Investing in Leading-Edge Technology: An Update on CHIPS Act Implementation

so good morning and welcome to csis my name is sujay shivakumar I'm a senior fellow here at csis and I direct our Ren um American innovation project here at csis so as you know Innovation is the engine that powers our nation's economic growth our competitiveness and our national security and semiconductors are the platform on which our economy runs and which On and On which so much of our Innovation is built that's why implementing chips and science Act is so important in various ways uh chips is pushing the renewal of how we manufacture in the United States train our Workforce connect Americans to The Innovation economy reinvest in our R&D infrastructure build new public private Partnerships and cooperate with our allies and strategic partners and importantly rewire and grow resilient Supply chains so all this is to secure the future of us leadership in the 21st century and it's certainly no small task so we're particularly honored to have have with us today the Secretary of Commerce Gina Rando to give us an update on the implementation of the chips act as a former venture capitalist secretary randoo understands Innovation and as a former Governor she understands the need for tangible outcomes and inclusive technology Le economic development that Embraces all Americans so it's my special pleasure to invite her to deliver the keynote investing in leader in Leading Edge technology an update on the chips uh uh act implementation uh following the keynote uh I invite the secretary to a fireside chat conversation with csis senior adviser Charles westner and so without further Ado Madam [Music] Secretary thank you thank you can you guys hear me yes great thank you spring is here it seems like spring is here that's why I wore a bright color anyway uh it's one wonderful for me to be here and big thank you to csis for hosting us uh it's an important message and I appreciate you giving me this opportunity so I am here because it was just about a year ago last February that we at the Commerce Department rolled out the funding applications for the chips and science program and when we did that a year ago I said that the chips initiative mirrors the Space Race the Space Race that the US had with the Soviet Union decades ago and at that time President Kennedy issued a call to America to put a man on the moon and in the decade since the whole country Academia industry the government rallied together uh to secure America's place at the frontier of innovation and in some cases tripled and quadrupled the number of scientists that our uh institutions of high higher educ ation produced we have the same opportunity right now right now six decades later President Biden is calling on the nation to unite around a common purpose so that we can once again cement our leadership role in this global technology uh race in the semiconductor industry everybody here knows what a big deal semiconductors are everything is powered by semiconductors windshield wipers phones pacemakers pretty much every piece of military equipment they're everywhere in everything fundamental to our lives from the moment you wake up in the morning until the moment you go to bed but now on top of all of that there's been a gamech Cher in the demand for Leading Edge semiconductor chips you all know what it is AI when we started this generative AI wasn't even really part of our our vocabulary now it's everywhere it takes tens of thousands of Leading Edge semiconductor chips to train a single large language model the truth of it is AI will be the defining technology of Our Generation you can't lead in AI if you don't lead in making Leading Edge chip CHS and so our work in implementing the chips act just got a whole lot more important the truth of it is the US does lead right we do lead we lead in the design of chips we lead in the development of uh AI large language models but we don't manufacture or package any Leading Edge chips that we need to fuel Ai and our whole Innovation ecosystem including uh chips necessary for National Defense We Don't Make It in America and the brutal fact is the United States cannot lead the world into as a technology and Innovation leader on such a shaky Foundation we need to make these chips in America we need more talent development in America we need more research and development in America and just a lot more manufacturing at scale by the way other countries like China aren't shy about its Ambitions and they're taking it in China's taking an increasingly ambitious role in uh increasing their own chip production so the truth is if we want to continue to lead on these Central Technologies then we at the Commerce Department you folks at nist and the team you've built we got to nail it we have to nail the implementation of the chips and science act we have to execute like every detail matters because it does and we have to be bold enough with our vision which is why I liken it to the Space Race So when we rolled this out a year ago I said we would be judged on two things first whether we were able to build a reliable and resilient semiconductor industry that advances our country's technological leadership and second whether we were good stewards of taxpayer dollars as a former Governor I take that very seriously I we Tre every dollar as if it's you know our own a year into it I want you to know I'm proud to say we're on track to accomplish both in record time this team at the Commerce department has