,800 --> 00:09:45,120 Speaker 1: public and a broad range of stakeholders, industry and applicants, 171 00:09:45,320 --> 00:09:50,040 Speaker 1: foreign governments, Congress to explain what we're trying to get 172 00:09:50,080 --> 00:09:53,360 Speaker 1: with their money. And we put out, after a lot 173 00:09:53,360 --> 00:09:56,880 Speaker 1: of analysis, what we call our Vision for Success document, 174 00:09:57,400 --> 00:10:00,680 Speaker 1: and that lays out what we want future to look 175 00:10:00,720 --> 00:10:04,920 Speaker 1: like after we've invested these funds in twenty thirty and beyond. 176 00:10:05,120 --> 00:10:08,600 Speaker 1: And so we say in Leading Edge Logic, we want 177 00:10:08,640 --> 00:10:12,400 Speaker 1: to have at least two large scale Leading Edge Logic 178 00:10:12,480 --> 00:10:16,160 Speaker 1: manufacturing clusters. We talk about the importance of advanced packaging, 179 00:10:16,200 --> 00:10:20,559 Speaker 1: which is absolutely critical both from a supply chain resiliency standpoint, 180 00:10:20,640 --> 00:10:24,240 Speaker 1: but also from a technology leadership standpoint. We talk about memory. 181 00:10:24,520 --> 00:10:27,400 Speaker 1: We talk about current generation to mature. So really across 182 00:10:27,440 --> 00:10:30,080 Speaker 1: these segments, we have tried to put some kind of 183 00:10:30,120 --> 00:10:32,839 Speaker 1: north stars out there that we're gonna tie ourselves to. 184 00:10:33,840 --> 00:10:37,280 Speaker 1: The measure I think about a lot. Joe. Beyond all 185 00:10:37,320 --> 00:10:41,839 Speaker 1: of those specifics is whether we can create self sustaining 186 00:10:41,920 --> 00:10:45,560 Speaker 1: dynamics going forward. So can we be in a position 187 00:10:45,640 --> 00:10:50,360 Speaker 1: where in the coming years, based on the investments we've made, 188 00:10:50,400 --> 00:10:54,640 Speaker 1: based on the scale and the ecosystems we've been able 189 00:10:54,679 --> 00:10:59,440 Speaker 1: to create, do the major chip manufacturers view investing in 190 00:10:59,480 --> 00:11:02,040 Speaker 1: the United States has quartered their business model? And if 191 00:11:02,040 --> 00:11:04,040 Speaker 1: we're able to do that, then I think we will 192 00:11:04,080 --> 00:11:08,120 Speaker 1: be on a really solid trajectory with respect to our 193 00:11:08,280 --> 00:11:12,600 Speaker 1: economic and national security objectives going forward. Do you want 194 00:11:12,600 --> 00:11:14,640 Speaker 1: to add to that at all? Yeah, I would say, 195 00:11:14,640 --> 00:11:16,760 Speaker 1: you know, in ten years when we look back, we 196 00:11:16,840 --> 00:11:19,400 Speaker 1: want to really see this act in this period of 197 00:11:19,440 --> 00:11:22,560 Speaker 1: time as an inflection point. Mike's already said that over 198 00:11:22,559 --> 00:11:25,679 Speaker 1: the last thirty years, we've seen the percentage of manufacturing 199 00:11:25,720 --> 00:11:28,000 Speaker 1: of chips happening in this country go from thirty seven 200 00:11:28,000 --> 00:11:30,680 Speaker 1: percent to ten percent. We need to turn that around, 201 00:11:30,760 --> 00:11:33,480 Speaker 1: and so the success will be to see that number 202 00:11:33,520 --> 00:11:36,319 Speaker 1: instead of continuing to go down, to start to go up, 203 00:11:36,640 --> 00:11:39,280 Speaker 1: and then in the very specific areas that we've already 204 00:11:39,320 --> 00:11:42,680 Speaker 1: laid out, meaning leading edge logic where we now today 205 00:11:42,760 --> 00:11:45,720 Speaker 1: produced zero percent of the world's chips and leading edge. 206 00:11:46,360 --> 00:11:49,520 Speaker 1: We've said very clearly we want to see two self 207 00:11:49,559 --> 00:11:53,120 Speaker 1: sustaining ecosystems at a minimum, and we have no real 208 00:11:53,160 --> 00:11:55,560 Speaker 1: advanced packaging in this country either. We want to see 209 00:11:55,960 --> 00:11:58,200 Speaker 1: quite robust aspects there, and we want to start to 210 00:11:58,200 --> 00:12:01,920 Speaker 1: see cost competitive memory plants being done in this country. 211 00:12:02,040 --> 00:12:05,199 Speaker 1: And we want to see all the piece of the ecosystem, 212 00:12:05,240 --> 00:12:08,440 Speaker 1: including suppliers, come together around those goals. And so that's 213 00:12:08,440 --> 00:12:28,000 Speaker 1: how we're thinking about measuring ourselves. I have a bunch 214 00:12:28,000 --> 00:12:31,360 Speaker 1: of questions about how the government can help build a 215 00:12:31,400 --> 00:12:35,920 Speaker 1: resilient industry that can sort of manage through various economic cycles. 216 00:12:36,440 --> 00:12:40,280 Speaker 1: But before we get to those, maybe just to back 217 00:12:40,360 --> 00:12:43,000 Speaker 1: up for a second, could you talk about how the 218 00:12:43,160 --> 00:12:47,600 Speaker 1: process of dispersing this substantial amount of money. You know, 219 00:12:47,640 --> 00:12:50,599 Speaker 1: you talked about fifty billion, thirty nine billion for manufacturing 220 00:12:50,600 --> 00:12:53,079 Speaker 1: and then eleven billion for R and D. How does 221 00:12:53,120 --> 00:12:56,840 Speaker 1: it actually work in terms of handing it out, you know, 222 00:12:56,840 --> 00:13:00,640 Speaker 1: and applying it. Do people come to you or do 223 00:13:00,760 --> 00:13:04,840 Speaker 1: you identify prospective companies that could benefit from this? How 224 00:13:04,840 --> 00:13:08,720 Speaker 1: exactly does that work the broad aspect of what we've 225 00:13:08,760 --> 00:13:10,960 Speaker 1: laid out in our notice, the funding opportunity is a 226 00:13:11,040 --> 00:13:15,000 Speaker 1: very clear cut and very specific application process, so we 227 00:13:15,040 --> 00:13:18,880 Speaker 1: are expecting companies to come to us. Our portal is 228 00:13:19,000 --> 00:13:21,320 Speaker 1: right now open for what we call statements of intent, 229 00:13:21,600 --> 00:13:25,040 Speaker 1: where anybody that qualifies for this or any of our 230 00:13:25,120 --> 00:13:28,240 Speaker 1: later funding opportunities can put in a statement of the 231 00:13:28,320 --> 00:13:31,080 Speaker 1: kind of project that they're looking for potential funding for, 232 00:13:31,559 --> 00:13:33,719 Speaker 1: and then there is a series of other approaches, a 233 00:13:33,760 --> 00:13:38,840 Speaker 1: pre application and application that accumulates very detailed information that 234 00:13:38,880 --> 00:13:42,440 Speaker 1: we can then evaluate and make decisions based on to 235 00:13:42,600 --> 00:13:46,040 Speaker 1: put money out to the various parts of the ecosystem. 236 00:13:46,320 --> 00:13:48,440 Speaker 1: In addition to that, I would say that we are 237 00:13:48,559 --> 00:13:51,120 Speaker 1: trying to be proactive to date, before we put our 238 00:13:51,160 --> 00:13:55,560 Speaker 1: funding opportunity out, we've talked to dozens of industry players 239 00:13:55,600 --> 00:13:58,840 Speaker 1: at companies. We are trying to identify the parts of 240 00:13:58,880 --> 00:14:02,720 Speaker 1: the ecosystem that our potential barriers or roadblocks so that 241 00:14:02,760 --> 00:14:07,120 Speaker 1: we can encourage specific applicants, but ultimately the applicants have 242 00:14:07,200 --> 00:14:09,839 Speaker 1: to come to us. Yeah, we'll do like a review 243 00:14:09,840 --> 00:14:13,559 Speaker 1: of the application, and we'll decide based on the criteria 244 00:14:13,640 --> 00:14:17,480 Speaker 1: we've laid out, based on our economic and national security objectives. 245 00:14:17,800 --> 00:14:20,160 Speaker 1: This is a project we want to support that will 246 00:14:20,240 --> 00:14:23,080 Speaker 1: lead us to extending what we call a preliminary memorandum 247 00:14:23,080 --> 00:14:25,600 Speaker 1: of terms but basically a term sheet, right, and then 248 00:14:25,680 --> 00:14:29,720 Speaker 1: you're in a commercial relationship with the company where we're 249 00:14:29,720 --> 00:14:31,840 Speaker 1: going to try to align on a set of economic 250 00:14:31,960 --> 00:14:35,040 Speaker 1: terms that allows a project or a set of projects 251 00:14:35,120 --> 00:14:37,240 Speaker 1: to move forward. If we can align, then we'll do 252 00:14:37,320 --> 00:14:39,960 Speaker 1: our due diligence and we'll move towards making that award. 