Podcast Summary: Statecraft – "Did the CHIPS ‘Everything Bagel’… Work?"

Host: Santi Ruiz
Guests:

• Mike Schmidt (Inaugural Director, CHIPS Program Office)
• Todd Fisher (Chief Investment Officer, CHIPS Program Office)
• Sarah Myers (Head of Operations & Chief of Staff, CHIPS Program Office)
  Date: December 12, 2025

Overview:

This episode examines the rollout and impact of the U.S. CHIPS Act, focusing on the challenges and strategies involved in launching the CHIPS Program Office (CPO) from scratch. The CHIPS Act aimed to restore America’s competitive edge in semiconductor manufacturing, and the CPO’s leadership team discusses what it took to allocate nearly $40 billion in manufacturing incentives, how success was measured, major hurdles, criticisms (including the "everything bagel" liberalism charge), and the lessons learned for future government programs.

Main Theme & Purpose

• Insight into how the CHIPS Program Office was built from the ground up to deliver on the CHIPS Act’s ambitious semiconductor manufacturing goals.
• Unpacking what worked, what didn't, and the bureaucratic and external challenges involved.
• Reflection on policy design, the "everything bagel" critique, and lessons for future large-scale government interventions.

Key Discussion Points & Insights

1. Starting from Zero: Building a Government ‘Startup’

• Building Vision, Team, Program:
  • "People don't really think... a bill passes and you don't really think immediately that what you're talking about is a startup. I mean, there's nothing. There's no people, there's no processes in place, there's no strategy." – Mike Schmidt [02:28]
  • CPO had to develop the vision, recruit talent, and create new processes from scratch.
  • Early support from the Commerce Department’s senior leadership and a cadre of 30 “detailees” set the tone for rapid scaling. [03:36]
  • Unique advantage: $780 million in administrative funding (about 2% of CHIPS total), allowing rapid hiring and operational flexibility.

2. Success Metrics: What Did the CHIPS Act Achieve?

• Reversing U.S. Semiconductor Decline:
  • U.S. share of chip manufacturing had dropped from 40% to 10%; leading-edge production was at 0%.
  • CHIPS Act targeted national security risks and supply chain vulnerabilities posed by concentration of manufacturing in Taiwan. [07:00]
• Tangible Results:
  • $34 billion in final awards disbursed in ~2.5 years, catalyzing about $600 billion in private investment.
  • All five global leaders in semiconductors (TSMC, Samsung, Intel, Micron, SK Hynix) now expanding U.S. presence—an unprecedented clustering.
  • Target: U.S. projected to reach 20% of world’s leading-edge logic chip production by decade’s end. [12:20]
  • "[It is] pretty exceptional from a standing start." – Todd Fisher [12:24]

3. Standing Up the Office: Process, Timelines, and Pressure

• Timeline Breakdown:
  • Six months: "Get ourselves up and running and put rules of the road out for those who were gonna apply." (Hiring, process, org structure) [19:55]
  • Next six months: Engaging with applicants, shaping proposals.
  • Following six months: Negotiating preliminary terms (PMTs).
  • Final phase: Securing legally binding agreements.
• Implemented a rolling, highly iterative approach: "Every microprocess you run, you have to design. And that is a gift... and it’s real hard." – Sarah [42:41]
• NOFO (Notice of Funding Opportunity):
  • Served as the key vehicle for setting application/evaluation terms, but required heavy interagency negotiation. [14:06, 17:11]
  • Time-consuming but provided structure and crucial protection against later criticisms.

4. Interagency Management & ‘Everything Bagel’ Critique

• "Everything Bagel Liberalism":

  • Critique: Biden-era policies (including CHIPS) try to please every constituency (“bagel with everything”), risking loss of focus.
  • CPO’s response: The process prioritized economic and national security, with other requirements (workforce, childcare) present but not deal-breaking. [23:00]
  • Childcare, for example, "never a sticking point...I probably spent 30 minutes talking about child care." – Mike Schmidt [23:59]
  • Key tension: Balancing essential priorities vs. stakeholder add-ons, ensuring the main objective (national security) remains paramount.

