WEBVTT - Eight Months In, What Is Happening With Biden's CHIPS Act? 0:00:10.080 --> 0:00:14.200 Hello, and welcome to another episode of the Odd Lots Podcast. 0:00:14.280 --> 0:00:17.759 I'm Joe Wisenthal and I'm Tracy Alloway. Tracy, you know, 0:00:17.840 --> 0:00:20.079 one of the things we talk about and the themes 0:00:20.120 --> 0:00:22.560 we come back to quite a lot, is just this 0:00:22.640 --> 0:00:25.400 idea of like US government really all government, but I 0:00:25.440 --> 0:00:30.440 guess sort of US centric government intervention active role in 0:00:30.480 --> 0:00:32.760 the economy, which is something that I would say is 0:00:32.760 --> 0:00:37.160 like characterized a lot of like early Biden policymaking so far, yes, 0:00:37.200 --> 0:00:40.479 and a perhaps unappreciated role at certain times. So we 0:00:40.560 --> 0:00:42.919 talked a lot about the history of Silicon Valley, yes, 0:00:43.040 --> 0:00:45.200 and how there was a lot of US government money 0:00:45.240 --> 0:00:49.960 that actually flowed into both that place and that industry 0:00:50.040 --> 0:00:53.120 and that had a massive impact. And now fast forward 0:00:53.200 --> 0:00:56.000 to you know, the post pandemic era, and it feels 0:00:56.000 --> 0:00:59.320 like we're seeing a bit of a resurgence. Yeah, that's 0:00:59.320 --> 0:01:03.520 a good thing. Your that reminder, Like it feels like, 0:01:03.840 --> 0:01:08.319 you know, the US political appetite for public investment, public 0:01:08.360 --> 0:01:12.440 direction of money and capital into certain industries, it ebbs 0:01:12.440 --> 0:01:15.920 and flows. Sometimes that's really out of favor or that's 0:01:15.920 --> 0:01:18.759 seen as anti capitalism or something like that. And clearly 0:01:19.000 --> 0:01:21.720 least the last few years it's been sort of back 0:01:21.720 --> 0:01:23.760 in favor or at least, you know, maybe even a 0:01:23.760 --> 0:01:26.280 little bit under Trump. It's certainly under Biden in a 0:01:26.400 --> 0:01:30.040 very significant way, both with the Chips Act and of 0:01:30.040 --> 0:01:34.160 course the Inflation Reduction Act of seriously public investment and 0:01:34.200 --> 0:01:37.560 the Infrastructure built public investment into different industries. Right. I 0:01:37.600 --> 0:01:39.640 think we spoke about this with as recline the new 0:01:39.720 --> 0:01:43.319 sort of supply side liberalism, this idea that the pandemic 0:01:43.440 --> 0:01:47.319 really exposed a lot of fault lines in the economy 0:01:47.360 --> 0:01:49.800 and also in supply chains, and now there's a lot 0:01:49.840 --> 0:01:53.120 of attention focused on actually fixing those. And I'm glad 0:01:53.160 --> 0:01:57.440 you mentioned one of the preeminent sort of set pieces 0:01:57.560 --> 0:02:00.880 of this particular type of policy, which, of course the 0:02:01.000 --> 0:02:04.000 Chips Act, So the Big Chips Act, other than the 0:02:04.360 --> 0:02:08.320 Infrastructure Act, the Chips Act is the kind of I 0:02:08.360 --> 0:02:12.480 guess the shining symbol of this new direction. Well, you 0:02:12.560 --> 0:02:15.160 mentioned supply chains, and we did a lot of episodes 0:02:15.280 --> 0:02:18.240 on broken chip supply chains, so this brings it together. 0:02:18.280 --> 0:02:20.399 But here's the other thing that I think is key, 0:02:20.520 --> 0:02:22.839 which is that if this is gonna if there's gonna 0:02:22.880 --> 0:02:26.600 be momentum on this front, if active public investment into 0:02:26.720 --> 0:02:29.960 industry is going to be something that sustained. And now, 0:02:30.080 --> 0:02:33.120 just like a two year, a couple bills passed, there's 0:02:33.120 --> 0:02:35.720 a big question like, isn't being done well? Are people 0:02:35.800 --> 0:02:38.840 happy with the results? And I presume if people are 0:02:38.840 --> 0:02:41.480 happy with the results and people see change, then maybe 0:02:41.520 --> 0:02:44.119 there's more momentum. And if people are like, oh, this 0:02:44.200 --> 0:02:46.440 is what happens every time the government and gets involved 0:02:46.440 --> 0:02:49.880 in some industry and it's red tape and cost overruns 0:02:49.960 --> 0:02:53.200 and wasted taxpayer money and so forth, then