Why the US Needs a Department of Competitiveness
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What could the future of industrial policy look like in America and what state capacity investments will we need to get there? How does and doesn't China matter to the future of the U.S. semiconductor industry? And what do government affairs offices and large technology firms actually do anyways? To discuss, we conclude our CSIS Chip Chat series with Bruce Andrews. He had a long career on the Hill before working GA for Ford, serving as Obama's Deputy Secretary of Commerce and most recently as Intel's head of government affairs.

He's now a fellow at CSIS. Bruce, welcome to Chinatown. Thanks, Jordan. Thanks for having me today. You were obviously intimately involved in the birth and execution of the Chips and Science Act. And...

When people over the course of the discussion around the legislation and actually like being doing the grants, you heard politicians and officials keep talking like we haven't done this in decades. Like we're building this muscle again. We're kind of like learning on the fly. This is something that America had done in the past, but like the sort of energy atrophied over over that time. I'm curious, reflecting back on.

Maybe let's start with the legislation writing process. What did the fact that these policy tools hadn't gotten to work out in so long do for the discussion and the development of the legislation?

I would argue that the United States government is actually not set up and is challenged in two ways for doing these big types of industrial policies. One is that the executive branch is not organized in the right way, that we really have a 20th century cabinet structure for 21st century problems.

And then the second piece of it is we really don't, to your point, have the muscle memory of how to really do industrial policy. We've been very fortunate in the United States that we have a robust private sector that with government investment and government R&D spending, we have been able to be successful, but the world has changed significantly, which we can talk about.

But for Congress in particular, there's not necessarily the expertise. And a lot of the time it really relies on dealing directly with the executive branch, both to identify what the issues are, what the lack of authorities that the US government has, which in many cases we don't have statutory authorities for executive branch agencies.

to carry these policies out and then writing the legislation, which there's always a balance between writing legislation that is specific enough while also giving enough flexibility to the administration to carry out those policies. So I do think that the Chips and Science Act was actually a good example. And really, if you think about it, it was actually done in two parts. So the first part was done

was drafted in the second half of the Trump administration and passed in the beginning of the Biden administration. But then they also had to turn around and provide the funding because you had the authorization, but you needed to appropriate or to provide the dollars that would actually be spent. And so that was a huge, both a huge legislative lift and

And it was also one that I think that Congress, I think in the end it ended up well, but it is a big lift to get that type of legislation done because of how complex it is. And interestingly, Congress added a bunch of new requirements as they did the funding legislation.

You started your career in the early 90s and then ended up general counsel to Senate Commerce in the early 2010s. I mean, thinking back on the kind of arc of on a few axes, it's just like legislative ambition, principal quality and like staff quality. Like what were some of the trends you observed over that time?

You know, that's a really good question, because I do think things have changed significantly that I think in the early and mid 90s, the the quality of the staff and this is not to say there aren't some really tremendous staff on Capitol Hill still, but there was really deep expertise. And part of what I blame that on, to be honest, is the fact that.

that salaries for lobbying and the growth of lobbying has really deprived Capitol Hill of a lot of good staff. I mean, I've always been a believer we actually need to pay congressional staff more. Frankly, we should pay executive branch, career, civil servants more as well. But what happens is if you're a young Hill staffer, even a very experienced Hill staffer, you look out and your colleagues in the private sector are making two or three times what you're making. Your incentive to stay on Capitol Hill

Hill and make a career with a deep expertise and a deep experience is less so. And the good news is there are plenty of really great people who make a career on Capitol Hill. I also see more turnover, a higher turnover rate and less tenure and a lot of important jobs. I think since the early 90s, I think you see a lot more of that now.

You also cycle people through the executive branch. So you have people who start out in Congress, and then when their party takes over the executive branch, they move into the executive branch. But I do think the deep expertise that we had previously is not there as much for a variety of reasons. Are there other factors aside from just the salaries that are pushing people out?

Look, I think it is, you know, I think sometimes there are, you know, it's stressful to work on Capitol Hill. There is a lot of attack on public servants. You know, there's a lot of criticism. I think there's a lot a lack of understanding both of career civil servants and senior staff on Capitol Hill, how talented and really good they are.

And there's not necessarily an appreciation for that. And I just think that salaries, the benefits, you know, in some ways, the quality of life can be much better in the private sector. So it just disincentivizes people from making long term careers, both in Congress and the executive branch in ways that we really should be encouraging and incentivizing people.

Because we want the best and brightest both to go into government, but then also to stay in government for a long time. So I did a show last year with Philip Wallach, who wrote this book, Why Congress, which I'll link back to in the show notes. And I thought it was a fascinating kind of like really mostly focused on postwar arc of kind of like colonization.

like congressional capacity and just like willingness to put itself center stage. And we are at a moment, we're recording this on May 6th, where, you know, Congress, like money it's appropriated is not getting spent because an executive feels like it and they're kind of not doing anything about it.

But, you know, we had this before, right, where post Nixon, Congress kind of regained a real sense of institutional pride and put itself front and center in a way that it hadn't in decades prior. So.

