ChinaTalk Podcast Summary

Episode: How the US Won Back Chip Manufacturing

Host: Jordan Schneider
Guests: Mike Schmidt (former CHIPS Program Director), Todd Fisher (former CHIPS Program CIO)
Date: February 17, 2026

Episode Overview

This episode dives deep into the story of how the US managed to win back significant semiconductor manufacturing capacity in the wake of the 2022 CHIPS Act, discussing the blend of industrial policy, market forces, and executional challenges that shaped an unprecedented semiconductor build-out. Host Jordan Schneider speaks with Mike Schmidt and Todd Fisher, who played pivotal roles in implementing the CHIPS Act, about the lessons learned, tensions between discretion and process, and the future of US industrial strategy and state capacity.

Key Discussion Points and Insights

1. Retrospective Credit: Policy vs. Market Forces

• The guests point out that the US chip manufacturing resurgence was not inevitable, highlighting how unforeseen trends like the AI boom (post-CHIPS Act) dramatically accelerated demand ([01:06]).
  • "If you go back to the CHIPS Act... ChatGPT was not even launched until November of that year... the concept that AI would drive this massive demand cycle was not part of it." – Todd ([01:06])
• The CHIPS Act is credited with accelerating capacity and enabling rapid US participation, but the underlying AI-driven demand would have caused capacity growth globally regardless ([02:15]).

2. Policy Design and Tradeoffs

• Discuss the importance of being selective with industrial policy, acknowledging its opportunity costs ([04:00]).
  • "If you're going to put $100 billion into the semiconductor industry, that's $100 billion you're not putting somewhere else." – Todd ([04:00])
• The guests stress "criticality"—focus on sectors vital for national security, health, and innovation, only when government levers can plausibly make a meaningful difference ([05:00]).
• The automated, capital-intensive nature of chips manufacturing was a major reason why incentives could shift production to the US ([06:34]).

3. Sequencing & Implementation: Discretion vs. Direction

• Congress provided large-scale discretion via the CHIPS Act, giving the executive branch substantial leeway ([07:37]).
  • "There was this one $2 billion carveout for premature technologies. But we wanted to spend more anyway... It wasn't a binding constraint." – Mike ([08:24])
• The team devised a "Vision for Success" document to articulate internal and external objectives and maintain discipline against the blank-slate design ([09:00]).
  • "It really created the framework whereby we would measure our own success against the objectives we had laid out." – Mike ([09:00])

4. Comparative Policy Perspectives & Executive Discretion

• The group debates the merits of targeted laws (like CHIPS) versus broader pots of discretionary money—concluding that discipline and clear mandates are important to avoid mission drift or politicization ([12:53]).
  • "I personally think there's a lot of value in Congress identifying key target areas and telling the executive, you have a lot of discretion to figure out how." – Mike ([13:19])
• They contrast CHIPS with the IRA (Inflation Reduction Act), underscoring the complexities of coordinating across multiple, less-focused objectives ([13:49]).

5. Governance, Accountability, and Corruption Concerns

• The guests express pride in the nonpartisan, insulated design of the CHIPS implementation office, contrasting it with recent politicization elsewhere in US economic policy ([18:09]).
  • "That's partially how Gina Raimondo approached it... Neither of us are political hires. My team were Republicans... we felt pretty protected from any of the politics." – Todd ([18:09])
• They warn that future backlash or loss of trust could undermine nimble and necessary industrial policy ([18:09], [34:14]).

6. Tools of Industrial Policy: Tax Credits, Demand Signals, and Structure

• Tax credits are viewed as most effective when objectives and eligibility are clear, but discretionary tools are vital for unique emergency or strategic contexts (like rare earths) ([19:27], [21:11]).
  • "I would urge simple tax credits... But there's probably just another bar you have to clear in order to decide when it makes sense to do the discretionary stuff." – Mike ([19:27])
• The limits of policy tools: US lacked direct "demand incentives" and had to rely on persuasion to get buy-in from major tech customers ([21:11]).
• The importance of building a dedicated, mission-driven governmental hub for sectors like semiconductors ([22:52], [24:38]).

7. Institution-building for Economic Security

• Discussion of the merits and challenges in establishing a permanent institution akin to a "sovereign wealth fund" or national investment bank for economic security ([24:38]).
  • "You need the money side for the best. 100%. You need the money side for the best..." – Mike ([31:16])
  • Challenges include maintaining top private sector talent, cross-departmental collaboration, and insulating from political interference ([26:54], [29:05]).
• The Japanese model and the importance of integrating fragmented US efforts in economic security ([29:05]).