that really 0:02:53.280 --> 0:02:56.440 sort of like kneecaps any momentum. Yeah, and it feels 0:02:56.480 --> 0:02:59.720 like the stakes are quite high for this particular program 0:02:59.720 --> 0:03:04.000 the sacked because it is, you know, symbolic in many ways. 0:03:04.160 --> 0:03:06.400 First of all, there is always an I would say, 0:03:06.480 --> 0:03:10.400 a almost knee jerk suspicion of government spending from you 0:03:10.760 --> 0:03:14.800 certain parts of America. But then secondly, this particular bill, 0:03:14.919 --> 0:03:18.200 I believe it did come with some new sort of 0:03:18.200 --> 0:03:23.280 conditions attached to it, requirements that companies receiving government funding 0:03:23.480 --> 0:03:27.400 have sufficient childcare things like that, and that has garnered 0:03:27.400 --> 0:03:30.920 additional scrutiny recently. So there are lots of questions over 0:03:31.000 --> 0:03:34.200 exactly how this is being implemented and how we'll measure 0:03:34.200 --> 0:03:37.240 its success. You mentioned scrutiny. I think some of it's 0:03:37.280 --> 0:03:41.080 from our own colleagues at the Bloomberg opinion side. There's 0:03:41.120 --> 0:03:43.440 a headline eight days ago, fifty two billion dollars ship 0:03:43.480 --> 0:03:46.640 making plan is racing towards failure. That was the opinion 0:03:46.680 --> 0:03:50.360 side of the House. That's not our opinion. Nonetheless, this 0:03:50.440 --> 0:03:52.960 is the question, So let's have this question. Look where 0:03:53.000 --> 0:03:55.840 are we that this bill was passed last August. We're 0:03:55.880 --> 0:03:58.240 already seen a lot of activity in the way, but 0:03:58.320 --> 0:04:01.520 how's it actually going. I'm very excited about our guests. 0:04:01.600 --> 0:04:05.000 We're going to be speaking with Mike Schmidt, director of 0:04:05.080 --> 0:04:08.320 the Chips Program Office, as well as Todd Fisher, chief 0:04:08.360 --> 0:04:11.560 Investment Officer of the Chip Program Office. I didn't even 0:04:11.600 --> 0:04:15.880 know CIOs were a role within government, so that's interesting anyway. 0:04:16.000 --> 0:04:18.240 Mike and Todd, thank you so much for coming on 0:04:18.279 --> 0:04:22.159 Odd Lot. Thank you, thank you Joe, thank you Tracy 0:04:22.240 --> 0:04:24.800 for having us. Really I'm a big fan of the podcast, 0:04:24.880 --> 0:04:27.200 so very excited to be on. This is Mike Schmidt, 0:04:27.200 --> 0:04:30.200 I'm the director of the Program Office, and Todd is 0:04:30.240 --> 0:04:33.680 our chief investment officer. And we're excited to be here 0:04:33.680 --> 0:04:38.040 to talk chips. Fortunately, your listeners won't won't need us 0:04:38.080 --> 0:04:41.720 to explain how critical chips are, given all the all 0:04:41.760 --> 0:04:44.080 the episodes you've already done on it, but just to 0:04:44.160 --> 0:04:48.000 lay that foundation, chips are critical to virtually every technology 0:04:48.000 --> 0:04:51.120 that underpins modern life, anything with an on off switch, 0:04:51.560 --> 0:04:57.480 automobiles and medical devices, but also satellite communications and military technology. 0:04:57.640 --> 0:05:00.520 They're going to be foundational to the technolo algies that 0:05:00.560 --> 0:05:05.080 will fundamentally shape society and geopolitics in the coming years, 0:05:05.160 --> 0:05:09.560 things like artificial intelligence, biotech, and clean energy, and so 0:05:09.839 --> 0:05:13.080 you know, we the US have long been a leader 0:05:13.120 --> 0:05:16.719 in chip design and R and D, and that's a really, 0:05:16.760 --> 0:05:20.720 really good thing, but we've fallen significantly behind and manufacturing. 0:05:20.720 --> 0:05:23.880 We account for only about ten percent of global semiconductor 0:05:23.920 --> 0:05:27.840 production today, down from several times that a few decades ago, 0:05:28.400 --> 0:05:31.560 especially where some is on the advanced chips, the leading 0:05:31.600 --> 0:05:35.400 edge chips, where we produce functionally none of that today. 