I don't know, like, who knows if that's going to be the future that Donald Trump leaves us with in 2028. But Bruce, like, if you're imagining what a more ambitious and, I don't know, gung-ho executive, excuse me, legislative branch looks like, like, I don't know, where does that leave the institution? Where does that leave America? Like, what would...

like what things would need to happen in order to have a new flourishing, maybe here's how I'll frame it. So like, you know, the chips and science hack we've talked about a lot on the podcast was this like crazy perfect storm of, you know, COVID and like, but it's sort of bipartisanship and a really eager executive that like happened to allow people to, to do a big bill. But, you know, for, for,

A you know, for sort of a broader, you know, shift in the ambition of an ability to execute of Congress, like what do you think are the kind of.

you know, necessary ingredients you'd need to see. Look, I think success does beget success, but I also think it's both sides coming together and identifying, you know, what the issues are. I think there are really three things, right? One is agreement and bipartisan agreement on rights

what the issue is that you're trying to solve for. In the Chips and Science Act, there was real clarity on, hey, we're trying to get particularly advanced logic, but we're trying to move semiconductor production back to the United States. Second is an agreement on what tools government has or should have in order to do that. And, you know, in the Chips and Science case, I think that, you know, people looked and they said, hey, you know, that, you know, that

Taiwan and Korea and China have spent the last 30 years providing incentives to help their industries to be successful. The U.S. has sat on the sidelines and let the private sector do it. And we now have watched, you know, the majority of advanced logic production move overseas. So, you know, second is, hey, we see the problem, which is the need to close the cost gap between, you

the U S and, and, uh, Asia. And they put in a solution that was able to do that. And third is, is bipartisan, uh, support. And I do think, you know, there were a number of heroes in my view of, of the chips act, uh, on both sides of the aisle, right? You had like, you had people like, um, you know, on, on the democratic side, you had, uh, you know, Ro Khanna and Chuck Schumer and, and, um,

And, you know, in Doris Matsui and people who said, hey, there's a problem. And on the Republican side, you had great senators like Todd Young and John Cornyn, Mike McCaul in the House who said, hey, we agree with you. This is a big problem. And let's work together and work together.

even over the politics. And, you know, as you'll recall at the end, the chipsack sort of got caught up in a little bit of last minute politics because of some of the other things that were going on unrelated to the chips act. And, you know, to their credit, the champions on the Republican side, you know, the Mike McCall's and the John Cornyn's and Todd Young's really helped push it through and help to get it done. So I think you need all three. So you need clear identification of an issue, um,

You need clear government solution and then a narrow and tailored way to provide the tools to do it. And you need bipartisan support to be successful. I mean, I guess that's really nice to hear. But, you know, it seems like that we have never been further away from that. You know, when you have a president who's like blowing up the NIH because he feels like it to say,

That, you know, like we're going to need to have some big thermostatic like response to what we have now, because it's just, you know, this is this is not the glide path. This is the plane lands and crashes. And then we're like, oh, I guess we got to do something.

That's right. And you've got to have an agreement that there are solutions we can put in place. And I think that's often I do think when you get down to the member level, you actually get a lot of good thinking and a lot of good bipartisan agreement. But then translating that and unfortunately, you know, if I were going to have one critique of Congress right now.

It would be that often, you know, we're not legislating big issues. We're more legislating when there's a crisis. And I do think, you know, there are lots of really important issues out there every single day that we need to be addressing. But unfortunately, it more seems to be that we get to the level of a crisis and then it's easier to pass legislation. And I think we need a little bit to get back to.

to the old days of like, you know, real bipartisan agreements and, you know, the ability to work in a bipartisan way and not to be pressed by, you know, your colleagues in either party to say, hey, why are you working with those people of the other party? You know, let's just win the next election and then we can do it our way because that's been going on for a long time where I think both sides have thought, hey, if we just wait until the next election, we'll win, we'll be in charge of, you know, fill in the blank, the House, Senate, the White House, and then we can get our

package. And the reality is that doesn't work, you know, with the filibuster in the Senate, you know, with the need for getting things done in the close margins of the House, you know, and of the nature of the White House, you know, thinking that we can just put off our problems and, oh, if we just win the next election, we'll solve them is never that easy.

Let's turn to the executive branch. So, um, you know, the, the chips and science act, uh, it basically got to hire the pick of the litter because they had special hiring authorities and were able to like really, uh, bring together this crack team from, you know, some, some government vets, but a lot of folks from, uh,

from Wall Street and a little bit from the semiconductor industry too. I mean, like, what does it say about... Dan Kim on a podcast the other day said that in 2016, there were only two people who were thinking about the commercial semiconductor industry and government. You know, what, like...

Does I don't know what does good look like here? Like, how do how do we what are the sort of institutions you would have loved to have had that were kind of building that commercial understanding and institutional muscle for whenever we have to do this the next time? It's not such from a, you know, a dead start.

Well, first of all, I would just start with the fact that I don't think government is totally organized in the best way right now, right? You know, I do think giving not just, I don't think the answer is just taking a chainsaw and eliminating agencies, but I do think having some flexibility to reorganize government for the 21st century and for the digital world. You know, we still have a very 20th century analog model that was built mostly in post-World War II and over the second half of the 20th century, but

for a very different world. So if I were king for the day, part of it is I would start by reorganizing the government to be much more focused and move some things around so that they made more sense. And I do think President Obama tried to do that, or he talked about doing that with the government reorganization. I mean, the Commerce Department is a perfect example where I would meet with counterparts from Medi in Japan or

of Commerce in China or wherever, you know, European Union. And, you know, counterparts would have a much clearer set of mandates and authorities and a clearer set of responsibilities. And you would have basically all of the business-related functions within the country, you know, within one agency. So one is organizing government activities.

in the right way, but I don't know if that's going to happen anytime soon. So let's go to the second. Well, no, no, let's, let's, let's stay here. Let's do a little more fan fiction. All right. What are you, what are you pulling in and putting out? Um, uh, yeah, let's go level down.