253 00:14:40,200 --> 00:14:42,680 Speaker 1: Let's jump right into some of the criticisms. One of 254 00:14:42,720 --> 00:14:44,480 Speaker 1: the big ones that got a lot of attention a 255 00:14:44,520 --> 00:14:47,600 Speaker 1: few weeks ago was there's message that was put out 256 00:14:47,680 --> 00:14:50,960 Speaker 1: about new construction and the requirement that companies had to 257 00:14:50,960 --> 00:14:54,000 Speaker 1: take childcare of the employees seriously. And I think the 258 00:14:54,120 --> 00:14:58,320 Speaker 1: concern was, or some of the criticism was that Democrats, 259 00:14:58,360 --> 00:15:00,600 Speaker 1: having failed to pass some sort of che wildcare bill 260 00:15:00,640 --> 00:15:04,280 Speaker 1: in the first two years, are trying to attach sort 261 00:15:04,280 --> 00:15:07,920 Speaker 1: of progressive interests onto the bills that they did pass, 262 00:15:08,240 --> 00:15:10,480 Speaker 1: and that this is potentially going to sort of lard 263 00:15:10,560 --> 00:15:13,120 Speaker 1: up the whole process and the companies they if we 264 00:15:13,160 --> 00:15:16,880 Speaker 1: really want them to just move fast, compete, be dynamic, 265 00:15:17,120 --> 00:15:19,640 Speaker 1: then why are we adding all of these extra strings 266 00:15:19,680 --> 00:15:23,960 Speaker 1: and obligations that aren't related to the production of advanced semiconductors. 267 00:15:24,360 --> 00:15:27,760 Speaker 1: Why is that criticism wrong in your view? The no 268 00:15:27,880 --> 00:15:31,240 Speaker 1: FOLLOW lays out sex evaluation criteria. It has economic and 269 00:15:31,360 --> 00:15:33,560 Speaker 1: national security, which we say is the core criteria, the 270 00:15:33,600 --> 00:15:37,560 Speaker 1: primary criteria. We'll receive the most weight, and then we're 271 00:15:37,560 --> 00:15:42,600 Speaker 1: going to evaluate applicants based on commercial viability, financial strength, 272 00:15:43,080 --> 00:15:47,200 Speaker 1: technical feasibility, workforce, and a set of broader impacts. And 273 00:15:47,240 --> 00:15:50,000 Speaker 1: we view workforce is absolutely essential to meeting the economic 274 00:15:50,080 --> 00:15:52,680 Speaker 1: national security objectives. Every time we talk to a company, 275 00:15:53,000 --> 00:15:55,160 Speaker 1: workforce concerns are at the top of their list. We 276 00:15:55,280 --> 00:15:58,000 Speaker 1: know it's a tight labor market. We need workforce to 277 00:15:58,000 --> 00:16:01,360 Speaker 1: build these fabs, we need workforce to operate these fabs. 278 00:16:01,400 --> 00:16:05,080 Speaker 1: It's absolutely essential, and the statute requires us to ask 279 00:16:05,120 --> 00:16:09,480 Speaker 1: applicants for a workforce plan, and as part of that, 280 00:16:10,080 --> 00:16:12,560 Speaker 1: one thing we hear a lot from companies is that 281 00:16:13,040 --> 00:16:16,920 Speaker 1: lack of access to affordable, accessible childcare is a barrier 282 00:16:17,000 --> 00:16:20,160 Speaker 1: to getting the type of broad, diverse workforce we need 283 00:16:20,320 --> 00:16:24,640 Speaker 1: in the system in order to achieve our objectives. So 284 00:16:24,680 --> 00:16:29,720 Speaker 1: we view childcare as really part and parcel of the 285 00:16:29,800 --> 00:16:32,680 Speaker 1: broader set of objectives that we have around workforce, which 286 00:16:32,680 --> 00:16:36,120 Speaker 1: is then, of course essential to meeting the broader objectives 287 00:16:36,440 --> 00:16:39,320 Speaker 1: on economic and national security. So as part of the 288 00:16:39,320 --> 00:16:43,400 Speaker 1: workforce Plan, we have asked companies to provide a plan 289 00:16:43,560 --> 00:16:46,440 Speaker 1: with respect access to childcare that will be part of 290 00:16:46,440 --> 00:16:52,320 Speaker 1: that holistic evaluation process that covers those six evaluation criteria. 291 00:16:52,360 --> 00:16:54,640 Speaker 1: But if I could add one or two things to that, 292 00:16:54,920 --> 00:16:58,120 Speaker 1: I left KKR five years ago with the intention to 293 00:16:58,440 --> 00:17:01,560 Speaker 1: shift my whole second career to something in the public 294 00:17:01,560 --> 00:17:05,119 Speaker 1: and not for profit sector, and my main focus was workforce, 295 00:17:05,200 --> 00:17:08,119 Speaker 1: And so I spent the last four years with a 296 00:17:08,200 --> 00:17:11,639 Speaker 1: maniacal focus on workforce because I believe the workforce system 297 00:17:11,680 --> 00:17:14,920 Speaker 1: in this country is broken, or at least not where 298 00:17:14,920 --> 00:17:17,439 Speaker 1: it needs to be. And when you look at this 299 00:17:17,520 --> 00:17:21,320 Speaker 1: industry where over the last twenty years we've lost third 300 00:17:21,400 --> 00:17:24,720 Speaker 1: of the workers in the semiconductor industry at the same 301 00:17:24,720 --> 00:17:27,840 Speaker 1: time as the industry has tripled globally. And you listen 302 00:17:27,920 --> 00:17:30,640 Speaker 1: to the companies in terms of their one of, if 303 00:17:30,680 --> 00:17:35,159 Speaker 1: not their biggest challenge is attracting workers for their desire 304 00:17:35,240 --> 00:17:37,720 Speaker 1: to build plants in this country. It is very clear 305 00:17:38,200 --> 00:17:41,120 Speaker 1: that workforce is going to be a really critical aspect 306 00:17:41,160 --> 00:17:43,639 Speaker 1: of success in the long term. In fact, when you 307 00:17:43,680 --> 00:17:47,320 Speaker 1: look at someone like TSMC or Samsung over in Asia, 308 00:17:47,680 --> 00:17:51,040 Speaker 1: a core part of their success is the product the 309 00:17:51,160 --> 00:17:54,239 Speaker 1: productivity they're able to get out of their workers, and 310 00:17:54,280 --> 00:17:56,960 Speaker 1: the sort of aligned system that the Koreans and the 311 00:17:56,960 --> 00:18:01,760 Speaker 1: Taiwanese have around workforce, and this aspect is really critical. 312 00:18:01,800 --> 00:18:05,360 Speaker 1: And so childcare is part of sort of expanding that 313 00:18:05,440 --> 00:18:08,119 Speaker 1: fundamental funnel at the front end so that there is 314 00:18:08,240 --> 00:18:11,840 Speaker 1: more capability for different types of workers to enter the 315 00:18:12,200 --> 00:18:14,560 Speaker 1: semiconductor industry. And I did a little bit of googling 316 00:18:14,600 --> 00:18:17,800 Speaker 1: this weekend. I literally went onto TSMC and Samsung and 317 00:18:17,880 --> 00:18:21,320 Speaker 1: Intel and Micron website, all of them. All of them 318 00:18:21,400 --> 00:18:25,280 Speaker 1: offer some kind of childcare. Micron just announced in Idaho 319 00:18:25,359 --> 00:18:28,440 Speaker 1: that they're building a childcare center where their R and 320 00:18:28,520 --> 00:18:31,080 Speaker 1: D fab out there. And so I think this is 321 00:18:31,119 --> 00:18:33,000 Speaker 1: a little bit of a red herring because I think 322 00:18:33,040 --> 00:18:36,240 Speaker 1: it's really core to what all of these companies need 323 00:18:36,280 --> 00:18:39,840 Speaker 1: to do to attract their workers. So I'm glad we're 324 00:18:39,920 --> 00:18:45,000 Speaker 1: talking about the labor force of this industry because this 325 00:18:45,080 --> 00:18:47,760 Speaker 1: is something that's come up in various ways. So aside 326 00:18:47,840 --> 00:18:52,480 Speaker 1: from childcare, what else are you doing in order to 327 00:18:52,600 --> 00:18:56,160 Speaker 1: attract people to this space or what can be done, 328 00:18:56,240 --> 00:18:58,840 Speaker 1: because you know, one of the reasons that people need 329 00:18:58,960 --> 00:19:03,480 Speaker 1: childcare for these type jobs is they are very intense 330 00:19:03,880 --> 00:19:06,520 Speaker 1: and you know, in some parts of Asia, we're talking 331 00:19:06,560 --> 00:19:10,840 Speaker 1: about twelve hour shifts where you have to be incredibly 332 00:19:10,880 --> 00:19:15,120 