0:05:36.040 --> 0:05:38.720 And so at commerce we have fifty billion to address 0:05:38.760 --> 0:05:42.080 this problem. Thirty nine billion is that for manufacturing incentives, 0:05:42.400 --> 0:05:45.120 eleven billions for R and D. Todd and I are 0:05:45.360 --> 0:05:48.400 are on that incentive side. On that thirty nine billion side, 0:05:48.400 --> 0:05:52.600 and we view ourselves fundamentally as managing a thirty nine 0:05:52.720 --> 0:05:57.000 billion dollar investment program on behalf of taxpayers. But our 0:05:57.040 --> 0:06:01.120 return is not financial. Our return is apply chain resilience 0:06:01.440 --> 0:06:05.080 and in advancing are our economic and national security. And 0:06:05.120 --> 0:06:07.320 I think we're off a pretty good start here, right. Well, 0:06:07.320 --> 0:06:09.679 I was gonna say, you know, Tracy mentioned the beginning, 0:06:09.800 --> 0:06:12.000 there's a big symbolic element but also just like a 0:06:12.080 --> 0:06:15.280 very real element. You mentioned the geopolitics, which is like 0:06:15.320 --> 0:06:19.159 the stakes are literally very high, but for all modern 0:06:19.200 --> 0:06:22.440 life of whether you know, the US always has a 0:06:22.760 --> 0:06:28.360 ongoing supply of sort of advanced in less advanced chips. So, Mike, 0:06:28.440 --> 0:06:30.320 that was a really good intro to the sort of 0:06:30.320 --> 0:06:33.040 stakes involved. But why don't we bring in Todd and 0:06:33.279 --> 0:06:36.400 maybe um Todd you could explain, you know, Joe alluded 0:06:36.440 --> 0:06:38.960 to this in the intro, but what does the chief 0:06:39.000 --> 0:06:43.960 Investment Officer of the Chips Program Office actually do? Thank you, Tracy, 0:06:44.000 --> 0:06:45.839 it's really great to be here. I'm also a big 0:06:45.839 --> 0:06:51.359 fan of your show. We college chief investment officer. The 0:06:51.520 --> 0:06:56.040 role is basically to figure out how to effectively invest 0:06:56.120 --> 0:06:58.680 and allocate the thirty nine billion dollars that we have 0:06:59.279 --> 0:07:03.240 to a complish our overall goals and vision for success. 0:07:03.279 --> 0:07:06.280 So I spent my career, I spent thirty years in 0:07:06.279 --> 0:07:10.560 the financial industry, twenty five years at KKR, basically making investments, 0:07:10.560 --> 0:07:14.200 sitting on investment committees, etc. And given that this is 0:07:14.240 --> 0:07:17.920 a new government program that really hasn't been done in 0:07:17.960 --> 0:07:21.720 this way in many decades, that concept of creating a 0:07:21.800 --> 0:07:25.080 chief investment Officer and an investment office to think about 0:07:25.120 --> 0:07:28.040 the way we are allocating this money seem to make 0:07:28.040 --> 0:07:30.000 sense to us. I was just going to jump in 0:07:30.040 --> 0:07:32.720 and maybe explain a little bit of like the broader 0:07:32.840 --> 0:07:35.400 theory of the case in terms of how we're building 0:07:35.400 --> 0:07:38.600 the team, because fundamentally, we have two objectives here right 0:07:39.080 --> 0:07:41.680 Number one, we need to make a set of investments 0:07:41.680 --> 0:07:44.160 that are advancing our economic and national security. So we 0:07:44.200 --> 0:07:46.400 have a set of strategic objectives. But then we have 0:07:46.440 --> 0:07:49.400 to do so in a way that is safeguarding taxpayer 0:07:49.480 --> 0:07:53.000 dollars and really getting good deal. So we built our 0:07:53.040 --> 0:07:58.960 office here around chief strategy Officer managing strategy, technology and policy. 0:07:59.600 --> 0:08:02.200 That's more and Dwyer, she comes from the senior leadership 0:08:02.200 --> 0:08:05.680 of the Defense Department and the Office of Science Technology Policy, 0:08:05.920 --> 0:08:10.040 and then Todd bringing his considerable financial commercial expertise as 0:08:10.040 --> 0:08:12.720 the Investment Office, you know, gives us a way of 0:08:12.800 --> 0:08:16.760 kind of like mediating a conversation and coming up with 0:08:16.800 --> 0:08:20.400 an overall approach that is kind of advance both the 0:08:20.440 --> 0:08:24.360 tastpayer protection side of the equation but also the kind 0:08:24.360 --> 0:08:27.560 of strategic and economic Well let me ask, and you know, 0:08:27.640 --> 0:08:32.000 with a sort of traditional investment CIO, like, it's fairly 0:08:32.080 --> 0:08:34.480 easy to measure did they do a good job or 0:08:34.520 --> 0:08:36.600 not because you can look at returns, maybe you can 0:08:36.600 --> 0:08:38.480 look at volatility and a few things. It's like, oh 0:08:38.520 --> 0:08:41.480 this this investor made money, or they at least avoided 0:08:41.559 --> 0:08:45.960 losing money, etc. Obviously, as you mentioned Mike and Todd, 0:08:45.960 --> 0:08:47.800 both of you, you know, it's different with public money 0:08:47.840 --> 0:08:50.120 because the goal is to foster an industry and the 0:08:50.160 --> 0:08:54.120 goal is to build something that creates sort of positive externalities. 