stood up an initi a program a a team which is flexible fast and worldclass they've built a team that's incredible 200 people now work in the chips program office who represent Decades of experience in government investing investment banking industry research Academia folks with Technical and policy expertise and a track record of delivering on big things I think the early results are pretty incredible I do we we're in the trenches all day every day working Fact one of the guys on our team told me he recently discovered he has a vitamin D deficiency cuz I don't let him out to the Sun but so we're trying to pull out a little bit here since President Biden signed the chips act and before we've put a single dollar out into any private companies the private sector in this country has announced 200 billion dollars in semiconductor manufacturing Investments that's incredible and I want to thank industry I want industry to hear from me a thank you for the way you've responded with your willingness to partner with us to achieve our national security goals since chips Act is signed nine states have created New Economic Development programs targeted to the semiconductor industry to provide matching funding and further leverage the chips act more than 50 community colleges across 19 states have announced new or expanded programming to support semiconductor industry opport unities and we're partnering with labor leaders and labor unions and manufacturers on training the workforce of the future so that we have the skilled folks we need to build the Fabs and work in the Fabs and that means we're sitting down with everyone including teachers unions across the country to ensure high school students not all these jobs require a college degree many do many do but not all do uh so we want high school students to get the skills they need to get the jobs that these semiconductors need to have a strong career pathway and we are working with Academia and government research agencies entrepreneurs and Industry to stand up the national semiconductor technology Center nstc which will tackle the research and development challenges facing America's chips manufacturing ecosystem and upskill so we have a skilled Workforce in fact it was just a week ago or two weeks ago we announced d Hanford who is a well-known well recognized uh industry veteran who will be the CEO of that uh uh uh natat cast the national semiconductor technology Center effort so that's all the good news it's exciting I spent the weekend with the governors they were in town for the national Governor Association they're all so excited to lean into this companies are academics are community colleges are we're ready to go here's the bad news we received over 600 statements of interest from companies from the biggest to the smallest and the brutal reality is that a significant majority of those companies expressing interest aren't going to receive funding including many excellent proposals by you know strong companies that are worthy but the reality is and I've said this many times the point of this program isn't to sprinkle a bunch of money out to as many companies as possible even though candidly that would be easier our job is to make targeted investments in Relentless pursuit of achieving our national security objectives and I I before we start announcing some of the big announcements I do want to reiterate that that's the purpose of our effort here at the outset we said we would invest about 20 $8 billion of the program's 39 billion in incentives for Leading Edge chip manufacturing leading C but I want you to know even though that sounds like a lot of money the Leading Edge companies alone have requested more than $70 billion so that means we have a lot of tough conversations we are engaging industry in a spirit of collaboration and they have been incredible Partners but as I said I'm obsessed with protecting taxpayer money and we have to be tough with companies our tough negotiations with individual companies will result in each one of them doing more for economic and national security at a lower cost to the taxpayer that means we're going to create tens of thousands of high-paying jobs in the communities where these Fabs are located will enhance our national security work and of course every one of these companies has to adhere to the national security guard rails of the chips act so you know ask any semiconductor CEO and how's it going with secretary Rondo and they'll say she's pushing us she's pushing us to do more for Less why because if I do that we'll be able to fund more projects with the same amount of money and Achieve our national security goals my conversation with CEOs of these chips company pretty much goes the same way they come in they ask for billions of dollars reasonable I tell them you'll be lucky to get half of that then they come in again to finalize the deal where they get less than half of what they wanted and they tell me they're not feeling lucky that's the reality these are tough negotiations that's our job and I want to once again thank them for their partners parip but we have a finite amount of money to meet our urgent National Security goals and so I have to make every dollar count we've made a few decisions that I'm announcing now we've decided to prioritize projects that will be operational by 2030 I want to be clear there are many worthy proposals that we've received with plans to come online after 2030 and we're saying no for now to those projects because we want to maximize