Podcast Summary: AI, Supply Chains, and the Future of Economic Power

Podcast: The a16z Show
Host: Andreessen Horowitz (a16z) Representative
Guest: Jacob Helberg, Undersecretary of State for Economic Affairs
Date: March 18, 2026

Episode Overview

This episode features a conversation between the a16z host and Jacob Helberg, Undersecretary of State for Economic Affairs. They explore the intersections of artificial intelligence, supply chains, industrial policy, and the shifting dynamics of economic power in a changing geopolitical landscape. Drawing on Helberg's book The Wires of War, the discussion covers the emerging divides in global tech, America's three-pronged strategy to "win the AI race," supply chain security, the impact of tariffs and industrial policy, differences between American and European approaches, and the rise of new strategic partnerships around the world.

Key Discussion Points & Insights

1. The New Geopolitics: From The Wires of War to the AI Revolution

• Dual Battlefields: Helberg argues that the tech world is the site of a two-front geopolitical conflict: software and hardware ([01:34]).
  • Hardware (physical infrastructure, supply chains) is decisive, because "if a country controls the Internet at the hardware level they can compromise and control everything that runs on top of it" ([01:34]-[02:30]).
• National Sovereignty: Foreign control over critical hardware infrastructure fundamentally threatens a nation’s sovereignty ([03:19]).
• Precedent in Huawei: U.S. policy against Chinese tech giants like Huawei and ZTE has been bipartisan and sustained ([03:19]-[04:00]).
• AI Accelerates the Stakes: The AI revolution, supercharged by breakthroughs like ChatGPT, amplifies the strategic consequences for both economic and national security ([04:00]-[04:39]).

"The hardware end was the decisive battlefield... if a country controls the Internet at the hardware level they can compromise and control everything that runs on top of it."
— Jacob Helberg ([02:20])

2. The U.S. Strategy: Winning the AI Race

The Three Conditions for Leadership ([04:46]-[07:09])

1. World's Best AI Innovation (Qualitative Lead)
   • Superior models are essential—but must also be widely adopted ([00:00], [04:46]).
2. Global Market Share
   • Market dominance is crucial; even the best tech is irrelevant without widespread users ([00:00], [04:46], [07:09]).
3. Secure, Reliable Supply Chains
   • Avoid brittleness: "If one tiny cog gets loose and trips up the whole machine, we are in a very brittle, precarious position." ([04:46])
   • The U.S. launched the Pax Silica initiative, securing partnerships and supply chains with leading economies ([07:09]).

"We need to make sure that our companies... have supply chains that are reliable, that are cost effective, and that are secure."
— Jacob Helberg ([06:30])

3. Core Challenges and Solutions

Maintaining Innovation Leadership

• IP & Model Distillation: Model distillation threatens the economic incentives for investing in new AI models ([07:09]-[07:55]).
  • The administration is working with industry to address these IP risks.

Market Share and Export Strategy

• Competing on Fair Terms: U.S. tech often faces an uneven global playing field ([07:55]).
• AI Export Program: Evangelizing and onboarding more global users, with programs like the chip concierge supporting trusted allies ([08:30]).

Supply Chain Security and Industrial Base ([09:20]-[11:30])

• U.S. vs. China Supply Chains: U.S. supply chains are geographically dispersed and fragile, with many "mom and pop" links ([09:45]).
• Coordination & Incentives: Government catalyzes efficiency and reliability through incentives, joint ventures, and market tools ([10:40]).

"Our supply chains are not vertically integrated at all... as a result... companies have very low visibility, there's a lot of inefficiencies."
— Jacob Helberg ([10:00])

4. U.S. Industrial Policy, Tariffs, and Economic Security

Rationale and Implementation ([11:30]-[15:19])

• Tariffs as Correction: Tariffs are a response to decades of policy that hollowed out U.S. manufacturing; they're recalibrating economic policy toward national security ([11:53], [13:00]).
• Results: U.S. trade deficits, especially with China, are rapidly shrinking; new capex investments are pouring in, though many are early-stage ([13:30]).
• Ingredients of the U.S. Industrial Renaissance: Tariffs, deregulation, abundant energy, and tax incentives for capex investment ([15:19]).

"It is incredibly— you can't defend a country with Facebook ads. You need to be able to make things... the future will belong to builders."
— Jacob Helberg ([15:19])

5. U.S. vs. Europe & The Culture Gap ([17:07]-[20:27])

• Europe’s Challenges:
  • High energy costs, strict regulations, high taxes.
  • Less risk-taking culture—difficult environment for founding and scaling advanced companies ([17:19]-[18:30]).
• American Advantage:
  • States as "laboratories of democracy" allow regulatory/tax arbitrage ([19:10]).
  • U.S. policy is openly candid with Europe about these headwinds: "Clear is kind" ([19:40]).