Well, look, I think I would pull, if it were up to me, I would pull all business-related economic development and competitive stuff into the Department of Commerce.

One of the industry tools and give the authority for real industrial policy to work with for public private partnerships with the business community to make sure that a we're making sure we're making these smart investments in R&D and building the future. And second, as I would set up a set of programs that helps the Commerce Department grow.

you know, to, or, you know, the, hopefully the new department of competitiveness to have a set of tools that it can use to support industry. And you, I mean, you look at, you know, look, China, Japan, China, Japan, Korea, Taiwan, have all,

all for the last 30 years had very focused policies, and they've been successful at encouraging certain industries. I mean, you know, that we can criticize how the, you know, how some of the competitive practices the Chinese went about, but they put in a Made in China 2025 and set out on key industries that they wanted to successfully dominate. And if you look at those industries that they identified, they've actually done pretty well. So, you know, you don't, you need

the magic of the private sector. And I do think that's a huge advantage that the United States has as our robust private sector. But you also need public-private partnerships in order for that leadership to take place. And because I think, you know, the world is too complicated right now for companies to just go at it alone. And I think a lot of these sectors, and, you know, when I was at Intel, I would always say, hey, we're not just competing with companies, we're competing with countries.

And I think that's the case that you've got many of these U.S. companies going at it alone, competing not just against their foreign competitors, but the tools and resources of their foreign competitors' government as well. So we don't want to recreate that. We don't want to copy. But we need to establish our own model.

that works. You know, I mean, I think one of the things that's actually interesting that Secretary Lutnick has proposed at the Commerce Department is, you know, what I would call Select USA on steroids. You know, when Obama during the Obama administration, we created the Select USA office to attract foreign investment.

But to Secretary Lutnick's credit, I think he's identified there are investments and then there are what I would call the mega investments. And having an office within the Department of Competitiveness that would help facilitate both U.S. companies but also foreign companies making those investments in the United States, I think would be fantastic. And giving the U.S. government some more flexible tools to help incentivize those investments and to help those investments to be successful.

I think is important for us to be competitive because I think we, you know, for 30 years and there were, you know, there were reasons why I get why globalization, you know, was a good economic theory and there was a lot that was good for consumers and a lot of other things. But we also live in a very different world now. So we need to have a structure and tools that allow the U.S. government to be competitive and the U.S. to be competitive in this very different world. Well, not to...

be your assignment editor, but I think this should be your first CSIS piece. It's like, what authorities you want to be here? Because it's like, it's, you know, it's a fun, like, future casting. Like, you don't really have to engage with, like, the present messiness thing. But can we do one more? Can we do one more pass on this? Like, what do you give up? That's our, I mean, the commerce is already, like, a giant mess. Like, what do you slough off it?

I guess there's three buckets. Like, what do you slough off? Like, what do you take from other agencies? And aside from SelectUSA, what's on your wish list for new authorities and powers?

Well, look, I would first of all point out that the Commerce Department is perfect, so I would probably change nothing. But if I had to change something, you know, I mean, look, there was Obama made a proposal, for example, to move NOAA, National Oceanic and Atmospheric Administration. You know, I actually could argue that that's important to business and that, you know, things like National Weather Service and others actually are key facilitators of public goods that help businesses to be successful. Right.

um you know but there was talk of for example moving the small business administration uh into department of commerce like it doesn't necessarily make sense that we have sba we have sbir problem programs around the government we have economic development administration and commerce and that we have you know at that time i think president trump has talked about eliminating but the minority business development administration um you know so number one is i would consolidate um

you know, all of these different economic and small business, minority business programs into one part of the department of competitiveness for it to be successful. Uh, I would also take the, all the technology, uh, agencies around the government. You know, we have, um,

NTIA, we have NIST, we have various technology programs, you know, rural broadband at the Department of Ag. We have all these different programs around different agencies. I would also consolidate them together and say, okay, you know, so it's the Department of Competitiveness has a...

Economic development piece and has a technology piece it has an international trade piece you know one of the things that was very controversial like I could argue this both ways is moving USTR within the Department of Commerce and having the international trade administration and the US trade representatives office be one you know super trade organization right.

You know, government statistics. Why is the Bureau of Labor Statistics, BEA, Bureau of Economic Analysis, and Census all various separate organizations throughout the government? So take all government statistics and put them in one place. So I do think there are a bunch of things that you could do to rationalize all of this information.

You know, and to help the U.S. really to be supercharged and competitive. And frankly, you know, it does. One of the reasons that, you know, Obama ran into trying to get this consolidation authority was Congress didn't want to give up the various committee jurisdictions. You know, but when I was at the Commerce Department, we had I think it was eight full committees and 79 some committees that has jurisdiction. I know jurisdiction over the Department of Commerce. That doesn't really make a whole lot of sense.

And let me revisit because you also raised chips and science and it might be worth talking about the history of how we got there if you'd like to. Sure. So, yeah, within all this context, let's do a little history lesson on how chips and science came to be.

So the interesting thing, and you mentioned something that's really important, which is in 2016, there were only two people within the U.S. government who are experts on semiconductors. And I learned this in November of 2015 when I spoke as the Deputy Secretary of the Commerce Department to the Semiconductor Industry Association.