our impa our impact in this decade it's not responsible to give money to a project that'll come online you know 10 or 12 years from now if it means saying no to excellent projects that could come online this year this is tough stuff none of this work is Easy A lot of people say oh you know secretary this is risky picking company picking you know winners and losers yes of course there's risk but I'll tell you this there is way more risk in doing nothing we were headed down a path of much greater National Security risk before President Biden had the courage to fight for these Investments as part of his overall investing in America agenda we cannot allow ourselves to be overly reliant on one part of the world for the most important piece of hardware and the 21st century that's way riskier so that's why we're doing what we're doing last year I said the goal of when we're all said and done with this chips initiative is to have at least two new large scale clusters of Leading Edge logic Fabs each of those clusters employing thousands of workers I'm pleased to tell you today we we expect to exceed that Target now that we've seen the applications the way Industries responded I think we're going to do better than what we told you we would do a year ago we think our investments in Leading Edge logic chips Leading Edge logic chip manufacturing will put this country on track to produce roughly 20% of the world's leading Edge logic chips by the end of the decade thank you that's a big deal why is that a big deal because folks today we're at zero today we're at zero so a year ago before we saw the applications I didn't know exactly what we could do we said we want at least two ecosystems and today I'm confidently standing before you to say by the end of the decade we're going to go from zero to 20% of Leading Edge built in the United States of America and the supply chain will also come along with that Supply chains can no longer be as vulnerable to geopolitical challenges as they are today we also believe we will be successful in having Leading Edge memory uh which is also a critical input for AI systems right here in the United States excuse me on shuring this is important cost competitive Leading Edge memory at scale right here in the United States of America in fact I also think and I I feel more certain of this every day as we work with industry and look at the 600 proposals in addition to those goals I laid out I I'm confident the United States can become the home to the entire silicon supply chain for the production of these Leading Edge chips from polysilicon production to wafer Manufacturing to fabrication to Advanced packaging that's the game by the way when I say let's be bold this is not build a few new Fabs and call it a day no Soup To Nuts polysilicon to Advanced packaging everything in between including R&D in the United States and to those of you now with a bubble over your head saying secretary what about um mature node we're on that too we're not losing sight of the importance of current generation uh and mature node chips which you all know are essential for cars medical devices defense systems and critical infrastructure just think back to a minute ago of the pandemic we were furlough tens of thousands of workers from car companies for lack of a single Legacy chip we have got to improve the fragility of that supply chain and we will do that already to date we've made uh three announcements of investments in current immature chip companies Bae microchip and Global foundaries not uh not quite two billion dollars over a billion and a half dollars and we're going to continue to announce additional investments in current mature production to make sure we have a domestic supply of these critical chips so um I'll end with this if as I've said if chips for America is to be successful and I know it will be and I want to thank my team many of whom are here today for your unbelievable dedication and hard work by the end of this decade by 2030 the United States of America will be the only country in the world where new chip architectures can be invented in our new research Labs including those funded by the nstc they'll be designed in the United States for every end use application you can think of manufactured at scale in the United States by wellp paid American workers and packaged with the most advanced technology in the world all on our Shores and engineering schools all over the country will be pumping out more engineers and technicians trained specifically for the chips industry we're going to make building Hardware sexy again how about that doesn't that sound fun we need computer scientists to build software we want those llms built in America but how about making the hardware right here in America with a dignified decent high paying job we've already caught the attention of the world we have and the excitement for this program is palpable I told you about the governors this weekend I did a panel like almost 20 Governors showed up CEOs are excited labor unions are excited Community College are excited high schools are excited they want to know what can we do to be part of our efforts to revitalize America's chip ecosystem I just it's amazing you got in Industry you know five years ago certainly 10 years ago five years ago if you were thinking of expanding in ships the question was where in Asia do we expand right now companies are saying they want to they're saying in what state in America should we expand with what universities in America