0:08:54.559 --> 0:08:57.840 But still, I mean, I wonder, are the hard benchmarks 0:08:58.000 --> 0:09:01.439 that we can look at in terms of taxpayer money 0:09:01.559 --> 0:09:05.199 well spent? Are the hard benchmarks in terms of how 0:09:05.360 --> 0:09:08.360 much chip production is happening in the United States today 0:09:08.880 --> 0:09:11.360 Verse twenty twenty eight, Verse twenty thirty three that we 0:09:11.400 --> 0:09:15.439 could say if we don't hit these levels it was unsuccessful, 0:09:15.480 --> 0:09:17.720 or if we do hit these levels that to success. 0:09:17.760 --> 0:09:20.079 What can the public look that to know whether it's 0:09:20.120 --> 0:09:22.800 working or not. We've spend a lot of time thinking 0:09:22.840 --> 0:09:26.679 about this. I mean, we fundamentally believe that we've been 0:09:26.760 --> 0:09:29.960 entrusted with a very large sum of taxpayer money and 0:09:30.120 --> 0:09:35.240 it's a public investment in private industry without recent president 0:09:35.360 --> 0:09:38.920 in terms of its scale and its strategic significance, and 0:09:38.960 --> 0:09:40.800 so we think we kind of owe it to the 0:09:40.800 --> 0:09:45.120 public and a broad range of stakeholders, industry and applicants, 0:09:45.320 --> 0:09:50.040 foreign governments, Congress to explain what we're trying to get 0:09:50.080 --> 0:09:53.360 with their money. And we put out, after a lot 0:09:53.360 --> 0:09:56.880 of analysis, what we call our Vision for Success document, 0:09:57.400 --> 0:10:00.680 and that lays out what we want future to look 0:10:00.720 --> 0:10:04.920 like after we've invested these funds in twenty thirty and beyond. 0:10:05.120 --> 0:10:08.600 And so we say in Leading Edge Logic, we want 0:10:08.640 --> 0:10:12.400 to have at least two large scale Leading Edge Logic 0:10:12.480 --> 0:10:16.160 manufacturing clusters. We talk about the importance of advanced packaging, 0:10:16.200 --> 0:10:20.559 which is absolutely critical both from a supply chain resiliency standpoint, 0:10:20.640 --> 0:10:24.240 but also from a technology leadership standpoint. We talk about memory. 0:10:24.520 --> 0:10:27.400 We talk about current generation to mature. So really across 0:10:27.440 --> 0:10:30.080 these segments, we have tried to put some kind of 0:10:30.120 --> 0:10:32.839 north stars out there that we're gonna tie ourselves to. 0:10:33.840 --> 0:10:37.280 The measure I think about a lot. Joe. Beyond all 0:10:37.320 --> 0:10:41.839 of those specifics is whether we can create self sustaining 0:10:41.920 --> 0:10:45.560 dynamics going forward. So can we be in a position 0:10:45.640 --> 0:10:50.360 where in the coming years, based on the investments we've made, 0:10:50.400 --> 0:10:54.640 based on the scale and the ecosystems we've been able 0:10:54.679 --> 0:10:59.440 to create, do the major chip manufacturers view investing in 0:10:59.480 --> 0:11:02.040 the United States has quartered their business model? And if 0:11:02.040 --> 0:11:04.040 we're able to do that, then I think we will 0:11:04.080 --> 0:11:08.120 be on a really solid trajectory with respect to our 0:11:08.280 --> 0:11:12.600 economic and national security objectives going forward. Do you want 0:11:12.600 --> 0:11:14.640 to add to that at all? Yeah, I would say, 0:11:14.640 --> 0:11:16.760 you know, in ten years when we look back, we 0:11:16.840 --> 0:11:19.400 want to really see this act in this period of 0:11:19.440 --> 0:11:22.560 time as an inflection point. Mike's already said that over 0:11:22.559 --> 0:11:25.679 the last thirty years, we've seen the percentage of manufacturing 0:11:25.720 --> 