Podcast Summary: Odd Lots – "This Is What President Biden's CHIPS Office Actually Did"

Introduction

In the April 23, 2025 release of Bloomberg's Odd Lots podcast, hosts Joe Weisenthal and Tracy Alloway delve deep into the intricacies of President Biden's CHIPS (Creating Helpful Incentives to Produce Semiconductors) Act. The episode features an insightful conversation with Hasan Khan, the former Director of Economic Security at the CHIPS Program Office. Together, they explore the program's objectives, achievements, challenges, and its future amidst shifting political landscapes.

1. The CHIPS Act and Reindustrialization of America

Joe Weisenthal opens the discussion by expressing frustration over the limited discourse surrounding the CHIPS Act compared to the broader narrative of America's reindustrialization efforts. He points out the significant investments and infrastructural developments that occurred in 2022 and 2023, which he feels are being overshadowed in the current conversation.

Joe Weisenthal [01:16]: "It's just crazy to me of all these like, influencers and LARPers waiting to bring back physical manufacturing and national security, et cetera. As if this hasn't been a dominant thing in US Discourse for years."

Tracy Alloway acknowledges the substantial investment under the Biden administration, noting its relative obscurity, especially among Trump administration supporters who criticized it as a partisan initiative.

Tracy Alloway [01:30]: "We did have a big investment program actually announced under the Biden administration. Like huge amounts of money, billions of dollars, and no one seems to be talking about it that much."

2. Objectives and Achievements of the CHIPS Program Office

Hasan Khan provides a comprehensive overview of his role and the CHIPS Program Office's mission. The primary goal was to reduce America's reliance on offshore semiconductor manufacturing, addressing both economic and national security concerns heightened during the pandemic.

Hasan Khan [04:51]: "Our reliance on offshore manufacturing for semiconductors presents both an economic and national security threat."

He emphasizes the dual focus of the office: setting strategic objectives through the "Vision for Success" and evaluating each proposed project based on its contribution to U.S. economic security. This involved assessing how new semiconductor factories would enhance technological capabilities, supply chain resilience, and address existing gaps.

3. Application and Funding Process

The podcast delves into the operational aspects of the CHIPS Program Office, detailing the streamlined application process designed to expedite funding for semiconductor manufacturing projects.

Hasan Khan [15:17]: "The process, the way it worked, you first had to submit a statement of interest... then we had a pre-app process... and then the full application was your final submission."

Khan outlines the timeline from application submission in late summer 2023 to the first preliminary announcement by the end of the year, highlighting the efficiency achieved after establishing negotiation templates.

4. Balancing Public Policy Requirements with Industrial Goals

A significant portion of the discussion centers on the criticisms regarding the CHIPS Act's conditions, such as workforce diversity, land acknowledgments, and childcare provisions. Tracy Alloway probes whether these requirements hindered the speed and efficiency of project approvals.

Tracy Alloway [10:27]: "In your experience, what is the role of these other elements in the speed of grant programs or project development?"

Hasan Khan responds by clarifying that many of these conditions were statutory requirements from Congress aimed at ensuring community investments and inclusion. He downplays their impact on negotiations, asserting that while they were not major stumbling blocks, the primary challenges stemmed from negotiations with labor and environmental stakeholders.

Hasan Khan [10:27]: "Where there are points of contention between different stakeholders... you need top leadership to be able to come and say, our number one goal is to get the factory built."

5. Competitive Landscape: Advantages and Disadvantages of U.S. Manufacturing

Tracy Alloway raises concerns about the United States' competitive disadvantages in semiconductor manufacturing, such as higher labor costs and stringent regulations.

Tracy Alloway [20:54]: "Do we have any competitive advantages? I'm actually struggling here, but there must be something."

Khan acknowledges these challenges but highlights existing strengths, including advanced research institutions and a robust talent pipeline. However, he points out that the lack of recent large-scale fab construction has eroded the manufacturing "muscle" in the U.S., leading to inefficiencies in regulatory processes and permitting.

Hasan Khan [21:17]: "We do have the best university system. So we have a deep talent pipeline. We have a tech stack that in the United States, I think is unparalleled anywhere else."

He uses the example of TSMC's Arizona fabs to illustrate how initial projects faced hurdles due to outdated regulatory frameworks, but subsequent projects benefited from established templates and processes.

6. Capitalist Incentives and Private Investment

The conversation shifts to the role of capitalist incentives in shaping the semiconductor industry's landscape in the U.S. Joe Weisenthal questions whether investor priorities, such as maximizing returns, have hindered domestic manufacturing efforts.

Joe Wiesenthal [25:02]: "...how much of this is an issue of capitalism. And investors in semiconductor companies don't want US manufacturing because that's lower margins."

Khan acknowledges the tension between public interests and private returns, citing the example of Intel's stock buybacks leading to reduced capital investments. He proposes that tax incentives, like the 25% investment tax credit, could align private returns with public benefits, making domestic investments more attractive without heavy-handed government intervention.

Hasan Khan [25:59]: "The government highly values these manufacturing facilities being in the United States for the economic and national security reasons... tax credits can solve all of that, in fact can happen with less government intervention."

7. Future Outlook and Policy Recommendations

Looking ahead, Khan discusses the uncertainties introduced by the transition to the Trump administration and the potential policy shifts that could impact the CHIPS Program's momentum. He emphasizes the need for policy stability to maintain investor confidence and the importance of scaling successful frameworks developed during the Biden administration.

Hasan Khan [39:08]: "Firms are going to wait to see what that policy mix looks like from the Trump administration before... placing further large bets."

He envisions a continued maturation of the semiconductor ecosystem in the U.S., driven by both public and private investments, leading to a robust industrial base capable of supporting not just semiconductors but a wide array of high-tech industries.

8. Conclusion

The episode wraps up with reflections on the CHIPS Act as an experiment in industrial policy. While early indicators show substantial investment inflows and infrastructural developments, the true measure of success will unfold over the coming years as additional projects come online and the manufacturing ecosystem strengthens.

Hasan Khan [42:57]: "The CHIP was an experiment in what industrial policy could look like. The scoreboard, the early returns look good, but I think the real measure of whether it was successful will know by the end of the Trump administration if these other projects come online."

Joe Weisenthal and Tracy Alloway express cautious optimism, acknowledging the challenges but recognizing the foundational work laid by the CHIPS Program Office in revitalizing U.S. semiconductor manufacturing.

Notable Quotes

• Joe Weisenthal [01:16]: "As if this hasn't been a dominant thing in US Discourse for years."

• Tracy Alloway [10:27]: "Do you fund stuff that's going to have the most immediate impact or do you finance stuff that maybe takes longer to build?"

• Hasan Khan [25:59]: "Tax credits can solve all of that, in fact can happen with less government intervention."

• Hasan Khan [42:57]: "The CHIP was an experiment in what industrial policy could look like."

Final Thoughts

This episode of Odd Lots offers a nuanced exploration of the CHIPS Act's role in reshaping America's semiconductor landscape. By featuring firsthand insights from Hasan Khan, the discussion highlights both the accomplishments and the ongoing challenges in aligning public policy with industrial growth. Listeners gain a deeper understanding of the complexities involved in national industrial strategies and the delicate balance between fostering innovation and meeting broader societal goals.