Speaker 1: focused and diligent and detail oriented. And I know there 333 00:19:15,160 --> 00:19:18,640 Speaker 1: has been some concern about whether or not the US 334 00:19:18,720 --> 00:19:22,040 Speaker 1: will be able to find enough people who want to 335 00:19:22,119 --> 00:19:25,840 Speaker 1: do this type of work. I mean, I think these 336 00:19:25,920 --> 00:19:29,840 Speaker 1: are really high quality jobs for many people in this country, 337 00:19:29,960 --> 00:19:34,119 Speaker 1: and what we need to do is to help individuals 338 00:19:34,119 --> 00:19:37,439 Speaker 1: across this country understand what these jobs involved, understand the 339 00:19:37,760 --> 00:19:40,919 Speaker 1: quality and attractiveness and potential for advancement in the jobs. 340 00:19:41,359 --> 00:19:43,760 Speaker 1: And so that means that we need a system that 341 00:19:43,920 --> 00:19:47,480 Speaker 1: trains and attracts that skill set. There should be no 342 00:19:47,560 --> 00:19:50,320 Speaker 1: reason that our workforce in the US can't be as 343 00:19:50,400 --> 00:19:54,440 Speaker 1: productive as any other workforce around the globe. And so 344 00:19:54,640 --> 00:19:57,359 Speaker 1: the other things in addition to things like childcare, you 345 00:19:57,359 --> 00:20:02,879 Speaker 1: would talk about aligning local whole systems, community colleges for 346 00:20:03,080 --> 00:20:09,200 Speaker 1: your institutions, training organizations with appropriate or wrap around support 347 00:20:09,240 --> 00:20:14,800 Speaker 1: around transportation and technology skills and things of those nature, 348 00:20:15,119 --> 00:20:18,439 Speaker 1: and aligning those systems so that there's clear pathways and 349 00:20:18,520 --> 00:20:22,800 Speaker 1: clear curriculum and clear training paths so that more talent 350 00:20:23,280 --> 00:20:26,000 Speaker 1: can experience the quality of the jobs if there are 351 00:20:26,000 --> 00:20:28,200 Speaker 1: in this industry. The other thing I would just say 352 00:20:28,400 --> 00:20:31,320 Speaker 1: is on the kind of engineering side of things. This 353 00:20:31,440 --> 00:20:34,880 Speaker 1: is just a personal view, but like I think we 354 00:20:35,280 --> 00:20:40,240 Speaker 1: as a country would be really better off if more 355 00:20:40,800 --> 00:20:44,280 Speaker 1: engineers were interested in working on semi conductors, you know, 356 00:20:44,320 --> 00:20:46,919 Speaker 1: as opposed to say software. And I think all of 357 00:20:47,000 --> 00:20:50,159 Speaker 1: us can play a role in trying to shape that narrative. 358 00:20:50,200 --> 00:20:53,840 Speaker 1: I mean semiconductors. It is really like the peak of 359 00:20:54,080 --> 00:20:57,239 Speaker 1: human innovative capacity, and I think, you know, we need 360 00:20:57,280 --> 00:21:00,480 Speaker 1: to make semi conductors cool. Here it does seem like, 361 00:21:00,720 --> 00:21:03,360 Speaker 1: I don't know, and if you could go into software 362 00:21:03,359 --> 00:21:05,280 Speaker 1: and make a lot of money and you know, hang 363 00:21:05,280 --> 00:21:08,800 Speaker 1: out and play ping pong and stuff like that, or yeah, 364 00:21:08,800 --> 00:21:11,119 Speaker 1: you go to semi conductors and it'd be like really 365 00:21:11,160 --> 00:21:13,560 Speaker 1: grueling and not sit on beam bags, and that's like 366 00:21:13,640 --> 00:21:15,520 Speaker 1: kind of tough. Like if you want to like attract 367 00:21:15,840 --> 00:21:18,640 Speaker 1: the most advanced technical talent, I want to just get 368 00:21:18,680 --> 00:21:21,960 Speaker 1: another question, and I'm sorry, I'm going to keep cripping 369 00:21:22,040 --> 00:21:26,080 Speaker 1: questioned ideas from our brutal Bloomberg opinion columnists. The fifty 370 00:21:26,119 --> 00:21:29,600 Speaker 1: two billion dollar plan is racing towards failure. But this 371 00:21:29,680 --> 00:21:32,080 Speaker 1: is something they bring up, and it's something I've heard 372 00:21:32,080 --> 00:21:35,000 Speaker 1: from many. You see a lot, which is that one 373 00:21:35,119 --> 00:21:40,439 Speaker 1: challenge in America is things like local environmental rags that 374 00:21:40,520 --> 00:21:44,200 Speaker 1: make buildings slower than it does in other countries, land 375 00:21:44,320 --> 00:21:48,960 Speaker 1: used questions, environmental reviews, lawsuits, things like that. Just so 376 00:21:49,040 --> 00:21:52,040 Speaker 1: far in the eight months since this bill was passed, 377 00:21:52,359 --> 00:21:55,679 Speaker 1: what are you seeing on the ground specifically in terms 378 00:21:55,680 --> 00:22:00,719 Speaker 1: of the challenges that potentially new fabs have in dealing 379 00:22:00,720 --> 00:22:04,359 Speaker 1: with the local laws that govern the ability to build anything. 380 00:22:04,520 --> 00:22:06,600 Speaker 1: It's a great question, I think. I think it is 381 00:22:06,640 --> 00:22:09,639 Speaker 1: a reality of our American system, the federal system, that 382 00:22:09,680 --> 00:22:15,440 Speaker 1: we have kind of overlapping expectations or requirements on the 383 00:22:15,560 --> 00:22:19,080 Speaker 1: kind of permitting an environmental review side, including both federal 384 00:22:19,400 --> 00:22:22,199 Speaker 1: and state and local. You know, we are building a 385 00:22:22,200 --> 00:22:26,480 Speaker 1: team here that is focused exclusively on those issues, right 386 00:22:26,640 --> 00:22:28,800 Speaker 1: and you know our so our job is not is 387 00:22:28,800 --> 00:22:31,440 Speaker 1: not to admire the problem, but to kind of jump 388 00:22:31,440 --> 00:22:34,560 Speaker 1: in and try to solve it. And you know, I 389 00:22:34,560 --> 00:22:37,840 Speaker 1: think with the right capacity on our side as well 390 00:22:37,880 --> 00:22:41,080 Speaker 1: as the right capacity being brought to bear from our 391 00:22:41,119 --> 00:22:44,040 Speaker 1: from our applicants, it's just a lot of blocking and tackling. 392 00:22:44,520 --> 00:22:48,280 Speaker 1: But you know, we are we are optimistic that permitting 393 00:22:48,280 --> 00:22:50,240 Speaker 1: an environmental review won't won't end up being what we 394 00:22:50,359 --> 00:22:53,320 Speaker 1: call the long pull in the tent. But you know, 395 00:22:53,359 --> 00:22:55,200 Speaker 1: there's no question it's a challenge and we are taking 396 00:22:55,240 --> 00:23:00,080 Speaker 1: it very seriously and investing necessary resources in order to 397 00:23:00,480 --> 00:23:02,200 Speaker 1: make sure that we're able to meet our objections. Sorry, 398 00:23:02,240 --> 00:23:04,439 Speaker 1: can you just talk a little bit more specifically? Are 399 00:23:04,480 --> 00:23:07,159 Speaker 1: there specific types of issues that come up in the 400 00:23:07,200 --> 00:23:09,439 Speaker 1: applicants you've seen and I know we've already seen like 401 00:23:09,520 --> 00:23:12,919 Speaker 1: various investment announcements over the last eight months, But are 402 00:23:12,920 --> 00:23:17,200 Speaker 1: there specific types of things that companies run into when 403 00:23:17,240 --> 00:23:20,440 Speaker 1: it comes to the permitting necessary to sort of fulfill 404 00:23:20,800 --> 00:23:23,320 Speaker 1: fulfill the goals of the program. What you do see 405 00:23:23,440 --> 00:23:27,480 Speaker 1: is that it is very project specific, right, and so 406 00:23:27,960 --> 00:23:32,000 Speaker 1: you might have a set of dynamics in one area, 407 00:23:32,200 --> 00:23:36,720 Speaker 1: right that are very different than another in terms of 408 00:23:36,920 --> 00:23:42,080 Speaker 1: what federal, state, local permits are required, what the NEEPER 409 00:23:42,080 --> 00:23:45,359 Speaker 1: review process will look like. And so what that means 410 00:23:45,359 --> 00:23:49,120 Speaker 1: for us is it ends up being a pretty bespoke interaction, right, 411 00:23:49,359 --> 00:23:52,639 Speaker 1: and so we need substantial resources on our side in 412 00:23:52,760 --> 00:23:56,439 Speaker 1: order to help manage that. So this actually reminds me 413 00:23:56,480 --> 00:23:58,439 Speaker 1: of something I wanted to