And interestingly, at that time, the SIA CEOs who previously had all been very confident of, A, governments stay out of our way. We don't need your help. And B, we've got this. We're 10 years ahead of China. We don't really need government assistance. And so when I spoke to them in November of 2015, I saw what I would almost describe as a sense of fear in their eyes about the Made in China 2025 program and what was called

the big fund, you know, the $250 billion fund that the Chinese government had set up to help facilitate their semiconductor industry. And, you know, so I took that back and sat down with my then boss, Secretary Penny Pritzker, and Penny and I said, okay, let's put a plan together

to help the U.S. semiconductor industry, what would that look like? What would a playbook look like to help the U.S. semiconductor industry to compete with Made in China 2025? And what's funny is I called the assistant secretary of the International Trade Administration for Industry and Analysis, and I said, okay, we need to put together a semiconductor plan. He said, okay, I'll bring my one guy up and let's talk about it.

Oh, no. We only have one guy doing this. Now, the good news is there was a guy named Travis Mosier who was super talented, super smart, and knew these issues quite well. But we literally put together a plan. We put together a playbook and we put together a plan and we said, okay, what is it the U.S. government can do? And what was interesting is we initially got some –

pushback because people said to us, well, number one, why are semiconductors special, which obviously is an enabling technology. They're very special. And number two, it's strategic. And number two,

We got some pushback because people said, well, if we help the semiconductor industry, won't other industries be unhappy and feel like we should help them too? It's like, well, yes, but that doesn't make it any less important. So we spent several months. We worked with the White House team and the interagency team. And interestingly, Paul Selva, who was my counterpart, the deputy, or not deputy, he was the vice chair of the Joint Chiefs of Staff, was also really interested in microelectronics. And so Paul and I got together and pushed through the NSC process.

um a plan basically to start really having much more focus and um attention to semiconductors now we had none of the tools and that came later right because eventually all of this work you know we did a you know penny pritzker gave a big speech that was really helped define the challenge uh we had a pcast report which is the president's committee the advisory on science and technology which really for the first time they made a series of recommendations

That was right at the end of Obama, but it then carried into the Trump administration. And all of that attention and focus eventually became the

Chips and Science Act. But what it did is it shows two things. One is you need to identify a problem and start talking about what are the solutions that you need to those problems. And two is you need really focused energy and intensity because nothing happens fast, either in the federal government or in Congress. So even though it took several years for all of this stuff to come together, um,

We were successful at both putting focus on the attention, setting a set of tools, and then enacting a program that the U.S. government, and I do think it's by far and away the biggest piece of industrial policy we've seen at least in the last 50 years. Well, I guess we sort of ended it at your time in the Obama administration. So let's kind of pick it up from there as...

from the perspective of an Intel executive? Like what is government affairs and maybe using this story as a case study, like what can and can't

Or what is easy and what is hard for like industry to do to make things happen in the legislative and executive branch? Sure. I mean, look, to me, government affairs is really education, right? It is bringing information to government policymakers to help understand the challenges the private sector is facing and then also help to start having a discussion about what the solutions look like.

The irony of the CHIPS Act is it was actually not started to Intel, although Intel will be the biggest beneficiary. Where it started was actually Mike Pompeo trying to recruit TSMC to come to Arizona.

And what TSMC said to Pompeo was, hey, you know, we have a huge cost gap and we get incentives in Taiwan to build. So we need something, you know, in the United States. And ironically, when I was deputy secretary of the Commerce Department, I met with Terry Gao, you know, the chairman of Foxconn and the CEO of Foxconn, who basically said to me, I want to build in the United States, but you need to give me big federal incentives. And I said, well, here's the problem. We don't have federal incentive programs in the United States.

it doesn't work the same way it does in China and Taiwan. And so, you know, and Terry eventually did, you know, they started that project. It sort of ended up not working. But the point being is I think people were starting to realize that if we wanted to bring manufacturing back, and I give

Secretary Pompeo a lot of credit because I think he recognized that was the way to get TSMC back. And interestingly, you know, when Pat Gelsinger came in as the Intel CEO, he recognized that, you know, that Intel needed to become a contract manufacturer for other country companies, so a foundry, you know, that it provided more competition to TSMC and Samsung. And the Chips and Science Act also

allowed Intel to do the construction in the United States that allowed to do that. But I think, you know, it allowed Intel to really make a fundamental change to its business model, you know, and moving manufacturing or building manufacturing in the United States. But, you know, so I think it's often forgotten that the CHIPS Act did start in the Trump administration.

It didn't get passed, but when Biden came in, it got passed quite quickly. And then that set off the debate for funding the Chips and Science Act, which was eventually passed in July of what I guess it was, 2022. I mean, yeah, it's education, but like, what does education mean? Like, how does one educate? Like, is it easier or harder today versus back in the day where you have more or less sophisticated staffers and all the stuff we were talking about?

Yeah. No, I mean, look, and in the same way that you did not have expertise within the Commerce Department, I'm not sure there was a single person who I would say had any level of expertise on semiconductors in the Congress. And I'm probably someone's probably going to call me and say, hey, I was that person. You're wrong. But let's just say for the purpose of argument, there really was not a deep level of expertise there.