• Notable Quote:

  • "Making the main thing, the main thing, like if you're doing policy like this, where the main thing is national security, that needs to be the priority." – Todd Fisher [24:56]

5. Negotiating with Companies: The ‘Deal’ Phase

• Complexity and Pace:

  • Private sector parallels: "We got to do 15 or 20 [big deals]. That seems hard." [08:39]
  • Leading-edge chipmakers requested $75 billion; office granted ~$25 billion after rigorous, simultaneous negotiation. [40:01]

• Iterative Learning:

  • Early deals (BAE, Microchip) served as “muscle building” for process and investment rigor. [43:36]
  • “We were building the muscle.” – Mike Schmidt [45:39]

• Deal Structure:

  • Created investment committee modeled on world-class private firms but oriented toward national/economic security returns.
  • Ensured diverse expertise (investment, technical, legal, policy) at decision table. [46:31]
  • "Mixing that with... expertise in national security and... workforce and environmental, that was the challenge. And... the magic." – Todd Fisher [47:32]

• International Negotiations:

  • Negotiated in Taiwan with TSMC to iron out risk, milestone, and compliance concerns; discovered cultural/legal system differences.
  • "They wanted certainty that if we hold up our end of the bargain, we're going to get that money." – Todd Fisher [50:34]
  • Humorous moment: TSMC compared U.S. legalistic contract with Japan’s simple receipt-based grants. [53:48]

6. Navigating Regulatory and Political Obstacles

• Davis-Bacon (Prevailing Wage) and NEPA (Environmental Review):
  • Administrative, retroactive compliance caused significant operational headaches; far more challenging than the intent of paying higher wages.
  • "The process is way more burdensome in some ways than paying a little bit extra in wages." – Santi Ruiz [36:37]
  • Davis-Bacon and NEPA both involved authorities outside Commerce, reducing CPO discretion and adding delays.
  • Congressional intervention ultimately carved out NEPA requirements (saving months/years), but team prepared as if they would have to comply. [64:22]

7. Oversight & Risk: Process vs. Doing the Job

• Oversight Trade-offs:
  • "The biggest risk is that we don't get this done. If we've successfully implemented the program and a year and a half from now, there's a negative IG report on the process, I can live with that." – Mike Schmidt [74:23]
  • Internal focus on risk of omission ("not getting stuff done") as much as risk of commission (making a "bad" deal).
• Solyndra Risk:
  • Not every award must succeed; failure in a few is tolerable if the portfolio achieves national goals. [76:18]
  • "If we're eliminating risk from the portfolio and we're not doing things that have no risk of failure, then we're not doing anything that the private market won't do themselves." – Todd Fisher [76:18]
• GAO/IG Culture:
  • Oversight agencies (IGs, Congress) tend to second-guess or penalize process deviations regardless of outcome.
  • Amusing anecdote: CPO exceeded hiring goals and speed, but the IG’s report dinged them for lacking a “comprehensive workforce plan.” [81:50]

8. Talent Acquisition: Breaking the Government Mold

• Expedited Hiring, Better Pay:

  • Administrative funding and statutory authority permitted up to 25 hires at rates indexed to the Vice President's pay.
  • Used direct hire and accepted service authority—allows discretion, speed, and competitive recruiting rarely seen in government. [85:17]
  • "I don't think in my 16 years in government... I've ever had the benefit of having an accepted service slot. And it just, it changes the game." – Sarah Myers [86:39]

• Intensive Recruiting:

  • Senior team directly recruited Wall Street, consulting, industry, and government veterans.
  • Culture blended private and public sector strengths; environment and mission retained top talent.
  • "There are a ton of people out there, there who have a strong desire to work in government and do something important and to give back and really believe in the mission." – Todd Fisher [87:43]

• Retention & Culture:

  • Emphasized internal empowerment, urgency, cross-functional respect, and maintaining connection to mission.
  • "You have to use [hiring authorities] and you have to. And then once you build the team, you need to focus on culture and retention and keeping people there and connected." – Mike Schmidt [93:34]
  • "We need to view the bureaucracy as our dance partner." – Todd Fisher [93:47]