ask you, which is, you know, 414 00:23:58,480 --> 00:24:03,080 Speaker 1: you spoke about diversity of likeabor force. Is geographic diversity 415 00:24:03,320 --> 00:24:06,680 Speaker 1: a concern for you? Because my impression is that so 416 00:24:06,720 --> 00:24:09,480 Speaker 1: far a lot of the money seems to be heading 417 00:24:09,560 --> 00:24:14,000 Speaker 1: towards Arizona and Texas, which, you know, speaking about regulation 418 00:24:14,080 --> 00:24:17,440 Speaker 1: and perhaps environmental concerns, you know, those are not the 419 00:24:18,200 --> 00:24:21,800 Speaker 1: two states that spring to mind when we're talking about, 420 00:24:21,840 --> 00:24:24,399 Speaker 1: you know, an abundance of water, which is necessary for 421 00:24:24,920 --> 00:24:27,760 Speaker 1: fabs and things like that. So how are you sort 422 00:24:27,760 --> 00:24:33,160 Speaker 1: of dispersing the money from a geographical perspective. We're not, 423 00:24:33,560 --> 00:24:38,320 Speaker 1: you know, driving the geographical diversification. We are trying to 424 00:24:38,440 --> 00:24:43,520 Speaker 1: encourage applicants to find the best locations at work for 425 00:24:43,560 --> 00:24:47,200 Speaker 1: them from and you mentioned water and electricity and also 426 00:24:47,640 --> 00:24:51,520 Speaker 1: local labor force and the quality of educational institutions in 427 00:24:51,560 --> 00:24:54,880 Speaker 1: those areas, and state and local incentives that you might 428 00:24:54,880 --> 00:24:59,000 Speaker 1: be part of any any application. The large leading edge 429 00:24:59,000 --> 00:25:03,280 Speaker 1: fabs that are and mostly about are already focused on 430 00:25:03,359 --> 00:25:06,639 Speaker 1: certain geographic locations. That is where many of them have 431 00:25:06,760 --> 00:25:10,720 Speaker 1: even started to construct on those locations, and we hope 432 00:25:10,760 --> 00:25:14,800 Speaker 1: and expect to see you know, broad ecosystems of suppliers 433 00:25:14,800 --> 00:25:18,919 Speaker 1: and customers and others, you know, build around those ecosystems. However, 434 00:25:18,960 --> 00:25:22,160 Speaker 1: that is not the you know, that is not all 435 00:25:22,160 --> 00:25:24,879 Speaker 1: of our money. We also are trying to support current 436 00:25:25,000 --> 00:25:28,119 Speaker 1: and mature nodes of semiconductors, some of the things that 437 00:25:28,280 --> 00:25:31,000 Speaker 1: really cause some of the slowdowns in the in the 438 00:25:31,040 --> 00:25:37,719 Speaker 1: pandemic auto healthcare, MRI machines, etc. That are not like 439 00:25:37,760 --> 00:25:41,600 Speaker 1: the leading edge of logic, but are mature nodes that 440 00:25:41,640 --> 00:25:43,680 Speaker 1: have been produced for a while but are still really 441 00:25:43,760 --> 00:25:47,640 Speaker 1: necessary to produce lots and lots of different consumer products 442 00:25:47,640 --> 00:25:51,680 Speaker 1: and auto products and communications products. Those will be spread 443 00:25:51,720 --> 00:25:53,840 Speaker 1: throughout the country, I'm sure, and I think there are 444 00:25:53,880 --> 00:25:57,399 Speaker 1: many many states and localities that are buying to build 445 00:25:57,680 --> 00:26:01,479 Speaker 1: effective ecosystems and attract company to their own geographies, and 446 00:26:01,800 --> 00:26:04,960 Speaker 1: my guess is we'll have a relatively broad dispersion of 447 00:26:04,960 --> 00:26:08,240 Speaker 1: that money in that regard. Oh so, this actually leads 448 00:26:08,920 --> 00:26:11,200 Speaker 1: very nicely into another thing that I wanted to ask, 449 00:26:11,240 --> 00:26:13,960 Speaker 1: which is I know you mentioned placing an emphasis on 450 00:26:14,560 --> 00:26:17,800 Speaker 1: leading edge tech in the beginning, but one of the 451 00:26:17,800 --> 00:26:19,680 Speaker 1: things that we learned from the past couple of years 452 00:26:19,840 --> 00:26:22,440 Speaker 1: was that, you know, a lot of the I guess 453 00:26:22,440 --> 00:26:25,480 Speaker 1: pressure points that emerged in various supply chains, and you 454 00:26:25,560 --> 00:26:28,919 Speaker 1: just mentioned the car industry for instance, that had to 455 00:26:28,920 --> 00:26:33,240 Speaker 1: do with pretty basic chips that were no longer coming 456 00:26:33,280 --> 00:26:37,800 Speaker 1: from traditional sources like Asia. So how are you sort 457 00:26:37,840 --> 00:26:41,920 Speaker 1: of balancing those two mandates, the sort of basic bread 458 00:26:41,960 --> 00:26:45,159 Speaker 1: and butter chips for lack of a better expression, versus 459 00:26:45,680 --> 00:26:49,040 Speaker 1: the sort of leading edge high tech stuff that you 460 00:26:49,119 --> 00:26:52,359 Speaker 1: want the US to be a specialist in in the future. 461 00:26:52,640 --> 00:26:56,920 Speaker 1: It's a really good, important question, and it's those types 462 00:26:56,920 --> 00:26:59,200 Speaker 1: of questions, which is why we felt compelled to put 463 00:26:59,200 --> 00:27:02,360 Speaker 1: out that Vision for Success statement that I talked about earlier, 464 00:27:02,600 --> 00:27:06,840 Speaker 1: where we are trying to articulate the broad range of 465 00:27:06,880 --> 00:27:10,960 Speaker 1: objectives that we are kind of realistically trying to achieve 466 00:27:11,000 --> 00:27:14,440 Speaker 1: with what, let's be real is a limited sum of money. 467 00:27:14,440 --> 00:27:17,280 Speaker 1: I mean, thirty nine billion dollars is a huge amount 468 00:27:17,560 --> 00:27:21,560 Speaker 1: in an absolute sense, but relative to the global semiconductor 469 00:27:21,600 --> 00:27:25,240 Speaker 1: investment we expect to see over the next several years, 470 00:27:25,280 --> 00:27:29,920 Speaker 1: it's a small amount, and we are ultimately going to 471 00:27:30,000 --> 00:27:34,399 Speaker 1: take a portfolio level approach right where we're going to 472 00:27:34,440 --> 00:27:37,080 Speaker 1: try to maximize what we can achieve on the leading 473 00:27:37,240 --> 00:27:40,280 Speaker 1: edge side, but also we hope to see really strong 474 00:27:40,440 --> 00:27:43,960 Speaker 1: applicants on the current generation and mature side that are 475 00:27:44,240 --> 00:27:50,600 Speaker 1: meaningfully contributing to supply chain resiliency and meaningfully providing that 476 00:27:50,680 --> 00:27:57,520 Speaker 1: kind of resilience to critical industries like critical infrastructure like auto, 477 00:27:58,000 --> 00:28:02,080 Speaker 1: like the defense industrial base obviously being critically important factor 478 00:28:02,119 --> 00:28:06,440 Speaker 1: there from a national security perspective. And we'll look across 479 00:28:06,480 --> 00:28:12,359 Speaker 1: across these various priorities and overlay the importance of putting 480 00:28:12,400 --> 00:28:15,080 Speaker 1: to tax fare money to work efficiently and getting kind 481 00:28:15,080 --> 00:28:17,480 Speaker 1: of the most bang for our buck and try to 482 00:28:17,520 --> 00:28:21,280 Speaker 1: produce an overall portfolio that is achieving this range of objective. 483 00:28:22,000 --> 00:28:24,280 Speaker 1: So maybe just a few comments they add there, if 484 00:28:24,320 --> 00:28:27,240 Speaker 1: it's all right. The statute itself calls for two billion 485 00:28:27,280 --> 00:28:30,840 Speaker 1: dollars of investment into current and mature nodes. We view 486 00:28:30,880 --> 00:28:33,320 Speaker 1: that very much as a floor. So to Tracy's point, 487 00:28:33,640 --> 00:28:38,480 Speaker 1: these companies and these nodes of semiconductors are really important 488 00:28:38,520 --> 00:28:41,800 Speaker 1: to the fundamental supply chain resiliency of this country. And 489 00:28:41,880 --> 00:28:43,800 Speaker 1: actually if you look at the auto industry. The auto 490 00:28:43,840 --> 00:28:47,840 Speaker 1: industry is really very interesting. The global semiconductor industry grows 491 00:28:47,880 --> 00:28:51,040 Speaker 1: by about six percent years six hundred billion dollars market. 