should we partner where should the nstc be located and with whom whom should they partner so thanks to President Biden's leadership and vision and belief that we can make things in America he has a belief in his core of the vibrancy of the American manufacturing sector I am so optimistic I am more optimistic than ever I want you all to know we're working day and night we're going as fast as we can but way more important than going fast is getting it right and we are relentlessly pursuing our national security goals which means together all of us we're going to rebuild our industrial base supercharge American innovation create hundreds of thousands of good paying jobs and meet I think one of the most Monumental challenges of our time so thank you so much for coming we're going to have a open discussion now but I'm excited for what's going to come well I'm not sure I want to ask questions but might ask where do I sign up the U that was certainly inspiring um I uh sometimes in Washington we seem to be trying to achieve the least possible I have the impression that you're trying to achieve a great deal more than that the um um and without falling into the Trap of being one of these um Washington Skeptics um you said for the first time you wanted to hit 20% uh which even for some of the those of us who might be called wonks in this area that's a big number it is a big number yeah um well then there's a related number um although I'm um I'm a recovered Economist I I nonetheless um would want to ask whether not the funding is sufficient to meet those ambitious goals yeah uh thank you for what you said your kind comments it is it is like I said a year ago when we put out the application I wasn't sure I was I was making some assumptions now we have 600 statements of Interest we're in the thick of these negotiations we know the plans the companies are really coming forward and being ambitious so I yes I think this is enough money to achieve that goal it doesn't mean that at some future date we don't need what people call A Chips to or more money you know like I said it's a whole ecosystem here uh I think we may need that for sure but uh based on everything I know now and where we are we're right where we want to be and this is achievable with the money we have well that's that's encouraging um do you think the political establishment uh if I can still use that term here in Washington uh uh appreciates that uh a company like tsmc last year spent $30 billion dollars on expanding their facilities and refining them um the National Fund in China last year spent $ 41 billion I'd like to think that we're the best in the brightest but yeah at some point The Leverage is out of yeah it look it's a great um it's this point that you're making I I don't know if people understand it if you stare at it on a paper every day it's pretty scary situ thing you know uh China as I said China is not shy about its ambition they are pouring in you know depending on who you listen to a hundred billion doll plus to their own domestic chip manufacturing so this is a tall order that being said that being said um all of the big chip customers Leading Edge chip customers are American you know uh Apple Nvidia Microsoft Google Amazon uh so we do have huge advantages in in the in our ecosystem the designers of these chips Nvidia AMD are American so I don't we definitely don't have to go dollar Ford dooll with China at all however this is why I'm so urgent about it you know what tsmc is contemplating doing in Arizona is path breaking you know and they are investing in the United States and we're Greatful that they're doing that and we're going to make sure it's successful well the leverage you mentioned there is perhaps as you suggest one of our one of our great advantages some people like to bring attention in fact I'm very happy happy to hear that you're talking about the Legacy chips I don't know your view but I find it a very unfortunate name it's like selling something from grandmother's attic I know it's actually the path to the Green Revolution the path to electric vehicles uh here at CSS we prefer F foundational as a way of trying to point out how much depends on that but the question is do you expect that you'll have the resources I I understand it admire your focus on Leading Edge that's where the ultimate gain is yeah um but the rest of the economy as you also mentioned depends on the Legacy can we can we get more resources to that uh to that sector would that be possible yes so the legislation requires that we invest a minimum of $2 billion into foundational chips we will do multiples of that great yeah we will do m in fact just a week ago I was in Malta New York with global foundaries doing the foundational chips and that alone that one announcement was a billion and a half 1.5 billion so we'll certainly exceed the two billion in statute we think of that as a floor and look if we had more we would do more no doubt about it like I said we're we're going to have to say no to excellent companies with excellent proposals it's it's so tough we could easily invest quite a bit more in excellent companies but I do feel uh we can do both we can do both we can do Leading Edge Leading Edge logic Leading Edge memory and uh current mature and still have some for uh the supply chain but but that's why um I'm not on the Christmas list Christmas card list of a lot of these CEOs and these chip companies because we're squeezing every dollar because every dollar I don't have to incentivize them it's