"You need a risk-taking culture and... they have the unit economics problem where it’s just really expensive to build stuff in Europe."
— Jacob Helberg ([17:50])

6. Positive-Sum Thinking & Strategic Partnerships

• U.S. Perspective:
  • America's philosophy is about expanding the economic "pie," not slicing it into smaller pieces ([00:00], [20:49]).
  • Joint ventures and co-investments are encouraged ([20:51]).
• Middle East Partnerships:
  • AI offers Middle Eastern countries an opportunity to pivot from hydrocarbons to exporting "intelligence and tokens" ([21:48]-[24:36]).
  • Access to abundant, cheap energy can become a U.S. strategic advantage if partnerships are structured well.

"Americans are positive sum thinkers... we see a world where the pie expands, and a lot of American companies are very comfortable doing co-investments and joint ventures."
— Jacob Helberg ([00:00], [20:51])

7. AI as the "New Oil" and Economic Acceleration

• Analogy: AI compute and the minerals that feed it are the 21st-century equivalent of oil and steel ([24:53]).
• Secular Economic Acceleration:
  • AI may drive U.S. GDP growth from the historic 2–3% range into 3–6% territory—dramatically compounding long-term ([24:53]-[27:52]).
  • The U.S. is already seeing >5% productivity growth, driven by AI ([26:00]).
• Implication:
  • Robust growth may help "solve" American debt and deficit problems by growing the economy’s denominator ([28:40]-[30:43]).

"Part of what we're likely to see with the AI revolution is... a shift upwards in economic growth... between 3 and 5 or maybe even 6% year by year."
— Jacob Helberg ([25:20])

8. Supply Chain and Resource Bottlenecks

• China’s Dominance: China processes ~90% of essential minerals for AI and tech ([30:43]-[31:04]).
• U.S. Response:
  • Helberg is "bullish" the U.S. will solve these bottlenecks, citing American founder talent, culture, and speed of institutional adaptation ([31:04]-[32:13]).
  • References historical American capacity to rally and solve major challenges at the “11th hour.”

9. Alliances, Globalization, and "Pax Silica"

• Not a Retreat from Globalization:
  • The administration’s new approach is not isolationism, but a retooling of global trade on fairer, reciprocal terms ([34:20]).
  • Programs like Pax Silica show a commitment to global partnerships.
  • U.S. encourages global allies to bring their own "specialization and superpowers" to joint endeavors ([33:56]-[35:51]).

Notable Quotes & Memorable Moments

• On National Sovereignty and Tech:

  • "The hardware end was the decisive battlefield... if a country controls the Internet at the hardware level they can compromise and control everything that runs on top of it."
    — Jacob Helberg ([02:20])

• On U.S. Industrial Resurgence:

  • "It is incredibly— you can't defend a country with Facebook ads. You need to be able to make things... the future will belong to builders."
    — Jacob Helberg ([15:19])

• On American Attitude:

  • "Americans are positive sum thinkers... we see a world where the pie expands."
    — Jacob Helberg ([00:00], [20:51])

• On AI as the New Engine:

  • "Part of what we're likely to see with the AI revolution is... a shift upwards in economic growth... between 3 and 5 or maybe even 6% year by year."
    — Jacob Helberg ([25:20])

Timestamps for Key Segments

• 00:00: Opening remarks on AI model supremacy and U.S. “positive sum” thinking
• 01:34: Origins of The Wires of War and the two-front tech war (software vs. hardware)
• 04:46: The administration’s three-front AI race strategy
• 07:09: Breaking down how to maintain AI innovation, market share, and supply chain security
• 09:20: U.S. vs. China supply chain differences
• 11:53: Tariffs, U.S. industrial renaissance, and economic policy
• 15:19: Tariffs’ positive effects on manufacturing, jobs, and security
• 17:19: European industrial risk-aversion vs. American startup culture
• 20:51: U.S. mindset: partnerships over zero-sum thinking
• 21:48: Strategic AI alliances with the Middle East
• 24:53: Compute as “the new oil”—the economic importance of AI infrastructure
• 27:52: AI's macroeconomic effects and U.S. growth prospects
• 30:43: Supply chain and critical mineral bottlenecks—with optimism on solving them
• 33:56: Pax Silica, specialization, and global partnerships
• 35:51: Episode closure

Conclusion

Jacob Helberg offers a comprehensive, optimistic—and candid—view of America’s AI-driven economic future. He emphasizes the need for qualitative AI leadership, global market adoption, and robust supply chains as the foundation of economic and geopolitical strength. The episode sheds light on how the U.S. is leveraging industrial policy, strategic partnerships, and a culture of risk-taking to navigate supply shocks, global competition, and the opportunities of the AI era. The tone is pragmatic but relentlessly positive, identifying challenges while reiterating belief in American ingenuity and the value of growing the pie for all.