492 00:28:51,800 --> 00:28:54,680 Speaker 1: By twenty thirty, it'll likely be about a trillion dollars 493 00:28:54,720 --> 00:28:57,200 Speaker 1: the auto industry, and the demand for ships within the 494 00:28:57,200 --> 00:28:59,840 Speaker 1: auto industry is growing double that. So the estimate for 495 00:29:00,080 --> 00:29:02,640 Speaker 1: the next eight or ten years is about twelve percent. 496 00:29:02,920 --> 00:29:07,200 Speaker 1: And that's driven by classic you know, evs and autonomous vehicles, etc. 497 00:29:08,000 --> 00:29:10,680 Speaker 1: And so what you're seeing, you're seeing the auto companies 498 00:29:10,920 --> 00:29:16,080 Speaker 1: really clearly with their pocketbooks and with their statements demanding, 499 00:29:16,320 --> 00:29:20,320 Speaker 1: demanding that the supply chain for those chips sits in 500 00:29:20,360 --> 00:29:25,000 Speaker 1: this country. You saw recently GM announced a dedicated capacity 501 00:29:25,040 --> 00:29:28,160 Speaker 1: corridor with global foundaries and a big deal in New York. 502 00:29:28,240 --> 00:29:31,440 Speaker 1: You've seen Poor Warner that has put five hundred million 503 00:29:31,520 --> 00:29:34,640 Speaker 1: dollars into a recent debt offering from wolf Speed in 504 00:29:34,680 --> 00:29:37,200 Speaker 1: an effort to secure six hundred and fifty million dollars 505 00:29:37,200 --> 00:29:40,200 Speaker 1: of annual capacity a year. You've seen similar things being 506 00:29:40,240 --> 00:29:43,800 Speaker 1: done by Renault, by Denio, you know, by different different 507 00:29:43,840 --> 00:29:46,720 Speaker 1: auto companies. And so there's there's real demand and there's 508 00:29:46,760 --> 00:29:50,360 Speaker 1: real action by the customers to try to push and 509 00:29:50,440 --> 00:29:54,840 Speaker 1: force that supply chain diversification and resiliency. Yeah, the important 510 00:29:54,880 --> 00:29:59,200 Speaker 1: the importance of the customer piece. That cannot be overstated here. 511 00:29:59,440 --> 00:30:02,920 Speaker 1: And it's true for this Todd set for current generation 512 00:30:03,200 --> 00:30:06,120 Speaker 1: and mature, but it's also true on on leading edge, 513 00:30:06,680 --> 00:30:10,680 Speaker 1: where the major leading edge customers like an Apple, like 514 00:30:10,760 --> 00:30:15,240 Speaker 1: the big fabulist firms are also now more interested in 515 00:30:15,360 --> 00:30:18,720 Speaker 1: geographic conversification of their supply chain. And that puts us 516 00:30:18,760 --> 00:30:23,600 Speaker 1: in a position where we are allocating our funds in 517 00:30:23,640 --> 00:30:26,080 Speaker 1: a way that is kind of building on tailwinds in 518 00:30:26,120 --> 00:30:30,080 Speaker 1: the industry already, and those dynamics and trying to sustain 519 00:30:30,120 --> 00:30:32,520 Speaker 1: those dynamics are it's gonna be huguely important going forward. 520 00:30:49,640 --> 00:30:51,680 Speaker 1: So I want to ask you a question, and I 521 00:30:51,760 --> 00:30:54,680 Speaker 1: pose this to former NBC chair Brian Deese when we 522 00:30:54,720 --> 00:30:56,880 Speaker 1: had him on right before he left the job. But 523 00:30:57,400 --> 00:31:00,000 Speaker 1: you know, when you think about prior periods of big 524 00:31:00,080 --> 00:31:03,640 Speaker 1: public investment in tech, a key element was this sort 525 00:31:03,680 --> 00:31:07,240 Speaker 1: of buyer of last resort, particularly the Defense department. And 526 00:31:07,280 --> 00:31:10,040 Speaker 1: so you mentioned the importance of the customer and I 527 00:31:10,120 --> 00:31:12,040 Speaker 1: get you know, of course, GM and some of these 528 00:31:12,040 --> 00:31:16,320 Speaker 1: other car companies are thinking about geographic diversity, and it's 529 00:31:16,400 --> 00:31:20,200 Speaker 1: understandable after the last few years. But you know, legacy nodes, 530 00:31:20,320 --> 00:31:23,160 Speaker 1: legacy tech like it does seem like it's a very 531 00:31:23,200 --> 00:31:26,160 Speaker 1: boom and bust cycle industry and there's not always going 532 00:31:26,200 --> 00:31:31,040 Speaker 1: to be a chip shortage, presumably, are you worried about 533 00:31:31,120 --> 00:31:33,040 Speaker 1: you know, okay, right now there is a lot of 534 00:31:33,080 --> 00:31:35,320 Speaker 1: demand and a lot of investment, but that in a 535 00:31:35,360 --> 00:31:37,800 Speaker 1: few years, while you hope to have this sort of 536 00:31:38,040 --> 00:31:41,360 Speaker 1: self sustaining industry, that some of these fabs will not 537 00:31:41,520 --> 00:31:43,800 Speaker 1: have an end buyer because there is no sort of 538 00:31:43,800 --> 00:31:47,160 Speaker 1: like sustained government buyer of last resort. And how do 539 00:31:47,200 --> 00:31:50,360 Speaker 1: you sort of think about that risk of commodification the 540 00:31:50,440 --> 00:31:53,240 Speaker 1: bus cycle a few years down the road, I would 541 00:31:53,280 --> 00:31:56,479 Speaker 1: answer that question yes and no. I mean yes, of 542 00:31:56,520 --> 00:32:00,000 Speaker 1: course we focus a lot and will focus a lot 543 00:32:00,160 --> 00:32:02,920 Speaker 1: at the fundamental analysis of each of these applications on 544 00:32:02,960 --> 00:32:07,760 Speaker 1: the overall supply demand and long term projections for those 545 00:32:07,760 --> 00:32:10,520 Speaker 1: specific products of those specific nodes. And we're also going 546 00:32:10,560 --> 00:32:13,200 Speaker 1: to be very focused and the funding opportunity lays us 547 00:32:13,200 --> 00:32:18,560 Speaker 1: out on specific evidence of custom demand over time. And 548 00:32:18,600 --> 00:32:21,640 Speaker 1: you've seen in this industry many customers who are willing 549 00:32:21,680 --> 00:32:26,040 Speaker 1: to make forward commitments three or forward commitments, etc. So 550 00:32:26,080 --> 00:32:29,760 Speaker 1: we're really looking for that because we're very mindful that 551 00:32:29,840 --> 00:32:32,320 Speaker 1: the supply and demand dynamics and these sort of micro 552 00:32:32,480 --> 00:32:36,320 Speaker 1: parts of this industry are really critical. All that being said, 553 00:32:36,360 --> 00:32:38,680 Speaker 1: and I know we're right now in a situation where 554 00:32:38,720 --> 00:32:43,040 Speaker 1: we've seen a very rapid fashion sort of the bus 555 00:32:43,120 --> 00:32:46,480 Speaker 1: side of your boom and bust as the economy shifts. 556 00:32:46,920 --> 00:32:49,160 Speaker 1: But when you look over long periods of time in 557 00:32:49,160 --> 00:32:55,040 Speaker 1: this industry, there are massive secular trends that are tailwinds 558 00:32:55,120 --> 00:32:58,160 Speaker 1: for this industry. It will always be somewhat cyclical, that's 559 00:32:58,200 --> 00:33:00,480 Speaker 1: the nature of it, but even if you go back decades, 560 00:33:00,560 --> 00:33:04,080 Speaker 1: you can see within those cycles the chart is up 561 00:33:04,720 --> 00:33:07,880 Speaker 1: and to the right. And I think those fundamental drivers 562 00:33:07,920 --> 00:33:10,800 Speaker 1: which I mentioned a couple before, like EV but also 563 00:33:10,840 --> 00:33:14,280 Speaker 1: AI and cloud five G and Internet of Things, like 564 00:33:14,680 --> 00:33:18,760 Speaker 1: all of those aspects are driving fundamental mid to high 565 00:33:18,760 --> 00:33:22,440 Speaker 1: single digit growth in this company content in this industry secularly, 566 00:33:22,960 --> 00:33:25,320 Speaker 1: which are really important. And so our job is to 567 00:33:25,360 --> 00:33:27,960 Speaker 1: take advantage of that to make sure more of that 568 00:33:28,040 --> 00:33:31,280 Speaker 1: capacity gets built in this country, and to make sure 569 00:33:31,320 --> 00:33:34,920 Speaker 1: we're also doing our job by taxpayers and making sure 570 00:33:35,000 --> 00:33:38,000 Speaker 1: that we are really mindful of the way supply and 571 00:33:38,040 --> 00:33:43,160 Speaker 1: demand dynamics evolve over time and agree result of all that, 572 00:33:43,440 --> 00:33:46,600 Speaker 1: and we just add one other dynamic, Joe, which is 573 00:33:47,360 --> 00:33:51,480 Speaker 1: that we will be a part of the capital stack, 574 00:33:51,880 --> 