a dollar to invest in the rest of the ecosystem you know one of the things that sometimes goes under the Horizon um when we're talking about chips we mentioned the 52 billion in the direct grants um what is your view on the importance of the tax incentives and the tax credit oh thank you uh hugely important and I want to thank Congress for that I was involved in negotiating the bill and there were different views at the time should we keep the tax credit should a company be allowed to get a grant and a tax credit the tax credits when this is all said and done the tax credits will be shown to have been an unbelievably powerful part of the incentive to stretch the capital and actually that is why we're able to do so much with relatively limited grant money well that's that's very that's very encourag encouraging uh to hear the um we often mention uh training um but will you be able to apply much of these resources particularly through the nstc uh to strengthening the talent pipeline is that a priority yes we envision the nstc as we were talking about to be some part is pure research and development you know working with industry and universities um to have facilities to to have R&D but also we envision launching a Workforce Center of Excellence so the NAT cast nstc would have and run a Workforce Center of Excellence which would be the national Hub of all semiconductor Workforce and training which is which is I think so exciting I did a lot of Workforce Development when I was the governor so you could imagine having for example a standardized curriculum that every Semiconductor Company would approve of so for example every cyber technician would have to for the chip industry would have to pass this curriculum every technician for chip industry would have to pass this curriculum every material scientist for example so our hope is that this Workforce Center of Excellence can set standards and best practices to unify um the industry which is to the benefit of every company you know when it comes to Talent having more trained people to work in the chip industry benefits every company that's actually where I think America really took its Eye Off the Ball you know when you talk to um like for example when I've talked to the CEO of say tsmc a company you mentioned they want to be here they're investing as you said huge amounts of money they want to make sure the talent Supply is here every one of these companies says I need to be able to hire thousands upon thousands of PhD Engineers college graduate Engineers high school graduate technicians so anyway this is I think that could prove to be the most important piece of work of the nstc well I was pleased to hear you say that there's been some interesting work here done in Dr Shiva Kumar's program at CSS on these new training programs that have are already spreading and being taken up by the companies interesting enough exactly but the um you you stressed the importance of meeting this moment with Leading Edge semiconductors especially with the AI Revolution and uh one question might be do we have the what happens if we don't do that and do we have uh and do we have the talent to do it and a related point would be and I I don't want to put you on the spot but the um some people have talked about getting a national security uh carve out uh for very high-end immigration or perhaps at the very least stop sending away the people we've trained at MIT and elsewhere where they finish their degrees Yeah put a green card on the diploma and keep them here instead of literally sending them to to compete with us yeah yeah is that so there's a lot in your question the first the first part about what happens if we don't succeed I mean it I really the failure is not an option here if we find ourselves in a world a few years from now just think about this guys all artificial intelligence which is the defining generation defining technology of Our Generation runs on chips you cannot train these models without tens of thousands of leading inch chips imagine if we're dependent on a couple countries in Asia for our entire chip Supply by the way these are the large language model to train military equipment nuclear simulation satellites biot terrorism you want to buy all those chips from Asia I don't you cannot lead the world as the United States of America if you don't lead the world in this kind of technology and Innovation including manufacturing so I don't know I can't allow myself to think about failure because it's just that important for for our country's strength I fly all over the world America is a leader in the world we have to stay there and advance that leadership you're right about immigration you know the president's called so many times for responsible immigration we can't afford we need to keep that talent I would be strongly supportive of you know something that uh maintains highly skilled immigrants for this industry I it doesn't have to be so narrow I wish it were broader than just the chip industry but it's a huge thing that does keep me up at night well sometimes and they want to stay here sorry to interrupt they want to stay here I know now it's there's a certain there's a certain irony that we spend hundreds of thousands of dollars to train them and then ask them to leave in a crit in a critical area um but the numbers if I'm not mistaken the numbers wouldn't be huge um but they may well be critical going forward I agree with that yes yes the um to take a step back here and I I really mean that you've been