a16z Podcast — "China Has Scale. Can America Catch Up?" (October 2, 2025)
Host(s): Ben & Mark (Andreessen Horowitz)
Guests: Brian Schimpf (Anduril), Chris Power (Hadrian)
Episode Overview
This episode of the a16z Podcast explores the current state and future of U.S. industrial and technological competitiveness, especially in the context of rising Chinese manufacturing and military capacity. Drawing on lessons from Ukraine, global supply chain realities, industrial policy, and pragmatic on-the-ground experience, the conversation peers into whether the U.S. can meld its innovation prowess with industrial scale quickly enough to compete in an era of great power competition. Brian Schimpf (Anduril) and Chris Power (Hadrian) provide expert insights on production bottlenecks, the evolution of industrial policy, and what America needs to do—policy-wise, culturally, and technologically—to regain its manufacturing edge, especially in defense.
Key Discussion Points & Insights
1. Why Mass Production Matters Again
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Tech Superiority Isn't Enough:
The U.S. long relied on "technical superiority" because of post-Gulf War success, but Ukraine exposed the importance of industrial scale."A low number of really exquisite weapons is not going to win a conflict. Ukraine definitively showed that to the world." — Brian Schimpf [02:43]
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Wargame Shortfalls:
Most U.S.-China conflict simulations show the U.S. would run out of munitions within a week and need years to rebuild inventories."We shoot all our missiles in one week and then we have none for two years." — Chris Power [00:13], [50:24]
2. How U.S. Manufacturing Lost Its Edge
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Outsourcing Skills and Capacity:
The U.S. systematically offshored manufacturing, particularly to China, eroding skill sets and making manufacturing a less attractive career domestically."It is just not an aspirational job for young founder mentality people... We just ceded that. We just said we're not going to do it and then we shouldn't be shocked that we don't have anyone as good at it." — Brian Schimpf [03:58]
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China's Skill-Building Scale:
"Apple trained something like 28 million Chinese people on really advanced manufacturing skills... invested like 50 to 60 billion worth of capex. More than the Marshall Plan." — Chris Power & Host (Mark) [07:23-08:05]
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Aging U.S. Workforce:
"Everyone that's highly skilled in any manufacturing domain is basically 62. It is a skilled labor replacement problem... high levels of automation [are needed]." — Chris Power [08:40]
3. Building Back American Industrial Capacity
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The Role of Automation and Software:
The U.S. retains software engineering excellence. Both guests see automation as the lever to surmount labor and scale limitations."Most of this is actually a software problem... The one thing we are still very, very good at in this country is software engineering." — Chris Power [15:34]
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Flexible, High-Mix Manufacturing:
Upcoming U.S. industrial efforts must prioritize flexibility, automation, and modularity, since demand will likely be high-mix/low-volume."Flexible factories at scale built very cheaply... allow it through better automation, better software and a flexible workforce." — Brian Schimpf [12:35]
4. Critical Supply Chains & National Security
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Choke Points in Resources:
China has weaponized control over rare earths, magnets, and processing know-how; U.S. must respond with industrial policy and strategic stockpiling."China has strategically kind of strangleholded rare earths... not only processing but now export controls on magnet making technology." — Brian Schimpf [13:27]
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Smart Industrial Policy:
U.S. must use levers like guaranteed offtake agreements and price floors for critical materials, as well as tariffs, to buy time for domestic ramp-up."Tariffs applied on a national security industrial policy basis can be really advantageous. Create the time for American and allied industry to be able to get price competitive." — Brian Schimpf [14:18]
5. Regulatory & Financing Bottlenecks
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Permitting and State Variation:
Environmental permitting is a major constraint, especially in California; some crucial manufacturing could not even be legally built today."Some of the exquisite stuff... only made in a certain state... all the other states banned it or they're in facilities... certified 50 years ago." — Chris Power [26:49]
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Offtake Agreements:
Lack of long-term government procurement undermines capital investment; manufacturing can't access the same finance as data centers."The financial markets understand data center offtake agreements... but because defense spends contracts once a year you can't have that long term revenue agreement." — Chris Power [35:36]
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Capital Market Strength:
The U.S. could harness its superior capital markets with government-backed, risk-sharing loans rather than grants."Let the banks... execute the loans, but the government will backstop... Bank still has skin in the game... Company has skin in the game... Government is actually going to make money." — Brian Schimpf [42:27]
6. Lessons from China's Industrial Policy