0:11:28.000 of chips happening in this country go from thirty seven 0:11:28.000 --> 0:11:30.680 percent to ten percent. We need to turn that around, 0:11:30.760 --> 0:11:33.480 and so the success will be to see that number 0:11:33.520 --> 0:11:36.319 instead of continuing to go down, to start to go up, 0:11:36.640 --> 0:11:39.280 and then in the very specific areas that we've already 0:11:39.320 --> 0:11:42.680 laid out, meaning leading edge logic where we now today 0:11:42.760 --> 0:11:45.720 produced zero percent of the world's chips and leading edge. 0:11:46.360 --> 0:11:49.520 We've said very clearly we want to see two self 0:11:49.559 --> 0:11:53.120 sustaining ecosystems at a minimum, and we have no real 0:11:53.160 --> 0:11:55.560 advanced packaging in this country either. We want to see 0:11:55.960 --> 0:11:58.200 quite robust aspects there, and we want to start to 0:11:58.200 --> 0:12:01.920 see cost competitive memory plants being done in this country. 0:12:02.040 --> 0:12:05.199 And we want to see all the piece of the ecosystem, 0:12:05.240 --> 0:12:08.440 including suppliers, come together around those goals. And so that's 0:12:08.440 --> 0:12:28.000 how we're thinking about measuring ourselves. I have a bunch 0:12:28.000 --> 0:12:31.360 of questions about how the government can help build a 0:12:31.400 --> 0:12:35.920 resilient industry that can sort of manage through various economic cycles. 0:12:36.440 --> 0:12:40.280 But before we get to those, maybe just to back 0:12:40.360 --> 0:12:43.000 up for a second, could you talk about how the 0:12:43.160 --> 0:12:47.600 process of dispersing this substantial amount of money. You know, 0:12:47.640 --> 0:12:50.599 you talked about fifty billion, thirty nine billion for manufacturing 0:12:50.600 --> 0:12:53.079 and then eleven billion for R and D. How does 0:12:53.120 --> 0:12:56.840 it actually work in terms of handing it out, you know, 0:12:56.840 --> 0:13:00.640 and applying it. Do people come to you or do 0:13:00.760 --> 0:13:04.840 you identify prospective companies that could benefit from this? How 0:13:04.840 --> 0:13:08.720 exactly does that work the broad aspect of what we've 0:13:08.760 --> 0:13:10.960 laid out in our notice, the funding opportunity is a 0:13:11.040 --> 0:13:15.000 very clear cut and very specific application process, so we 0:13:15.040 --> 0:13:18.880 are expecting companies to come to us. Our portal is 0:13:19.000 --> 0:13:21.320 right now open for what we call statements of intent, 0:13:21.600 --> 0:13:25.040 where anybody that qualifies for this or any of our 0:13:25.120 --> 0:13:28.240 later funding opportunities can put in a statement of the 0:13:28.320 --> 0:13:31.080 kind of project that they're looking for potential funding for, 0:13:31.559 --> 0:13:33.719 and then there is a series of other approaches, a 0:13:33.760 --> 0:13:38.840 pre application and application that accumulates very detailed information that 0:13:38.880 --> 0:13:42.440 we can then evaluate and make decisions based on to 0:13:42.600 --> 0:13:46.040 put money out to the various parts of the ecosystem. 0:13:46.320 --> 0:13:48.440 In addition to that, I would say that we are 0:13:48.559 --> 0:13:51.120 trying to be proactive to date, before we put our 0:13:51.160 --> 0:13:55.560 funding opportunity out, we've talked to dozens of industry players 0:13:55.600 --> 0:13:58.840 at companies. We are trying to identify the parts of 0:13:58.880 --> 0:14:02.720 the ecosystem that our potential barriers or roadblocks so that 0:14:02.760 --> 0:14:07.120 we can encourage specific applicants, but ultimately the applicants have 0:14:07.200 --> 0:14:09.839 to come to us. Yeah, we'll do like a review 0:14:09.840 --> 0:14:13.559 of the application, and we'll decide based on the criteria 0:14:13.640 --> 0:14:17.480 we've laid out, based on our economic and national security objectives. 0:14:17.800 --> 0:14:20.160 This is a project we want to support that will 0:14:20.240 --> 0:14:23.080 lead us to extending what we call a preliminary memorandum 0:14:23.080 --> 0:14:25.600 of terms but basically a term sheet, right, and then 0:14:25.680 --> 0:14:29.720 you're in a commercial relationship with the company where we're 0:14:29.720 --> 0:14:31.840 going to try to align on a set of economic 0:14:31.960 --> 0:14:35.040 terms that allows a project or a set of projects 0:14:35.120 --> 0:14:37.240 to move forward. If we can align, then we'll do 0:14:37.320 --> 0:14:39.960 our due diligence and we'll move towards making that award. 