And, you know, the good thing about a company like Intel is it's got a huge number of very smart experts who are thinking around sitting around thinking two things. One is understanding the global industry. So being able to present a picture through data, you know, and I will say the Semiconductor Industry Association

which SIA, which is the industry for the semiconductor industry, is actually really good at providing data and providing information that gives a very full and complete picture to help educate lawmakers, right? Because generally you've got to assume lawmakers start at a relatively low level of understanding just because they're not, you know, you do get some members who come in as an experts or, you know, you get a guy like Todd Young

who really learns about the semiconductor industry and has a state like Indiana and a university like Purdue that want to focus on how to be effective and how to be successful in the semiconductor space. But you generally start with not a huge amount of information, but you start with an interest. And I give Doris Matsui and Mike McCall credit in the house. And as I mentioned earlier,

you know, you had, you know, Young and Cornyn and Schumer in the Senate who said, hey, this is really important. So they then turned to industry and say, okay, help educate us on two things. One is what is the status of the global industry? What's the, you know, so helping to define what is the problem we're solving for? And then second, and I think this is where, you know, the companies are really helpful, is to be able to say, here are the tools that if you had, you could help us. And so in the case of the CHIPS Act,

it was identifying that there was a 30 to 45 or as high as 55% cost gap between manufacturing in the United States and manufacturing in Asia. And so the CHIPS Act, both the grants but also the 25% investment tax credit, were all

all about filling that gap and helping U.S. manufacturing to be competitive. And, you know, that's not something that members of Congress or the people in the administration may necessarily totally understand well on their own. And so that's where, you know, private sector actors can come in and help educate them as to, you know, what those tools and what those tools would look like to be the most successful.

That is a nice story. And I think, you know, perhaps your average American or maybe your average independent tech policy podcaster would see this and see something wrong here. Right. Of the fact that the U.S. government had one guy, the fact that Congress, the executive branch had one guy, the fact that Congress had no one and that there was not.

you know, think tanks, we can debate how independent they are from corporate money, uh, academics. We can also debate how they are from corporate money, particularly when you're talking about these, um, you know, high technology industries where there's a lot of, you know, university to, um, to industry connection. And it's just like, uh, you know, as a sitting here as a big fan of the chips act, it was kind of concerning to me seeing that every voice in this debate was, you know, funded or connected to, um,

And I guess like as we you know, if we end up doing more and more industrial policy, like it would be nice to have voices whose paychecks are not necessarily connected to to these outcomes to also be able to inform informed legislators. Yeah.

Yeah. And I would say two things to that. I mean, one is I think that the American people had a real crash course in the importance of the semiconductor industry during the during covid when they couldn't buy products because there were not an availability of semiconductors because they were all being sourced out of Asia.

right? And so on one level, I hear you. And yes, obviously, this is why I think bipartisanship is so important in having a broad variety of voices in a legislative debate, because you bring members from both sides who have different constituencies and, you know, but they come to the table and they say, hey, let's get the

best policy we can and reflect a lot of views, because you're right. You know, I would point out that I don't the semiconductor industry has never been a particularly big or politically active. They don't have big packs. It's not like a lot of industries where, you know, there's a huge amount of money flowing through. It's actually been a relatively unsophisticated in Washington industry. But I also think, you know, that's where the identification of the

problem was so important. And I think there were two voices that were critical, right? One was actual consumers. And I'll never forget when we went to meet with a very senior senator and he told us that, you know, he had autos sitting on lots in his state waiting for semiconductors to be put in so that they could go out to dealers, right? Or one senator told us he actually got, he bought a Ford F-150 truck, but it didn't have the heated seat available yet because the chip was

that would heat his seat was not available. So in this, a guy who lived in a really northern state that was super cold, so I felt bad for him in the winter without his heated seat. And then I think the second piece of this is the voice of the national security community because I think what also makes semiconductors kind of unique

And it's not to say there aren't a lot of other areas that are important, but the national security implications. As I mentioned, Paul Selva, the vice chair of the Joint Chiefs, was very focused on microelectronics and having a trustworthy supply of microelectronics in the United States.

In the same way, you saw a lot of leading members of the national security community in the committees in Congress. Mark Warner is a great example. He's both a tech guy and a national security leader as the chair of the House Intelligence Committee – I mean Senate Intelligence Committee, sorry –

is one of the most vocal voices for the CHIPS Act, not because Virginia is a big, you know, semiconductor manufacturing state, although I think Mark would like that, but it is with more out of a recognition that this is a huge national security imperative that he was very supportive of. So, look, there's no doubt that there's lots of stuff where

There needs to be public scrutiny. There needs to be public debate. You need to hear all kinds of voices to make sure that, you know, special interests don't just take advantage of a process. But I think in this case, there were two pieces, right? One was the passage of the congressional legislation. And then the second was the implementation by the CHIPS program office to try to make sure that this was done in the, you know, in the way that was most focused on the national interest.

Do you have any thoughts about like think tanks as like institutions and like what they can and can't do and what their purpose is?

No, I mean, look, I think think tanks are actually very important. I should have mentioned them earlier to the extent that, you know, look, my experience with think tanks is, yes, they because of the way, you know, everybody needs money to run that some do take corporate and other types of money. So it's not just corporate. There's all kinds of money that help fund think tanks. But my experience is people tend to be very independent because they, you know, they have their work.

that they, you know, want, that their reputation is on the line. So they're very focused on doing the highest quality work. But I think think tanks are actually really important because they do provide an independent perspective and sometimes an independent validation. And sometimes they can do studies that, you know, a company can't do. You know, I'll give you an example. I just saw this morning that the Rhodium group came out with a

a study about the China made in 2025, the effectiveness of it, right? That's not something that a single company could do, right? I read CSIS reports all the time. You know, you guys have a lot of smart scholars and there are other, you know, good think tanks. I won't mention any of them since this is your show. But, you know, there are a lot of good think tanks with a lot of really smart, thoughtful people who are adding to the debate.

And the key thing, and this is how I always viewed it is when I was a policymaker, both in Congress, you know, at the Senate Commerce Committee as a very senior staffer as a general counsel, but also as the deputy secretary of the Commerce Department, which is everybody who came in had their self-interest. And part of my job was to be able to, A, getting enough voices to make sure that someone's self-interest, you know, to validate what they were saying, to get other perspectives, to try to get all the perspectives. Right.