00:33:55,520 Speaker 1: right as the federal government and there's an investment tax credit, 575 00:33:56,040 --> 00:33:59,080 Speaker 1: and you know there's going to be state and local incentives, right, 576 00:33:59,400 --> 00:34:02,320 Speaker 1: but private investment is going to be driving this right 577 00:34:02,320 --> 00:34:05,520 Speaker 1: And so fundamentally, when it comes to the kind of 578 00:34:06,160 --> 00:34:11,760 Speaker 1: demand dynamics of any particular fab or any particular award, 579 00:34:12,000 --> 00:34:14,120 Speaker 1: we're going to do our due diligence, as Todd said, 580 00:34:14,120 --> 00:34:17,080 Speaker 1: we think that's like cord or our job. But we're 581 00:34:17,080 --> 00:34:21,760 Speaker 1: going to be investing in a sense alongside private capital 582 00:34:22,000 --> 00:34:24,680 Speaker 1: who will also have a measure of confidence that, yes, 583 00:34:24,719 --> 00:34:27,120 Speaker 1: there will be ups and downs, as there always are 584 00:34:27,160 --> 00:34:31,040 Speaker 1: in this industry, but that the overall demand profile is 585 00:34:31,040 --> 00:34:34,960 Speaker 1: going to lead to healthy and self sustaining dynamics. On 586 00:34:35,000 --> 00:34:38,520 Speaker 1: the topic of private investment, it does feel like the 587 00:34:38,560 --> 00:34:42,680 Speaker 1: semiconductor industry is in some respects in a weird place 588 00:34:42,800 --> 00:34:45,240 Speaker 1: right now, because there is a lot of concern about 589 00:34:45,440 --> 00:34:50,560 Speaker 1: demand potentially slowing down, about a potential glut of supply, 590 00:34:50,719 --> 00:34:55,200 Speaker 1: and yet there is also simultaneously this recognition that long term, 591 00:34:55,640 --> 00:34:58,319 Speaker 1: it feels like people are just going to want more 592 00:34:58,360 --> 00:35:02,479 Speaker 1: and more chips. So I'm curious what you're hearing from 593 00:35:02,560 --> 00:35:07,480 Speaker 1: applicants right now in terms of their appetite for investment. 594 00:35:07,680 --> 00:35:10,240 Speaker 1: What are they telling you and what are their major 595 00:35:10,320 --> 00:35:14,480 Speaker 1: concerns at this point in time. But we've heard from 596 00:35:14,680 --> 00:35:18,680 Speaker 1: companies is broadly what we've already talked about, which is 597 00:35:18,760 --> 00:35:22,480 Speaker 1: long term, this industry is very clearly driven by some 598 00:35:22,560 --> 00:35:25,520 Speaker 1: really strong secular drivers. There is no reason in the 599 00:35:25,600 --> 00:35:29,920 Speaker 1: current sort of economic shift to doubt that, and so 600 00:35:30,440 --> 00:35:35,320 Speaker 1: most companies are looking forward with their capital investment and saying, 601 00:35:35,360 --> 00:35:38,640 Speaker 1: you know, over a X year, five, ten year period, 602 00:35:39,120 --> 00:35:42,160 Speaker 1: we still expect to spend the same amount of money 603 00:35:42,200 --> 00:35:45,640 Speaker 1: that we anticipated before. That might take different shapes. We 604 00:35:45,760 --> 00:35:48,200 Speaker 1: might invest at all less next year, particularly in certain 605 00:35:48,239 --> 00:35:50,800 Speaker 1: parts of the industry that are much more cyclical, like memory, 606 00:35:51,320 --> 00:35:54,879 Speaker 1: But broadly speaking, they don't see any changes to their 607 00:35:54,920 --> 00:35:58,560 Speaker 1: overall capital investment over time. I want to ask you 608 00:35:58,560 --> 00:36:01,680 Speaker 1: a question about stock by back. Very controversial in almost 609 00:36:01,719 --> 00:36:05,319 Speaker 1: any area, and people are always fighting about them. And 610 00:36:05,440 --> 00:36:07,759 Speaker 1: the reason I'm curious about them is I've seen some 611 00:36:07,920 --> 00:36:11,160 Speaker 1: comments from the White House or from the administration about 612 00:36:11,560 --> 00:36:14,160 Speaker 1: you know, making sure the money doesn't go towards stock buybacks. 613 00:36:14,160 --> 00:36:16,120 Speaker 1: And I kind of get that on some level, But 614 00:36:16,320 --> 00:36:18,200 Speaker 1: on the other hand, like, if there's going to be 615 00:36:18,200 --> 00:36:22,600 Speaker 1: a self sustaining, sort of self propagating industry in the 616 00:36:22,680 --> 00:36:26,800 Speaker 1: United States that this initial investment of fifty two billion 617 00:36:26,800 --> 00:36:29,080 Speaker 1: dollars is going to sustain, then presumably it's going to 618 00:36:29,160 --> 00:36:32,200 Speaker 1: be because shareholders are going to want to see returns, 619 00:36:32,200 --> 00:36:34,920 Speaker 1: and obviously all these companies are for profit companies, and 620 00:36:34,960 --> 00:36:38,200 Speaker 1: shareholders are going to want to see overtime stock go up. 621 00:36:38,520 --> 00:36:40,600 Speaker 1: And so I'm sort of curious, like how you think 622 00:36:40,640 --> 00:36:44,680 Speaker 1: maybe buybacks specifically or more broadly about the sort of tension. 623 00:36:44,719 --> 00:36:46,680 Speaker 1: It's like, Okay, you don't want like this money to 624 00:36:46,760 --> 00:36:49,600 Speaker 1: just go straight in the hands of shareholders. But on 625 00:36:49,640 --> 00:36:51,800 Speaker 1: the other hand, there's not going to be an industry 626 00:36:51,840 --> 00:36:54,160 Speaker 1: that booms in the United States unless people see that 627 00:36:54,160 --> 00:36:56,440 Speaker 1: they're making a lot of money at it, because ultimately 628 00:36:56,440 --> 00:36:59,640 Speaker 1: that's why people would invest in anything. And so I'm curious, 629 00:36:59,680 --> 00:37:03,120 Speaker 1: like how you think about like the shareholder return element 630 00:37:03,560 --> 00:37:06,759 Speaker 1: of making sure that the CHIPSAC does its job to 631 00:37:07,080 --> 00:37:10,719 Speaker 1: level set to start we want this industry to be 632 00:37:10,800 --> 00:37:14,239 Speaker 1: hugely successful, right. We want the economic returns from these 633 00:37:14,680 --> 00:37:20,280 Speaker 1: investments to propel additional investment going forward. That is hugely 634 00:37:20,320 --> 00:37:24,200 Speaker 1: critical to our long term success. So I fully agree 635 00:37:24,200 --> 00:37:27,279 Speaker 1: with you there. There's a provision in the law that 636 00:37:27,360 --> 00:37:30,160 Speaker 1: says the money we give companies can't be used for 637 00:37:30,160 --> 00:37:33,280 Speaker 1: stock buybacks. That's kind of self evident because they're supposed 638 00:37:33,280 --> 00:37:36,200 Speaker 1: to use the money to build fabs, so there's not 639 00:37:36,320 --> 00:37:40,360 Speaker 1: much of a trade off there. We have also said 640 00:37:40,600 --> 00:37:46,160 Speaker 1: that we will favor applications that want to make long 641 00:37:46,320 --> 00:37:52,480 Speaker 1: term investments in R and D and manufacturing capasciting production 642 00:37:52,800 --> 00:37:55,720 Speaker 1: here in the United States, which we believe is absolutely 643 00:37:55,719 --> 00:38:01,839 Speaker 1: critical to meeting those economic and national security objectives as well. Yeah, 644 00:38:01,840 --> 00:38:05,319 Speaker 1: I think that's an important point when you there is 645 00:38:05,400 --> 00:38:11,640 Speaker 1: no restriction on stock buybacks in our funding opportunity. The 646 00:38:11,760 --> 00:38:15,960 Speaker 1: only comment about stock buybacks is in relationship to what 647 00:38:16,040 --> 00:38:19,160 Speaker 1: Mike just said, and basically we're saying that what we 648 00:38:19,200 --> 00:38:22,400 Speaker 1: really want to see is long term companies commit to 649 00:38:22,480 --> 00:38:26,400 Speaker 1: continue to invest in this in this country. Both capital 650 00:38:26,880 --> 00:38:32,719 Speaker 1: are indeed dollars for people, for facilities, for process improvements, etc. 651 00:38:33,760 --> 00:38:37,879 Speaker 1: And one way to show that is to demonstrate your 652 00:38:37,880 --> 00:38:42,520 Speaker 1: commitment to those dollars, but also to limit or otherwise 653 00:38:42,800 --> 00:38:47,160 Speaker 1: you restrict the your buybacks or dividend programs to show 654 00:38:47,200 --> 00:38:51,520 Speaker 1: that you're doing that. That is not a restriction or requirement. 