0:14:40.200 --> 0:14:42.680 Let's jump right into some of the criticisms. One of 0:14:42.720 --> 0:14:44.480 the big ones that got a lot of attention a 0:14:44.520 --> 0:14:47.600 few weeks ago was there's message that was put out 0:14:47.680 --> 0:14:50.960 about new construction and the requirement that companies had to 0:14:50.960 --> 0:14:54.000 take childcare of the employees seriously. And I think the 0:14:54.120 --> 0:14:58.320 concern was, or some of the criticism was that Democrats, 0:14:58.360 --> 0:15:00.600 having failed to pass some sort of che wildcare bill 0:15:00.640 --> 0:15:04.280 in the first two years, are trying to attach sort 0:15:04.280 --> 0:15:07.920 of progressive interests onto the bills that they did pass, 0:15:08.240 --> 0:15:10.480 and that this is potentially going to sort of lard 0:15:10.560 --> 0:15:13.120 up the whole process and the companies they if we 0:15:13.160 --> 0:15:16.880 really want them to just move fast, compete, be dynamic, 0:15:17.120 --> 0:15:19.640 then why are we adding all of these extra strings 0:15:19.680 --> 0:15:23.960 and obligations that aren't related to the production of advanced semiconductors. 0:15:24.360 --> 0:15:27.760 Why is that criticism wrong in your view? The no 0:15:27.880 --> 0:15:31.240 FOLLOW lays out sex evaluation criteria. It has economic and 0:15:31.360 --> 0:15:33.560 national security, which we say is the core criteria, the 0:15:33.600 --> 0:15:37.560 primary criteria. We'll receive the most weight, and then we're 0:15:37.560 --> 0:15:42.600 going to evaluate applicants based on commercial viability, financial strength, 0:15:43.080 --> 0:15:47.200 technical feasibility, workforce, and a set of broader impacts. And 0:15:47.240 --> 0:15:50.000 we view workforce is absolutely essential to meeting the economic 0:15:50.080 --> 0:15:52.680 national security objectives. Every time we talk to a company, 0:15:53.000 --> 0:15:55.160 workforce concerns are at the top of their list. We 0:15:55.280 --> 0:15:58.000 know it's a tight labor market. We need workforce to 0:15:58.000 --> 0:16:01.360 build these fabs, we need workforce to operate these fabs. 0:16:01.400 --> 0:16:05.080 It's absolutely essential, and the statute requires us to ask 0:16:05.120 --> 0:16:09.480 applicants for a workforce plan, and as part of that, 0:16:10.080 --> 0:16:12.560 one thing we hear a lot from companies is that 0:16:13.040 --> 0:16:16.920 lack of access to affordable, accessible childcare is a barrier 0:16:17.000 --> 0:16:20.160 to getting the type of broad, diverse workforce we need 0:16:20.320 --> 0:16:24.640 in the system in order to achieve our objectives. So 0:16:24.680 --> 0:16:29.720 we view childcare as really part and parcel of the 0:16:29.800 --> 0:16:32.680 broader set of objectives that we have around workforce, which 0:16:32.680 --> 0:16:36.120 is then, of course essential to meeting the broader objectives 0:16:36.440 --> 0:16:39.320 on economic and national security. So as part of the 0:16:39.320 --> 0:16:43.400 workforce Plan, we have asked companies to provide a plan 0:16:43.560 --> 0:16:46.440 with respect access to childcare that will be part of 0:16:46.440 --> 0:16:52.320 that holistic evaluation process that covers those six evaluation criteria. 0:16:52.360 --> 0:16:54.640 But if I could add one or two things to that, 0:16:54.920 --> 0:16:58.120 I left KKR five years ago with the intention to 0:16:58.440 --> 0:17:01.560 shift my whole second career to something in the public 0:17:01.560 --> 0:17:05.119 and not for profit sector, and my main focus was workforce, 0:17:05.200 --> 0:17:08.119 And so I spent the last four years with a 0:17:08.200 --> 0:17:11.639 maniacal focus on workforce because I believe the workforce system 0:17:11.680 --> 0:17:14.920 in this country is broken, or at least not where 0:17:14.920 --> 0:17:17.439 it needs to be. And when you look at this 0:17:17.520 --> 0:17:21.320 industry where