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It’s Not Cheap Labor, It's State Subsidies:
Chinese manufacturing cost advantage comes from state support—subsidized capex, energy, reverse tariffs/export subsidies—not cheap workers."China's stuff is not cheap because they have low cost labor. It's because they subsidize capex... and do export subsidies." — Chris Power [38:42]
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Long-Term State Planning vs. U.S. ‘Punch-Driven’ Reaction:
China executes multi-decade plans with coordinated industrial approaches; U.S. only acts decisively under pressure."They lay out five year plans... strategic framework... zero percent loans... lower cost of capital... just more strategic framework." — Brian Schimpf [40:27]
7. Prescriptions and Policy Proposals
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Data-Driven Supply-Chain Resilience:
U.S. needs better data visibility into multi-level supply chains for rapid, targeted intervention."There’s very little data on what 2, 3 levels down into the supply chain is actually on that bill of materials..." — Brian Schimpf [23:54]
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Strategic Industrial Bets:
The state should pick a handful of scale players, provide off-take and capital support, then let market incentives drive performance."You just have to pick four to five companies and let them have at it at a scale that’s never been seen..." — Chris Power [10:24]
8. The China–Taiwan Military Equation
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China's "Anti-Access" Systems:
China has focused on pushing U.S. power projection further out with space-based sensing, long-range missiles, massive production (e.g., drones, ships)."They have invested systematically in technologies that push back the U.S.... They’ve created this impenetrable bubble." — Brian Schimpf [46:47]
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Attrition and Industrial Volume:
In a conflict, both sides would expend inventories rapidly—winning rests on rapid reconstitution and volume more than on exquisite tech."We shoot all our missiles in one week and then we have none for two years." — Chris Power [00:13], [50:24]
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Demographics and Window of Risk:
China’s aging population means its military window may be during the next decade."The one child policy... will really drop off China's population very quickly... if they don’t hit this window they’re not going to have a chance in 30–40 years." — Chris Power [51:43]
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Xi's Priorities Are Not Economic:
Western assumptions about economic rationality don't apply—CCP and Xi are focused on regime survival and legacy, not just growth."He does not care if he harms the economy if he believes it is in the interest of national security and preservation." — Brian Schimpf [54:45]
Notable Quotes & Memorable Moments
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On the Futility of U.S. War Plans Without Scale:
"Every war game we run we run out of munitions missiles in like six to seven days and then it takes about two to three years to refill that battery. We shoot all our missiles in one week and then we have none for two years." — Chris Power [00:13]
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Industrial Realism:
"The capex is actually quite easy... It’s really the skill of it. And the only way to replace that skill in my mind is basically high levels of automation." — Chris Power [08:40]
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On China’s Manufacturing Automation:
"On pure manufacturing autonomy they are probably 20 years ahead of us just on that... Our version is... most of this is actually a software problem." — Chris Power [15:34]
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The U.S. Data Center/Finance Advantage:
"Who else could you finance $200 billion of data center investments with like basically no real revenue to show for it?" — Brian Schimpf [45:01]
Timestamps of Key Segments
- 00:13 — U.S. wargame shortfalls & Ukraine lessons
- 02:43–03:58 — The myth of tech superiority/scale in modern warfare
- 07:23–08:38 — How outsourcing hollowed out U.S. manufacturing
- 12:31–14:18 — Why “flexible factories” and automation are USA’s best hope
- 13:27 — Strategic supply chain choke points (rare earths, magnets)
- 15:34 — China's automation prowess and U.S. software opportunity
- 26:49–28:34 — Regulatory obstacles and the future of industrial policy
- 35:34–37:05 — Why data centers scale but factories don't
- 38:42–40:27 — Chinese state subsidies vs. U.S. 'even playing field'
- 42:27 — Policy: government as loan backstop, not grantor
- 46:47–50:21 — Taiwan scenario: military, manufacturing, and supply chain factors
- 51:43–54:45 — China's demographic pressures & the "Xi calculus"
Conclusion
The U.S. faces a stark and urgent challenge: While it remains the world’s hub of innovation and software, years of offshoring have left its industrial base hollow and ill-prepared for high-scale, protracted competition—especially with China, whose state-driven focus on scale, automation, and supply chains puts American capacity at a deep disadvantage. The episode makes clear that regaining this capacity will require more than technological invention—policy, finance, culture, and skills must align. Offtake agreements, strategic subsidies, reliable supply chain data, regulatory reform, and leveraging American capital markets are all cited as tools to close the gap. Most importantly, the U.S. must rediscover the "mass" side of its military-industrial complex—and fast—before the window of relative security closes.