You know, my rule when I was in government was always I would meet with anybody and listen to you. I might tell you no, and I might tell you that I think you're completely wrong. But, you know, that's OK. That's actually how the system works, right? It should be a dialogue and it should be a back and forth. Frankly, it should be a really robust dialogue.

public debate and we should have hearings in Congress and we should have lots of different perspectives aired. And then you've got people who, you know, in the end are going to have to make decisions, but at least you've had a broad set of opinions and views and data put on the table. And then policymakers have to be able to sort through all of that. And that's one of the reasons both policymakers having expertise, but also having staff with expertise to help

sort through, you know, this massive amount of information that comes in. But I've many times seen think tank reports that really help to shape legislation or help to shape either the identification of problem or identification of solutions. And frankly, sometimes bringing bipartisanship, you know, sort of my three recipe or three components for what, you know, you need to be successful. But I actually think think tanks play a very important right part in that.

So you mentioned America or senators getting lessons in the semiconductor industry from having cold butts. Well, America is also about to get a whole lot of lessons in trade policy thanks to what's been happening over the past few months. I don't know. What do you want to say about this stuff? We can do chip specific economy in general. Like, I mean, look, I did. This is obviously a very complicated topic. You know, I get that. And I, I,

What President Trump has said, I agree with him two things. One is that we need to identify strategic sectors where we need to be investing as a country in manufacturing. I wouldn't say that it has everything because there are a lot of things that we just can't do. But so one level one should be what can we do strategically, both out of our own

economic interest, national security interest in where we can be successful. Second is how do we work with allies? You know, and I remember when I was at the Commerce Department, you know, there was a lot of discussion about, you know, NAFTA in Mexico because a good that was made in Mexico had 46% U.S. content. A good that was made in China had 4% U.S. content.

So everybody sort of realized this light bulb went off to people with that data, basically saying, hey, for things that we can't economically or cost effectively do in the United States, it's actually in our interest to have them be done in Mexico or Canada. And so you've seen a lot of work with various allies, um,

to try to have things manufactured places and in ways that is good for the United States. And then three is the availability for consumers because on one level, you've got to protect the workers. And the story I told you earlier about when Penny Pritzker and I decided to make semiconductors a priority for the Department of Commerce,

One of the reasons was, as I had met with the steel industry executives and the National Steelworkers Union several days before, and I literally said to Penny, I don't want to be in a position in 10 years where, oh, in meeting with the steelworkers, I basically said, hey, look, we don't have the tools to be able to be helpful to you. We want to help you, but the statutory tools and authorities we have will not allow us to be helpful to you here.

And so, you know, and so, you know, so Penny and I said, okay, let's make sure that's not the semiconductor industry in 10 years. You know, the experience we're having with the, you know, with the, you

steel workers, their steel unions and the steel industry today. And so I do think that's important of identifying what is really in our core national interest and what can we as a country be successful. I think tariffing everything in sort of a broad way isn't necessarily going to be effective. And I think we're already starting to see

you know, some of the economic effects on that. So I'm hoping that the administration looks and says, okay, what are we trying to solve for here? You know, a little bit of what I said earlier, what are we trying to solve for? What are the authorities we have and how do we do it in a way? And I think to at least thus far, it doesn't feel like we have clarity on what the problem we're trying to solve for is and exactly what the solutions are. We're trying to enact to do that. And I'm hoping that the administration, as they do these,

um, negotiations with other countries, we'll get more clarity on that because otherwise I do worry that this is going to be, um, you know, a, a, a trade war that doesn't, that is not successful for the United States for you, American consumers, uh, but also American companies. And I'll give you an example. And one of the things that really concerns me is if you are a U S manufacturer and

There are a lot of things that you have to import from overseas to inputs into machinery, all kinds of things. I'll give you actually a great example is Intel. In an Intel fab, there is a $450 million ASML EUV lithography machine, right? So what happens if you put a 25% tariff?

on an EUV lithography machine coming from Europe that Intel has to buy with those tariffs, but their foreign competitors in Taiwan, Korea, China don't have. What happens fairly quickly is it makes US companies completely non-competitive as manufacturers. So if our goal is to...

be successful, right, in manufacturing, which it should be. I think that's actually a really important helping U.S. manufacturers. Then we need to be doing everything we can to help them to be successful, not tariffing intermediate goods in a way that actually harms the competitiveness of U.S. manufacturers.

Anything else you want to say about, like, the future of Intel? I think it's a very important company to the United States. And it was one of the reasons I went there. You know, when Pat Gelsinger laid out his vision for having, you know, a third but a U.S. competitor, because, you know, TSMC is a remarkably impressive company. You know, Samsung is a great company as well. But, you know, having a...

having a not over consolidated industry and having manufacturing in the United States is really important. And, you know, so I think Intel is actually a very important company to this country. And, you know, it's one that I spent a lot of time because I believe in the mission and the American manufacturing, but also the importance of having a leading advanced

logic manufacturing company who does its R and D and whose primary, um, you know, primary operations are in the United States. So Ben Thompson of Stratechery, uh, his kind of identification, his, his like diagnosis of the challenge of the chip sack was that it focused kind of too far on the supply side and not enough on the, on the demand side. And like his vision of what, uh,

Intel is going to need to succeed on the foundry side, at least, is designated customers. And on the one hand, yeah, Qualcomm, Nvidia, Apple, they're not excited to live under a monopoly decade of...

you know, going forward where the only people who can supply them are TSMC, but it is hard to be the first mover to kind of like go in with Intel and work with them to get the, you know, get all the tooling right and be that sort of like guinea pig. When on the other hand, like, yes, you have someone who can charge you a huge markup, but like, you know, they're going to deliver. So his vision is like, you have some like,

you solve the collective action problem with the government basically like stepping in and like banging heads and forcing everyone to go in on Intel. I don't know. Curious for that. Like that seems like a high degree of difficulty to put on, you know, Howard Lutnick. But, you know, what about, how would you work on the demand side from a policy perspective to give Intel Foundry a boost?