over the last twenty years we've lost third 0:17:21.400 --> 0:17:24.720 of the workers in the semiconductor industry at the same 0:17:24.720 --> 0:17:27.840 time as the industry has tripled globally. And you listen 0:17:27.920 --> 0:17:30.640 to the companies in terms of their one of, if 0:17:30.680 --> 0:17:35.159 not their biggest challenge is attracting workers for their desire 0:17:35.240 --> 0:17:37.720 to build plants in this country. It is very clear 0:17:38.200 --> 0:17:41.120 that workforce is going to be a really critical aspect 0:17:41.160 --> 0:17:43.639 of success in the long term. In fact, when you 0:17:43.680 --> 0:17:47.320 look at someone like TSMC or Samsung over in Asia, 0:17:47.680 --> 0:17:51.040 a core part of their success is the product the 0:17:51.160 --> 0:17:54.239 productivity they're able to get out of their workers, and 0:17:54.280 --> 0:17:56.960 the sort of aligned system that the Koreans and the 0:17:56.960 --> 0:18:01.760 Taiwanese have around workforce, and this aspect is really critical. 0:18:01.800 --> 0:18:05.360 And so childcare is part of sort of expanding that 0:18:05.440 --> 0:18:08.119 fundamental funnel at the front end so that there is 0:18:08.240 --> 0:18:11.840 more capability for different types of workers to enter the 0:18:12.200 --> 0:18:14.560 semiconductor industry. And I did a little bit of googling 0:18:14.600 --> 0:18:17.800 this weekend. I literally went onto TSMC and Samsung and 0:18:17.880 --> 0:18:21.320 Intel and Micron website, all of them. All of them 0:18:21.400 --> 0:18:25.280 offer some kind of childcare. Micron just announced in Idaho 0:18:25.359 --> 0:18:28.440 that they're building a childcare center where their R and 0:18:28.520 --> 0:18:31.080 D fab out there. And so I think this is 0:18:31.119 --> 0:18:33.000 a little bit of a red herring because I think 0:18:33.040 --> 0:18:36.240 it's really core to what all of these companies need 0:18:36.280 --> 0:18:39.840 to do to attract their workers. So I'm glad we're 0:18:39.920 --> 0:18:45.000 talking about the labor force of this industry because this 0:18:45.080 --> 0:18:47.760 is something that's come up in various ways. So aside 0:18:47.840 --> 0:18:52.480 from childcare, what else are you doing in order to 0:18:52.600 --> 0:18:56.160 attract people to this space or what can be done, 0:18:56.240 --> 0:18:58.840 because you know, one of the reasons that people need 0:18:58.960 --> 0:19:03.480 childcare for these type jobs is they are very intense 0:19:03.880 --> 0:19:06.520 and you know, in some parts of Asia, we're talking 0:19:06.560 --> 0:19:10.840 about twelve hour shifts where you have to be incredibly 0:19:10.880 --> 0:19:15.120 focused and diligent and detail oriented. And I know there 0:19:15.160 --> 0:19:18.640 has been some concern about whether or not the US 0:19:18.720 --> 0:19:22.040 will be able to find enough people who want to 0:19:22.119 --> 0:19:25.840 do this type of work. I mean, I think these 0:19:25.920 --> 0:19:29.840 are really high quality jobs for many people in this country, 0:19:29.960 --> 0:19:34.119 and what we need to do is to help individuals 0:19:34.119 --> 0:19:37.439 across this country understand what these jobs involved, understand the 0:19:37.760 --> 0:19:40.919 quality and attractiveness and potential for advancement in the jobs. 0:19:41.359 --> 0:19:43.760 And so that means that we need a system that 0:19:43.920 --> 0:19:47.480 trains and attracts that skill set. There should be no 0:19:47.560 --> 0:19:50.320 reason that our workforce in the US can't be as 0:19:50.400 --> 0:19:54.440 productive as any other workforce around the globe. And so 0:19:54.640 --> 0:19:57.359 the other things in addition to things like childcare, you 0:19:57.359 --> 0:20:02.879 would talk about aligning local whole systems, community colleges for 0:20:03.080 --> 0:20:09.200 your institutions, training organizations with appropriate or wrap around support 0:20:09.240 --> 0:20:14.800 around transportation and technology skills and things of those nature, 0:20:15.119 --> 0:20:18.439 and aligning those systems so that there's clear pathways and 0:20:18.520 --> 0:20:22.800 clear curriculum and clear training paths so that more talent 0:20:23.280 --> 0:20:26.000 can experience the quality of the jobs if there are 0:20:26.000 --> 0:20:28.200 in this industry. The other thing I would just say 0:20:28.400 --> 0:20:31.320 is on the kind of engineering side of things. This 0:20:31.440 --> 0:20:34.880 is just a personal view, but like I think we 0:20:35.280 --> 0:20:40.240 as a country would be really better off if more 0:20:40.800 --> 0:20:44.280 engineers were interested in working on semi conductors, you know, 0:20:44.320 --> 0:20:46.919 as opposed to say software. And I think all of 0:20:47.000 --> 0:20:50.159 us can play a role in trying to shape that narrative. 