655 00:38:51,719 --> 00:38:54,759 Speaker 1: It is just an example of how to demonstrate that 656 00:38:54,840 --> 00:38:57,880 Speaker 1: over time, your plan is to continue to invest in 657 00:38:57,920 --> 00:39:01,359 Speaker 1: this country and in this industry. So this is a 658 00:39:01,400 --> 00:39:05,200 Speaker 1: related question. But if the goal of this program is 659 00:39:05,239 --> 00:39:10,839 Speaker 1: to build up a more resilient domestic semiconductor industry so 660 00:39:10,880 --> 00:39:14,640 Speaker 1: that it creates lots of good jobs and also ensures 661 00:39:14,640 --> 00:39:18,600 Speaker 1: that the US isn't vulnerable to supply chain disruptions in 662 00:39:18,640 --> 00:39:22,120 Speaker 1: the future, does that mean that companies who take this 663 00:39:22,200 --> 00:39:25,120 Speaker 1: money and by the way, I stole this question off 664 00:39:25,160 --> 00:39:28,200 Speaker 1: of our discord that we're running the all thoughts discord, 665 00:39:28,239 --> 00:39:30,560 Speaker 1: so people who are interested should definitely check that out. 666 00:39:30,920 --> 00:39:34,880 Speaker 1: But does that mean that companies who take this money, 667 00:39:34,960 --> 00:39:39,280 Speaker 1: these subsidies to build fabs, do they have specific obligations 668 00:39:39,360 --> 00:39:44,960 Speaker 1: to prioritize US customers. Well, I think there are a 669 00:39:45,000 --> 00:39:49,000 Speaker 1: few elements to that. Number One, some of that pressure, 670 00:39:49,000 --> 00:39:52,919 Speaker 1: as we indicated earlier, is coming from the other direction, right, 671 00:39:53,320 --> 00:39:56,720 Speaker 1: which is to say it's US customers who are saying 672 00:39:57,280 --> 00:40:03,160 Speaker 1: we want additional supply chain resili and driving interests in 673 00:40:03,360 --> 00:40:07,640 Speaker 1: geographic diversification and then specifically investment in the United States, 674 00:40:07,920 --> 00:40:11,480 Speaker 1: and in particular the fact that we have such a 675 00:40:12,160 --> 00:40:18,239 Speaker 1: thriving fabless semiconductor company ecosystem here. So these are these 676 00:40:18,280 --> 00:40:23,120 Speaker 1: are the semiconductor companies who don't manufacture the chips, but 677 00:40:23,160 --> 00:40:26,480 Speaker 1: they then design them and work with the foundry to 678 00:40:26,520 --> 00:40:28,799 Speaker 1: produce them. The fact that we have so many of 679 00:40:28,840 --> 00:40:31,640 Speaker 1: those leaders here means that there's all there are a 680 00:40:31,640 --> 00:40:35,319 Speaker 1: lot of synergies to be gained by investing in the 681 00:40:35,360 --> 00:40:39,359 Speaker 1: United States, doing joint research and development and that kind 682 00:40:39,400 --> 00:40:41,120 Speaker 1: of thing. So there's a lot of there's a push 683 00:40:41,120 --> 00:40:43,560 Speaker 1: coming from that direction, which again we find to be 684 00:40:43,760 --> 00:40:47,839 Speaker 1: hugely constructive. And then in terms of serving kind of 685 00:40:47,840 --> 00:40:52,200 Speaker 1: our economic and national security interests, I think you know, 686 00:40:52,239 --> 00:40:55,240 Speaker 1: one thing we have said in the NOFO is that 687 00:40:55,640 --> 00:41:00,560 Speaker 1: we will really encourage companies to submit projects that are 688 00:41:00,600 --> 00:41:04,960 Speaker 1: going to support our defense industrial base, right and you know, 689 00:41:05,120 --> 00:41:08,480 Speaker 1: producing chips that will end up supporting in a very 690 00:41:08,520 --> 00:41:12,640 Speaker 1: direct way our national security is obviously a hugely important 691 00:41:13,000 --> 00:41:15,960 Speaker 1: part of this program and something we're going to be 692 00:41:16,080 --> 00:41:18,759 Speaker 1: looking to do. Looking to do at scale. I have 693 00:41:18,840 --> 00:41:21,799 Speaker 1: one last quick question, but on that point, and I 694 00:41:21,880 --> 00:41:24,960 Speaker 1: hear this conversation more than the context of the Inflation 695 00:41:25,000 --> 00:41:28,120 Speaker 1: Reduction Act, what have you encountered so far about some 696 00:41:28,200 --> 00:41:31,560 Speaker 1: of the reaction of our trading partners, particularly Europe. You know, 697 00:41:31,800 --> 00:41:34,799 Speaker 1: chips is a really global industry, and we know like 698 00:41:35,160 --> 00:41:39,200 Speaker 1: how any given you know, wafer or product like crosses 699 00:41:39,200 --> 00:41:41,920 Speaker 1: a million, you know, thirty boarders before the time it 700 00:41:42,200 --> 00:41:45,960 Speaker 1: enters a US consumers hands. Have we seen some of 701 00:41:45,960 --> 00:41:48,839 Speaker 1: our trading partners like want to invest in their own 702 00:41:49,040 --> 00:41:52,200 Speaker 1: Like what is the reaction elsewhere? And do any countries 703 00:41:52,239 --> 00:41:54,719 Speaker 1: feel defensive about Okay, well, if the US is doing this, 704 00:41:55,000 --> 00:41:56,839 Speaker 1: trying to bring industry here, do we have to do 705 00:41:56,880 --> 00:41:58,400 Speaker 1: this And will there be sort of this sort of 706 00:41:58,440 --> 00:42:03,080 Speaker 1: like deglobalization or reversal or every country trying to recreate 707 00:42:03,120 --> 00:42:05,680 Speaker 1: what you're doing for themselves. Yeah, it's really it's a 708 00:42:05,719 --> 00:42:08,640 Speaker 1: really important question. I'm glad you raised it. One way 709 00:42:08,640 --> 00:42:11,319 Speaker 1: to think of our goal. What we're trying to do 710 00:42:11,440 --> 00:42:16,319 Speaker 1: here is contribute to global supply chain resilience, right and 711 00:42:16,440 --> 00:42:20,600 Speaker 1: working with partners and allies to develop a more resilient 712 00:42:20,640 --> 00:42:25,160 Speaker 1: global supply chain as you said, the semiconductor supply chain 713 00:42:25,640 --> 00:42:30,040 Speaker 1: is already massive in scale, very complicated, and very global. 714 00:42:30,160 --> 00:42:32,400 Speaker 1: That's not going to change, nor should it. Right. There 715 00:42:32,400 --> 00:42:36,600 Speaker 1: are tremendous efficiencies that are gained as a result of that, 716 00:42:36,840 --> 00:42:39,480 Speaker 1: and so so in no way is our goal to 717 00:42:39,600 --> 00:42:43,480 Speaker 1: build a self sufficient semiconductor ecosystem. And if we have 718 00:42:43,480 --> 00:42:47,520 Speaker 1: allies and partners that are also investing in various parts 719 00:42:47,560 --> 00:42:50,279 Speaker 1: of the supply chain and increasing capacity, I think that's 720 00:42:50,440 --> 00:42:54,680 Speaker 1: that's good for all of us. Right. The important thing 721 00:42:55,520 --> 00:43:00,319 Speaker 1: is that we don't let kind of unconstructive competitive dynamics 722 00:43:00,360 --> 00:43:03,160 Speaker 1: take hold, right, Like we don't want a race to 723 00:43:03,200 --> 00:43:07,040 Speaker 1: the bottom. We want to have healthy dialogue and to 724 00:43:07,040 --> 00:43:11,120 Speaker 1: the extent we can a coordinated global approach with partners 725 00:43:11,440 --> 00:43:16,080 Speaker 1: and allies. One of the I mentioned at the outset 726 00:43:16,160 --> 00:43:20,360 Speaker 1: our Office of Strategy, Technology and Policy under Morgan Dwyer. 727 00:43:20,880 --> 00:43:24,200 Speaker 1: One of the offices within that office for the Chips 728 00:43:24,239 --> 00:43:27,960 Speaker 1: program is an Office of International Engagement. Right, so we 729 00:43:28,000 --> 00:43:32,560 Speaker 1: actually just had a team who was out in Korea, Taiwan, 730 00:43:32,920 --> 00:43:38,080 Speaker 1: Japan having these meetings directly with our international counterparts sector. 731 00:43:38,239 --> 00:43:43,080 Speaker 1: Ramondo has been raising these issues directly with foreign leaders. 