inspiring on this uh it's um and I think the space act uh uh or the space race is really the appropriate uh appropriate metaphor uh what do you see as your main challenge going forward to getting these Awards out and you know you make small groups of people happy and you'll make larger groups of people unhappy uh definitely true uh do you do you do you see any clouds on the horizon as you go forward that you need to handle or are you fairly confident that we have the bipartisan support that you'll need that's a good question that's a good question this is really hard I'm not going to pretend it's not every decision is difficult every yes or no is fraught with a lot of dialogue uh it helps to have the the um North Star of our national security goals and that's what we're just really focused on and that I think is allowing us to maintain the bipartisan support so in the past month I have spoken with Senator Corin republican from Texas Senator Warner Democrat from Virginia who were leaders on this they're both still strongly supportive I was with Todd young Republican senator from Indiana the other day Schumer last week all still strongly supportive so I think yes I think I have no doubt that when we say no to good companies I'm going to get calls from Senators saying how come you didn't fund that company and those will be uncomfortable calls but fundamentally uh and they you know I understand why they make those calls they want to stick up for their state they want to create jobs in their state and I I tell them give me more money and I'll fund the company right you know this is an easy solution to this chips too double it I can double the number of companies they're all they'd be great but with the limited money I have to hit these National Security goals we got to make tough choices but anyway short answer is I do still feel we have a lot of support I mentioned I was with the governors this weekend National Governors Association was in town and I did a panel and there were like 17 or 18 Governors who showed up broadly bipartisan that's great you know from all kinds of states big States little States coastal Midwestern so I feel pretty good about it you know in line with what you were saying there we uh the nstc seems to have enormous potential something that's absolutely necessary to make our ecosystem work um but I've been Disturbed sometimes when we see that there's like maybe a fiveyear horizon on the on that how do you how do you see the longevity I'm pointing to my team cuz I say in our meetings don't be shortsighted great this thing has to be built for the decades to come we have it's a you know we have to have short-term goals like we announced just at the end of last year we announced the board of rockstars we just announced the woman who's going to run it you know this year we want to launch this Workforce Center of Excellence so we need shortterm Milestones but really these are 10 15 20 year long-term goals great this is this has to be we it's hard in politics right it's really hard in politics to dare to think long term but if we are shortsighted this is our one chance to get it right I think so we have to maximize it I'm pleased to hear that I think the idea that we're one and done on this is is is perhaps the single greatest risk that you may be may be running agree with that the long term just a a last question um we've talked about big companies we talked about the logic what about the um the smaller companies will you be able to help those companies uh prototype their ideas uh is that part of your plan yes I'm spiling because we it is we just had a meeting about this so two points we're determined to give small grants to small companies there are some unbelievably innovative companies in the semiconductor supply chain sometime you know they're not building big Fabs obviously that requires scale but they might they might have materials that are Innovative or somehow inputs to the Fabs so we have a whole initiative internally to look at small companies to give them small grants once again the majority will be told no but many small companies are going to get funded but the thing you said is even more exciting exting in some ways the nstc will set up infrastructure whether it's Labs or testing facilities or prototyping facilities digital twin facilities for little companies to use to have access to equipment and talent that they otherwise couldn't afford and that's why we're building this nstc with for the long term if we do our job right I don't know I don't know what the next I don't know what the next wave of innovation is as these chips get smaller and such but small companies should have access to these labs and Facilities so they can develop um the new technology even though they're Capital constrained we're extremely conscious of that as someone who's worked on programs for small companies in the past I'm very very pleased to hear you say that that's that's often the source of the new ideas that drive our economy and help Drive the larger companies as well we could obviously talk about this all all afternoon but I imagine you have a few other engagements thank you so much for coming thank you so much thank [Music] you

Channel: Center for Strategic & International Studies

Views: 7,810

Keywords: Center for Strategic and International Studies, CSIS, bipartisan, policy, foreign relations, national security, think tank, politics, #RAI, #Event, #2AB

Id: bZK7UT3Bg3I

Length: 41min 23sec (2483 seconds)

Published: Mon Feb 26 2024