0:20:50.200 --> 0:20:53.840 I mean semiconductors. It is really like the peak of 0:20:54.080 --> 0:20:57.239 human innovative capacity, and I think, you know, we need 0:20:57.280 --> 0:21:00.480 to make semi conductors cool. Here it does seem like, 0:21:00.720 --> 0:21:03.360 I don't know, and if you could go into software 0:21:03.359 --> 0:21:05.280 and make a lot of money and you know, hang 0:21:05.280 --> 0:21:08.800 out and play ping pong and stuff like that, or yeah, 0:21:08.800 --> 0:21:11.119 you go to semi conductors and it'd be like really 0:21:11.160 --> 0:21:13.560 grueling and not sit on beam bags, and that's like 0:21:13.640 --> 0:21:15.520 kind of tough. Like if you want to like attract 0:21:15.840 --> 0:21:18.640 the most advanced technical talent, I want to just get 0:21:18.680 --> 0:21:21.960 another question, and I'm sorry, I'm going to keep cripping 0:21:22.040 --> 0:21:26.080 questioned ideas from our brutal Bloomberg opinion columnists. The fifty 0:21:26.119 --> 0:21:29.600 two billion dollar plan is racing towards failure. But this 0:21:29.680 --> 0:21:32.080 is something they bring up, and it's something I've heard 0:21:32.080 --> 0:21:35.000 from many. You see a lot, which is that one 0:21:35.119 --> 0:21:40.439 challenge in America is things like local environmental rags that 0:21:40.520 --> 0:21:44.200 make buildings slower than it does in other countries, land 0:21:44.320 --> 0:21:48.960 used questions, environmental reviews, lawsuits, things like that. Just so 0:21:49.040 --> 0:21:52.040 far in the eight months since this bill was passed, 0:21:52.359 --> 0:21:55.679 what are you seeing on the ground specifically in terms 0:21:55.680 --> 0:22:00.719 of the challenges that potentially new fabs have in dealing 0:22:00.720 --> 0:22:04.359 with the local laws that govern the ability to build anything. 0:22:04.520 --> 0:22:06.600 It's a great question, I think. I think it is 0:22:06.640 --> 0:22:09.639 a reality of our American system, the federal system, that 0:22:09.680 --> 0:22:15.440 we have kind of overlapping expectations or requirements on the 0:22:15.560 --> 0:22:19.080 kind of permitting an environmental review side, including both federal 0:22:19.400 --> 0:22:22.199 and state and local. You know, we are building a 0:22:22.200 --> 0:22:26.480 team here that is focused exclusively on those issues, right 0:22:26.640 --> 0:22:28.800 and you know our so our job is not is 0:22:28.800 --> 0:22:31.440 not to admire the problem, but to kind of jump 0:22:31.440 --> 0:22:34.560 in and try to solve it. And you know, I 0:22:34.560 --> 0:22:37.840 think with the right capacity on our side as well 0:22:37.880 --> 0:22:41.080 as the right capacity being brought to bear from our 0:22:41.119 --> 0:22:44.040 from our applicants, it's just a lot of blocking and tackling. 0:22:44.520 --> 0:22:48.280 But you know, we are we are optimistic that permitting 0:22:48.280 --> 0:22:50.240 an environmental review won't won't end up being what we 0:22:50.359 --> 0:22:53.320 call the long pull in the tent. But you know, 0:22:53.359 --> 0:22:55.200 there's no question it's a challenge and we are taking 0:22:55.240 --> 0:23:00.080 it very seriously and investing necessary resources in order to 0:23:00.480 --> 0:23:02.200 make sure that we're able to meet our objections. Sorry, 0:23:02.240 --> 0:23:04.439 can you just talk a little bit more specifically? Are 0:23:04.480 --> 0:23:07.159 there specific types of issues that come up in the 0:23:07.200 --> 0:23:09.439 applicants you've seen and I know we've already seen like 0:23:09.520 --> 0:23:12.919