Sure. I mean, look, so one is, is I tend to be a carrot guy, not a stick guy, right? Like I think the stick is, can work in certain cases, but you're better off having the carrots, you know, and I'll give you, you know, one example is the, you know, a number of companies in the fabulous side have talked about having a design tax credit for the United, you know, a design tax credit for American fabulous companies, right? And during the CHIPS Act, they lobbied, but, you know, Congress did not

add a investment design tax credit for the phallus industry. But, you know, look, I do think I could see and I know there are policymakers who believe, sure, let's give them a design tax credit, but let's do it if they manufacture it in the United States, because what we don't want to do is give them a design tax credit

to then go and manufacture in Korea or Taiwan or China. And so, you know, I think that's one possibility. I think there's going to be a set of discussions because I do think if we have identified this as a national priority, and for that reason, I do think trying to find some tailored solutions, you know, Intel's got to do its piece to be, you know, competitive. And then on the other side is having, you know,

Some, you know, particularly, I think, carrots to encourage companies to embrace that and, you know, manufacture here in the United States would actually be a really good thing. So, Bruce, earlier you mentioned, you know, as Deputy Secretary of Commerce and in the Senate as well, you meet with everyone. I'm curious, kind of thinking back to that before you spent, you know, the past few years in the semiconductor industry, were there other industries where you're just like, oh, man, like these guys really get it. They're super sharp.

It's a really good question. I mean, short answer is yes. Look, I think there are a lot of really smart and talented companies out there. And I was constantly surprised by the quality. And, you know, and I think the tech space is one. But there are a whole bunch of areas where you have really sharp, really

really talented leaders in those companies. I think tech was definitely one because I think, you know, tech in particularly since the late 90s has attracted a lot of great talent. And, you know, the people running these companies are actually very smart, talented people. And so I meet them and go, wow, they are really smart. But no, I found that more often than not.

You know, every once in a while I would meet with people and I'd be like, God, your arguments suck. Like I could help you write your talking points better than you have written them. But for the most part, I actually found, you know, most companies, particularly in, you know, areas that tended to be both technical, but, you know, very competitive, you know, highly competitive industries that I actually found people to be quite smart and impressive most of the time.

like there's a story that like Nvidia had like two government affairs officials before October 7th, 2022. I mean, it is, you were talking earlier about how the semiconductor industry for a while was just kind of like hands-off, but like even, you know, it was Robert Noyce in the eighties was like, we're going to do Semitech. I mean, it's, it's, it's just, it's this weird ebb and flow, right. Of like caring about Washington, not caring Washington, really realizing you have to care about Washington again. Um, um,

you know, is it a California thing? Or like, this is so far away. Like what, like at what point maybe for semiconductors and just industries broadly, do they kind of like, does the light bulb turn on that? Like this place is really important to us and we gotta, we gotta get serious about it.

Sure. I mean, look, I think it's been an evolution over the course, but particularly it's accelerated in recent years. I think for manufacturing companies, they tend to get it more because they actually had physical locations, right? So for a company like Intel or Global Foundries or Texas Instruments, you know, you got the importance of...

interrelationship with government. But, you know, NVIDIA is a good example where they didn't have a PAC, they didn't have any lobby, they didn't have anybody registered to lobby probably until, I guess, 2022 sounds right. But I remember when I first met them when I was at SoftBank, they said, oh yeah, we have nobody registered to lobby in Washington. We don't do lobbying.

But I think a couple of things have happened. One is the world has become much more complicated. The geopolitics are driving a lot of the technology policies. Right. And then second is things like export controls, which directly impact companies have taken place. But I do think there has always been, particularly in Silicon Valley, but in a lot of other industries, a deep change.

deep libertarian streak where it's like, hey, we don't need help from government. You know, basically leave us alone. We'll compete. We'll be successful. We can do this. We don't need you. And

Whereas other industries, pharmaceuticals is a good example, where government health policies have always been very directly related because you have Medicare and Medicaid funding or the auto industry where government policies on cafe. So the semiconductor industry had not been.

been particularly heavily regulated and particularly true on the fabulous side. So the companies that just did design but didn't do their own manufacturing. And, you know, the world has changed. And, you know, and I think as the world changed, people realized, wow, we really have to engage here and we have to be in the game.

But that is not unusual of many other industries. But I do think the kind of libertarian leave us alone streak in Silicon Valley tended to be much deeper than a lot of other places. Yeah. And it's, I think, like Trump trade policy is going to put that to bed for literally every industry, probably for. It's I'm sure been a wake up call to a lot of companies for sure. I'm curious for your reflections from a sort of like

GR corporate messaging perspective on, you know, how you bend to the prevailing winds in Washington. There have been a lot of examples, I think, over the first few months of the Trump administration, which, you know, almost show the extreme of this with corporations really bending over backwards to kind of like use the language and rhetoric of the of the Trump administration. But this is something that happens all the time. So I'm curious, like,

To what extent you see this as like a disjuncture versus just kind of par for the course of trying to ingratiate yourself with the party in power?

