This is not the first time we've had governments involved in tech by any
means going back to a media in Japan. DARPA Defense Department.
What have we learned from that. What should we have learned from those
experiences. Well I think it's that's a great analogy
that you draw and you seem to be a historian of our industry.
I actually was living in Japan or the memory wars.
I was living in Tokyo at the time working in IBM Japan.
Now today things have changed. I mean clearly because it's not Japan
who was part of the worldwide economic and governance systems.
It's China. And China as you know is fast growing
economy investing trillions of dollars in technology.
They want to lead the West. They want to be the worldwide leader in
semiconductors and microelectronics. And the majority of our capacity is
Asia. And it's not exactly a stable part of
the world. So it's quite different.
So it's more than just government involvement and adding stimulus to get
an investment in these key critical areas.
You have a they have the geopolitics at play.
So it's very complicated much more so than it was in the past.
But it doesn't always work does it. I mean I think a lot of people think
that the media experiment over in Japan actually Altman was not successful.
Japan is not a dominant player in semiconductors today.
That's correct. I mean I would argue that the execution
by government then was very poor. I was I used to meet with MIDI and they
were stronger in electronics and they still are strong in manufacturing
electronics. But the fill in what was required from
the industry's perspective we also had that software capability and they were
weak so many times. I think the government doesn't
understand what's required to actually not just invest but to lead and then the
discipline that's required to execute these things with precision.
So Sam as you suggest I mean China really has changed the game.
I think in technology and all sorts of ways and given its authoritarian aspect
which means it can do pretty much whatever it wants to do as well as the
massive amounts of money involved. Does it make it almost essential that
the United States and for that matter in Europe also some way step up to the bar.
I think it's key and I know many my colleagues the private sector will find
that that's strange for somebody that ran IBM to say those things.
But this transition is very very expensive.
And I don't think you can do you could have a company regardless of how
successful they are. Intel AMD DSM out in Europe etc.
Do this on their own. They're taking on a sovereign nation.
And when you're taking on a sovereign nation it's not like competing in your
industry space. So there is a role for government.
Now the question is what is the role for government.
And I think we all know we've all learned that government picking winners
and losers losers even if you're an authoritarian government like China can
act quickly doesn't always work for lots of different reasons.
But I think you need to have this partnership and not have the government
pick and choose who the political winners or losers happen to be based
upon votes per state and all the things that they consider beyond just what it
takes to make this business successful and what it takes to lead and technology
in the world. So the lead in implementing this the
United States is going to be general one of the secretary of commerce.
Give her a little advice. I mean we've talked to her and she said
she wants to get that 53 billion dollars out the door as soon as possible.
What would you tell her to make sure that it goes to the right places and the
right time. Well that's an excellent question.
I'd start with the fact that I haven't been involved in these types of programs
in the past. The application process to get approval
to proceed is extremely onerous some very complicated.
And many times people just give up a lot of this one on the electoral
modernization and digitisation of the grids.
When I was working in the government processes are so cumbersome.
People just said it's not worth it. The heck with it.
You know those kinds of things. In this case it's permitting district
quiet and location that's required. Now the good news in this quite honestly
is the states are heavily involved like Ohio and the states are much better at
getting these things done in my opinion than the federal government is such as
based on my experience. So that's the positive side of this
thing. But Chief you need to get the
bureaucracy out of the way you know. Same thing they did with the vaccines.
You've got to get the bureaucracy out of the way so you can move very very
quickly. Now the other piece of this quite
honestly I advise her on as you have to look beyond just production capacity.
I know that's the bill. That's where the money is.
But the issue is more complex than just the location locating the fabricators.
If you look back in history the US government does not have an unblemished
record when it comes to waste. When you're putting a lot of money out
in the marketplace and yes even fraud how do you get the bureaucracy out of
the way of at the same time make sure the money is going to the right places
and the right people and not being wasted or for that matter fraud isn't
being conducted. Well quite honestly they would start by
getting competent people involved. And what I mean by that there are people
in this industry that know how to do these things.
I mean I'm not volunteering for work. Don't misunderstand.
I'm really not. However there are people engaged the
people who know how to get these things done.
Government for whatever sorts of reasons goes on their own.
And that is a problem because in these very complicated areas you need people
who have done this before about the expertise and you need to engage them.
They turn it over completely to the government agencies without a
partnership of some kind with a full capable people.
I think we'll be a mistake. I've argued this for years.
When the Obama commission when it came to cybersecurity and the government
network infrastructure you need to get people involved that know how this stuff
works. However having said that my experience
as a government in the US clearly in the United States is very hesitant to do
that. I cannot explain why.
I just know they're hesitant to use the private sector expertise.
Finally Sam take a step back here a moment.
We talked about China. We talked about some of the geopolitics
involved in semiconductors. There are a lot of larger set of issues
now in geopolitics around the world. You don't need me to tell you whether
it's Russia and Ukraine whether it's Taiwan and China whether it's Iran.
Everywhere you look as a former CEO of a very large global company how does it
change how you make your investment decisions.
What you're seeing geopolitically right now.
Well I mean quite honestly it makes it much more complicated.
If you think about it there was a system before the world globally integrated
called the Hub and spoke. And by that I mean you maintain
manufacturing you're already an IP and your domiciled headquarters locations
and you sold things in other countries today as you look at where your
facilities are. Would you make an asset.
It's a multi-billion dollar investment in an asset manufacturing facility or
data center or whatever that would happen to be in parts of the world are
unstable. Of course not.
Would you do that. There's not a predictable government.
Of course not. I mean basically.
So that's what has to change. The question is where do you go.
And then you need stable environments where you have trusted governments that
you know they'll be reliable and predictable that you can make these long
term investments. Now there's a lot of those locations in
the world but far away. But fundamentally that's what you need
to do. Enough from a government's perspective.
I don't really think it's practical to say everything returns to your domicile
whoever you are in the US. Germany doesn't matter.
France. That's not practical because the
capabilities you need in technology in the world no one geography has total
total end and capability to lead. They need to cooperate.
They need to partner together to actually get this done.