732 00:43:43,239 --> 00:43:46,200 Speaker 1: It's a really important part of the agenda for our 733 00:43:46,280 --> 00:43:49,520 Speaker 1: Trade and Technology Council. We a europe so we're really 734 00:43:49,560 --> 00:43:53,080 Speaker 1: really active in this international dialogue. I think you're right 735 00:43:53,120 --> 00:43:56,239 Speaker 1: that there's a risk of these kind of unconstructive dynamics, 736 00:43:56,360 --> 00:44:00,239 Speaker 1: but there's also a huge opportunity for us to work 737 00:44:00,280 --> 00:44:03,640 Speaker 1: with partners and allies in ways that are usually beneficial. 738 00:44:04,000 --> 00:44:06,560 Speaker 1: Mike Schmidt and Todd Fisher, thank you so much. There's 739 00:44:06,560 --> 00:44:08,840 Speaker 1: a million more things we could talk about, but let's 740 00:44:08,840 --> 00:44:10,759 Speaker 1: do them in a year from now. Come back on 741 00:44:10,800 --> 00:44:14,160 Speaker 1: the show. We'll do a check in. Sounds great, let's know, 742 00:44:14,200 --> 00:44:16,440 Speaker 1: will you that much? Thank you? That was great. I 743 00:44:16,480 --> 00:44:31,000 Speaker 1: really appreciate your time. Yeah, thank you. That was really interesting. Tracy. 744 00:44:31,080 --> 00:44:33,719 Speaker 1: I gotta say, like, this seems like it's gonna be 745 00:44:33,760 --> 00:44:38,880 Speaker 1: really hard, seriously, like really hard. It feels like there 746 00:44:38,880 --> 00:44:44,359 Speaker 1: are a lot of different considerations, like not necessarily even stakeholders, 747 00:44:44,360 --> 00:44:47,360 Speaker 1: like official stakeholders, but a lot of different things you 748 00:44:47,480 --> 00:44:51,480 Speaker 1: have to be considerate. Yeah. Of what I will say though, is, 749 00:44:51,600 --> 00:44:54,400 Speaker 1: you know, I read that editorial and some of the 750 00:44:54,440 --> 00:44:58,440 Speaker 1: criticisms that were in it, and I think one of 751 00:44:58,480 --> 00:45:01,359 Speaker 1: the lines in it was that checks was never going 752 00:45:01,400 --> 00:45:05,239 Speaker 1: to be enough. But Frankly, I'm always kind of, you know, 753 00:45:05,680 --> 00:45:09,239 Speaker 1: surprised when when we do manage to write, Yeah, of 754 00:45:09,520 --> 00:45:13,560 Speaker 1: this size and I think, you know, fifty billion in 755 00:45:13,680 --> 00:45:17,920 Speaker 1: total going into this area clearly a sizeable amount, and 756 00:45:18,000 --> 00:45:21,680 Speaker 1: clearly there are some big questions over exactly how it's 757 00:45:21,719 --> 00:45:25,200 Speaker 1: being dispersed, but that is still a huge sum. Yeah, 758 00:45:25,239 --> 00:45:29,759 Speaker 1: you know. Like so my takeaway is I thought that 759 00:45:29,920 --> 00:45:32,120 Speaker 1: the two of them, Mike and Tad, liked they have 760 00:45:32,320 --> 00:45:35,880 Speaker 1: clearly really thought about these things, including say, like, you know, 761 00:45:35,920 --> 00:45:39,720 Speaker 1: there's a lot of flak about the childcare component, and 762 00:45:39,880 --> 00:45:42,080 Speaker 1: I kind of suspect that's not going to be ultimately, 763 00:45:42,200 --> 00:45:44,080 Speaker 1: like that's not going to make or break this problem. 764 00:45:44,320 --> 00:45:45,799 Speaker 1: Like that's like a pretty minor thing. And I think 765 00:45:45,840 --> 00:45:47,879 Speaker 1: they've like all of these things that people bring up, 766 00:45:48,480 --> 00:45:51,600 Speaker 1: local permitting, etc. Like they've clearly thought about them. On 767 00:45:51,640 --> 00:45:54,960 Speaker 1: the other hand, like that's really tough to overcome, and 768 00:45:55,239 --> 00:45:56,960 Speaker 1: these are going to be like real challenges. So while 769 00:45:57,000 --> 00:46:00,560 Speaker 1: I my takeaway is that all of these concerns that 770 00:46:00,560 --> 00:46:03,200 Speaker 1: people have are like Mike and Todd and others within 771 00:46:03,200 --> 00:46:06,759 Speaker 1: the administration and the Commerce are like taking them very seriously. 772 00:46:07,040 --> 00:46:10,600 Speaker 1: The question is whether like taking them very seriously, is 773 00:46:10,760 --> 00:46:13,640 Speaker 1: enough to sort of overcome some of this inertia that 774 00:46:13,680 --> 00:46:17,480 Speaker 1: we've seen from the long term decline of domestic manufacturing. Yeah, 775 00:46:17,560 --> 00:46:20,880 Speaker 1: that to me is the bigger issue. And I'm glad 776 00:46:20,880 --> 00:46:23,719 Speaker 1: you asked that question about sort of managing through the 777 00:46:23,760 --> 00:46:27,320 Speaker 1: cycles and the whole buyer of last resort idea, because 778 00:46:27,360 --> 00:46:29,960 Speaker 1: because that's that's the point at which, you know, if 779 00:46:30,000 --> 00:46:34,560 Speaker 1: you keep flinging money at an industry that can't sort 780 00:46:34,600 --> 00:46:39,719 Speaker 1: of stand on its own or has significant pro cyclicality issues, like, 781 00:46:39,840 --> 00:46:42,840 Speaker 1: that's when it becomes really problematic, and we're not going 782 00:46:42,920 --> 00:46:45,960 Speaker 1: to have like supply chain problems in cars forever. Right. 783 00:46:46,160 --> 00:46:48,640 Speaker 1: I take the point about how there are serious tailwins, 784 00:46:48,719 --> 00:46:51,879 Speaker 1: particularly with related evs and so forth, But still at 785 00:46:51,920 --> 00:46:53,719 Speaker 1: some point you would expect some sort of like I 786 00:46:53,719 --> 00:46:56,000 Speaker 1: don't know, maybe like maybe maybe I'm wrong, Maybe the 787 00:46:56,040 --> 00:46:58,960 Speaker 1: tailwins from like auto is just so great because of 788 00:46:59,000 --> 00:47:01,600 Speaker 1: the great transition that that isn't a concern. And again, 789 00:47:01,920 --> 00:47:03,799 Speaker 1: you know, they point out it's not like they're not 790 00:47:03,840 --> 00:47:07,200 Speaker 1: taking these things into account when they're looking at an applicant, 791 00:47:07,680 --> 00:47:10,240 Speaker 1: But it does seem like still this very big difference 792 00:47:10,239 --> 00:47:14,320 Speaker 1: between sort of past periods of successful domestic US industrial 793 00:47:14,360 --> 00:47:17,120 Speaker 1: policy verse Now, like, how much is that going to 794 00:47:17,200 --> 00:47:20,960 Speaker 1: sustain the industry going for years for years? Yeah, you're 795 00:47:21,040 --> 00:47:25,080 Speaker 1: kind of thinking fundamental questions about how capitalism and private 796 00:47:25,120 --> 00:47:28,600 Speaker 1: investment is supposed to work, plus the future of technology. 797 00:47:28,600 --> 00:47:31,000 Speaker 1: I think Mike and I think Mike and Todd can figure. 798 00:47:31,120 --> 00:47:34,640 Speaker 1: You think they can fundamental issues of capital All right, 799 00:47:34,719 --> 00:47:36,480 Speaker 1: on that happy note, shall we leave it there? Let's 800 00:47:36,520 --> 00:47:39,239 Speaker 1: leave it there? Okay, this has been another episode of 801 00:47:39,280 --> 00:47:42,040 Speaker 1: the All Thoughts podcast. I'm Tracy Alloway. You can follow 802 00:47:42,080 --> 00:47:45,080 Speaker 1: me on Twitter at Tracy Alloway, and I'm Joe wisent'al. 803 00:47:45,160 --> 00:47:48,240 Speaker 1: You can follow me on Twitter at the Stalwart, follow 804 00:47:48,280 --> 00:47:52,680 Speaker 1: our producers Carmen Rodriguez at Carmen Armin and Dash Bennett 805 00:47:52,719 --> 00:47:55,839 Speaker 1: at dashbot. And check out all of our podcasts here 806 00:47:55,840 --> 00:47:58,960 Speaker 1: at Bloomberg under the handle at podcasts, and for more 807 00:47:59,040 --> 00:48:02,720 Speaker 1: Oblouts ten go to Bloomberg dot com slash odd lots, 808 00:48:03,040 --> 00:48:05,640 Speaker 1: where we have transcripts, a blog, and a newsletter. And 809 00:48:05,760 --> 00:48:08,080 Speaker 1: for even more check out the discord. We have this 810 00:48:08,200 --> 00:48:10,920 Speaker 1: community twenty four seven. Hang out with other listeners. Go 811 00:48:11,040 --> 00:48:14,239 Speaker 1: to discord dot gg slash odd lots hang out and 812 00:48:14,360 --> 00:48:18,200 Speaker 1: chat about all these topics including you send me, conductor, energy, water, 813 00:48:18,480 --> 00:48:21,680 Speaker 1: real estate, and more. A lot of fun times in there. 814 00:48:22,160 --> 00:48:22,920 Speaker 1: Thanks for listening.