So look, I would say it's a little of each. I mean, on one hand, I think historically, you know, all players, it's not just companies and corporate CEOs and lobbyists or whoever have always tailored their message to how they think it will be best received by policymakers in power, right? And so, and I do think starting in 2017, but accelerating, you know, that China has become a much more

more used argument for almost every regulatory policy or whatever. When you see Meta saying, oh, we need to not be regulated as much because we need to compete with China, you just realize that that's something probably because it's actually something that appeals to policymakers, right? Like the

you know, the, the speakers are always going to tailor their message to what they think is going to be most effective with the audience. And so I think that's one piece. And I do think, look, president Trump is very assertive. I think he, you know, companies have, um,

approach the administration carefully and wanting to get on their good side and understanding what those things that, you know, that President Trump sees as part of his priorities and his legacy. And I do think that you have seen companies kind of tailor their messaging as they have, you know, for pretty much every other administration. But they have they've definitely tailored that messaging as part of a part of dealing with the administration.

Can we can we reflect back a little bit on the Pat era? Because it was sort of remarkable, right? Where, you know, he wouldn't say China, he would say American national competitiveness or what have you. But then I remember, you know, he still had to go to China every once in a while because it was such an important, you know, market for Intel to sell into. So I guess like, you know, reflecting back, like as you guys were sort of managing that and then managing like

annoying podcasters like me whining that Intel is investing in Chinese chip design, AI chip design companies or whatever. How do you think through that calculus as you're trying to maintain market access to a country that the US is not super happy you get so much revenue from?

Sure. Well, I mean, I guess I would say two things. I mean, one is you've got to look at facts, right? And for everybody in the semiconductor industry, you know, and Intel is probably in the pack sort of average, but there are definitely companies that have a higher, much higher amount of their revenue come from China. So for the semiconductor, for American semiconductor companies to remain not just competitive, but to remain as leaders, actually, the Chinese market is quite important because about, you know, anywhere from 30 to 40 percent

of the market is in China. And that's changing a little bit now that, you know, Apple's moving phones out and Dell and HP are moving laptop production out and you're seeing changes in the footprint, but you're still going to see China be a very significant market for all these companies. And so then the companies have a, have a balance, right? Because on one hand, in order to continue investing in R and D and continuing investing, uh,

in factories and other things in the United States, you can't drop your revenue 30%. If you lose 30% of your revenue, you're dead, right? You have no company. If you lose 30% of your revenue, you stop being competitive. So the question is how to find a balance which is to remain competitive and be successful while also respecting U.S. national security concerns, which is a lot of what has driven...

you know, the government to make policies that tend to reduce companies' access to the Chinese market and in some ways the Chinese as well. You know, and what's interesting about this is each company has its own profile, right? And they have to make a decision how important is access to the Chinese market

what percentage of the revenues and then how are those revenues spent? What does it mean to their long-term and future competitiveness? And so it is, it's a very challenging calculation for any company to make. But for any company that does business in China, and you can see sometimes companies that are really vocally anti-China, right, don't have any revenue in China. But for companies that...

want or need to be successful in the Chinese market to remain leaders and remain innovators and remain competitive, then it is definitely a delicate process, which is how do you maintain that?

that. And I do think you see a lot of companies trying to do that because they recognize the importance of the Chinese market. And also, I don't know if you've read Eric Schmidt's piece today in the New York Times, but there are a lot of very, very successful Chinese companies. And sometimes export controls, if you go too far on export controls, what you actually end up doing

is accelerating indigenous innovation in China. So there's plenty of Chinese companies that would much rather buy it. I'm going to use Nvidia as an example, but would much rather buy Nvidia chips. But then you've got people in the United States government saying, hey, here are the national security concerns we have about China. So it's finding that balance and recognizing that there's really two pieces to this, right? One is how do we help American companies to run faster so to remain competitive and successful? And two is how do we

balance the national security concerns, particularly when they're really important. And Jake Sullivan called it the small yard and high fence. And people in the industry always said, "Sure, but just keep the yard small and the fence low."

And so the question, that is a constant balance that industry is always going to see their self-interest and they've got fiduciary duty to their shareholders to try to maximize revenue. And you're going to see U.S. government officials. There are plenty of people who would say, oh, let's just not sell anything to China, which I also don't think that is realistic because it will both undermine the long-term competitiveness of U.S. companies, but also undermine the short-term competitiveness because massive revenue loss where there's not

really a clear national security interest. I think that might be a nice place to end it. All right, Bruce. Well, thank you so much for being a part of China Talk and looking forward to having you back once you've fleshed out your Department of Competitiveness. I know. I know. I'm excited for that. It's going to be the Department of Competitiveness is actually very, very important. Something that I used to spend a lot of time thinking about, I have thought less about, but

You know, one of the things that has really struck me in reading, you know, about Ezra Klein's new book, Abundance, which is, you know, he talks about the need for having a government that works well. Right. And I think part of it is it's always been very clear to me we are not

organized for how the world exists today. We're organized for how it used to exist and, you know, to be successful, we've got to do that. An abundant department of competitiveness is, I think, all we can hope for for the next few years. Bruce, thank you so much for being a part of China Talk. Happy to do it. Great to see you, Jordan. I'm crossing you in Sunday Make a break up I'm going

Drifters off to see the world. There's such a love to see. Chasing after us. Chasing after us. Someday you'll make up the same. Drifters off to see the world. Such a crazy love to see. Chasing after us. Chasing after us.

But it's just around