8. Process, Pace, and Risk Tolerance

• Candid debate about moving quickly vs. building robust process. While speed was necessary, having clear, fair structures built credibility and protected against accusations of favoritism ([53:31]).
  • "I think it's good to bake in a little bit of process, to kind of slow our roll a little bit so that we didn't go out quickly and do something we kind of regretted." – Mike ([55:20])
• Reflections on negotiating and structuring "deals" with the world’s most sophisticated companies, using both public tools and private sector best practices ([83:20]).
• The difficulties and ethical lines around government using leverage or crossing into private sector management (e.g., replacing company leadership) ([86:32]).

9. Defensive vs. Offensive Industrial Policy

• Defensive: Government can "80/20" (i.e., quickly solve) existing, defined vulnerabilities/choke points (like rare earths).
• Offensive: Picking future winners, enabling new strategic industries, requires much more experimentation and risk tolerance, and it's harder for government to pick winners ([58:00], [59:53]).
• "Can you R&D your way out of needing manufacturing scale? That's very much an open question." – Jordan ([61:03])

10. Reflections & Emotional Resonance

• Both guests express immense pride in having laid the groundwork for potentially transformative clusters, like in Phoenix, AZ, with parallels drawn to Hsinchu in Taiwan ([90:22]).
  • "You can look in 10 years and say this is going to be the equivalent of Hsinchu. That's incredible." – Todd ([90:22])
• There’s candor about the emotional toll of team turnover, layoffs, and the personal sacrifices made for public service ([94:12]).

Notable Quotes & Memorable Moments

• On the Non-Inevitability of US Chip Success:
  "First of all, it was definitely not baked in...the concept that AI would drive this massive demand cycle was not part of it." – Todd ([01:06])

• On Policy Tradeoffs:
  "Everything's a tradeoff. If you're going to put money into chips, that's $100 billion you're not putting somewhere else." – Todd ([04:00])

• On CHIPS Office Structure:
  "Neither of us are political hires... our office made up of many of the people I hired. My team were Republicans. I think it just depends on how you set these things up." – Todd ([18:09])

• On Maintaining Talent:
  "How do you sustain really talented private sector people, not only financial and investment type people, but semiconductor or industry people...?" – Todd ([27:05])

• On Tax Credits vs. Discretion:
  "Tax credits only go so far... The challenge is one tool." – Todd ([21:11]) "In the semiconductor industry... the scale was so dramatic, it was so concentrated that creating the hub in the government that was engaging dynamically with the industry... proved really valuable." – Mike ([19:27])

• On Offensive Industrial Policy:
  "What we should also be focused on is the enabling technologies going forward. And advanced packaging is one of those things." – Todd ([55:20])

• On the Need for Humility in Picking Winners:
  "Government as a matter of course should not be in the business of business in that way." – Todd ([87:58])

• On Emotional Impact:
  "When you think about the transformational potential of some of this, it is mind bending... It is pretty exciting to think about planting some of those seeds..." – Todd ([91:28])

Memorable Segment: "The Musical Number"

A playful skit at the end where the guests and host take on the personas of Intel, Samsung, and TSMC, rapping about their fab investments and competing appeals for government incentives ([96:07] - [98:21]).

Timestamps for Key Segments

• Policy Foundations & The Role of AI Demand: [01:06]–[03:33]
• Tradeoffs and Criticality Framework: [04:00]–[07:37]
• Implementation, Discretion, and Process: [08:24]–[11:10]
• Tax Credits, Tools, and Governance Structures: [19:27]–[22:52]
• Institution-building & Interagency Coordination: [24:38]–[29:49]
• Lessons Learned & Risk Appetite: [37:46], [39:16]
• Emotional and Cultural Reflections: [90:09]–[94:12]
• Musical Rap Battle between Intel, Samsung, and TSMC: [96:07]–[98:21]

Conclusion

This episode provides a uniquely candid look inside the mechanics, politics, and strategy behind America’s dramatic semiconductor comeback. The guests honestly evaluate difficult tradeoffs, the necessity for a new economic security institution, and the importance of maintaining public confidence and talent. Their reflections highlight both the practical and deeply human dimensions of ambitious national projects, offering indispensable context for policymakers and industry observers alike.