Semiconductor Why a semiconductor shortage may cause a national security risk
Nzs capital co, founder brad slingerland joins us now, brad first on qualcomm it’s an interesting quarter because their chipset business we’re talking snapdragon we’re talking 5g their own technology that they build into chips. Outperformed did quite well it’s just that in the smartphone chip business overall. The past three months, the next three months falling a bit light of analysts expectations. What do you think this says about the smartphone and 5g environment? Well, i think we’re in a transition period, going from 4g phones to 5g phones, there’s, always a lot of lumpiness. You know i remember going back from two to two and a half. You know gsm, to edge two and a half to three g uh, the timing of the iphone cycle, uh impacts. When p. You know, a lot of advertising is going on for 5g. The carriers are spending a lot of money on spectrum here in the us it’s being deployed around the world we’re just sort of in the the lumpy period of deployment long term, i think it’s very clear 5g is an evolution of wireless technology. It brings low latency higher bandwidth it’s, going to open up new applications for the internet of things connected devices we’re going to see a lot more ai out at the edge, as opposed to in at the cloud we’re going to see just a lot of great applications. Coming it’s just one of the mega themes creating demand for semiconductors overall, which is why we’re seeing such tight demand across the entire semiconductor supply chain.
Right now, which we think is an important issue that the united states needs to work with partners around the world. To address part of what’s so interesting about this moment, and even as you describe it, the demand for chips not only globally but for chips manufactured in the u.s is what intel is going through. New ceo, coming in uh, you know momentarily at intel questions about how much they should focus on manufacturing, but there’s. No u.s chip manufacturer that’s, more invested than intel and you’re saying it seems that it’s in the national security interest for the us to build up more chip manufacturing. What do you think intel should do now? What should policy makers do now when it comes to intel that’s right? So you know we certainly see gm shutting more production lines down this week. You know having cars. Net manufactured is a bit of an annoyance, but if we can’t get critical chips, we need for fighter jets military applications, artificial intelligence applications that the economy is increasingly running on it’s a big problem intel is, you know, as you say, one of the largest three largest Manufacturers of chip and chips in the world they’re still on a leading edge, they’ve stumbled for three to four years now. Pat gelsinger coming in should really improve the situation. Uh at intel, uh, hopefully breathe some oxygen back into what was a once great and innovative engineering culture and the world simply can’t go on without intel.
They have such a high share of compute, but we’re going to see a lot more types of chips that we need, whether it’s arm based processors, the big cloud companies, amazon, microsoft, google or developing their their zone chips, but outside of intel. Most of these are made by tsmc in taiwan. Samsung in south korea and the us really lacks the infrastructure it needs, and we propose that the u.s actually get together with these companies that that are designing these chips that rely on these chips. Amazon apple, facebook, microsoft – all of these nvidia qualcomm is one of them and build a hundred billion dollars of capacity on u.s soil. We need to start today, it’ll, take a decade and that will diversify the supply chain de risk. The supply chain and ensure that that partners in the west have the supply that they need to keep the economy running. Is the economy now runs on semiconductors? We are transitioning to a digital economy and if we don’t have these chips we’re in trouble, so brad tell us a little bit more about this proposed joint venture. You mentioned 100 billion dollars, it’ll take 10 years. How does this start to come together? I mean you want to have everyone involved in it from intel to apple, amazon and google, who could be the one to put that together? Well, i think it needs to be a joint effort and we need to rely on technology from tsmc and samsung tsmc.
Out of taiwan has announced a fab in arizona. Samsung already has capacity in in austin. Both companies will be adding leading edge capacity in the us, but it’s, a very small percentage. The us produces around 10 percent uh 12 of global chips right now, um, and we that number will come down if we don’t add this capacity here, and these companies have a lot to lose. Apple relies almost exclusively on semiconductors made in one spot in taiwan, and tsmc is an incredible company. But if something were to happen, there is effectively we could possibly go years without apple being able to ship, iphones or ipads, and so it really is an existential situation for the united states. We need to come together. The government needs to back it. Intel should be part of it. Micron is another great chip manufacturer based here in the u.s likely. Europe should be involved with this. They have the same vulnerabilities themselves, but what we would hate to see is five or ten years go by the risks escalate. More and more between the east and the west – and nothing have been done here in the united states – to address these vulnerabilities shepard smith.