Notable Quotes & Memorable Moments

On Building From Nothing

• “It's just very hard to execute in government. And so we, in less than two and a half years, awarded $34 billion in final awards. And that's starting from nothing, with no team, no process, no vision, which I think stands up certainly to private sector parallels.” – Mike Schmidt [08:07]

On the Everything Bagel Critique

• “Like many of these things, it requires nuance and appreciating the details. I think the core thing that the criticism missed early on was how the process was designed. We had set up an evaluation and negotiation process that was highly iterative and was highly holistic.” – Mike Schmidt [23:00]

On Private vs. Public Sector

• “I remember asking...how does our contract compare to Japan’s contract? ... [They said] 'Oh, we don't have a contract with Japan. We just submit evidence of our investment and they give us the money'.” – Mike Schmidt [53:48]

On Oversight Pathologies

• “There are two pathologies that emerge because of concerns about oversight risk. One is that you design a process to be immune from criticism…The biggest risk is that we don’t get this done.” – Mike Schmidt [74:23]

On Risk and Portfolio Management

• “If we're eliminating risk from the portfolio and we're not doing things that have no risk of failure, then we're not doing anything that the private market won't do themselves. So we need to take educators, we need to do our work, we need to do good underwriting and good analysis. But ultimately...not everything we do is going to be successful. And that's okay.” – Todd Fisher [76:18]

On Talent and Hiring

• “I do want to say a couple things about this. One is it would be a mistake to just say, oh, we brought in this private sector talent. And that was the magic. I mean, truly. We also attracted unbelievable government talent. And one of the really cool things was watching the kind of mutual respect emerge as kind of stereotypes were broken down on both sides and people learned to work together and like really drive outcomes.” – Mike Schmidt [91:02]

On Future Replicability

• “Our goal is to try to impart some of those lessons so that it can be repeatable. And it's not just a bunch of people just trying to do 24, 7 for two and a half years to just break through everything every day. Rather, there's some structure around it that it is repeatable and transformational. And impactful over time.” – Todd Fisher [94:43]

Timestamps for Major Segments

| Timestamp | Topic/Segment | |---------------|---------------------------------------------------------------------| | 00:13–03:36 | Introduction, setting up the CHIPS Program Office from scratch | | 07:00–13:34 | Metrics and evidence of CHIPS program’s “success” | | 13:34–19:55 | Timeline: NOFO, resource planning, interagency negotiation | | 21:52–24:56 | Everything Bagel liberalism, policy complexity vs. focus | | 27:44–32:31 | Negotiation, risk, financial structuring in deals | | 34:00–38:22 | Regulatory burdens: Davis-Bacon, NEPA, administrative process | | 41:14–43:36 | Process design, building internal governance | | 48:19–54:00 | Deal negotiations: TSMC, international contrast | | 57:09–60:16 | Rapid decision structures, internal steering committees | | 61:31–65:24 | Real vs. perceived slowdowns, discretion, nepa carve-out | | 67:16–70:05 | Holistic evaluation, discretion, outreach with applicants | | 71:19–76:18 | Oversight risk, IGs, “Solyndra risk”, documentation | | 78:39–84:36 | Talent and hiring, IG’s workforce planning critique | | 85:05–93:34 | Authorities and methods for elite recruiting, culture-building | | 93:34–95:08 | Lessons for future government programs, sustainability |

Final Takeaways

• CHIPS Program’s success wasn’t inevitable: Due to strong leadership, adequate resources, policy clarity, purposeful hiring practices, and a willingness to learn and iterate rapidly, the program delivered both headline and substantive outcomes in a challenging environment.
• Policy Design Matters: Building in discretion—and using it judiciously—was crucial in reconciling efficiency, fairness, and the central goal of national security.
• Oversight vs. Execution: Effective government cannot be achieved by process-auditing alone; focus, transparency, and smart risk-tolerance are key.
• Hiring is (almost) destiny: Given the right authorities and resources, government can attract top talent and create world-class execution capacity—if it’s willing to do real work to find, hire, and empower them.

For more on how the team is sharing lessons, check out their newsletter, Factory Settings. The episode offers both an inspiring window into “government as startup” and a sobering look at the behind-the-scenes grind (and grinding) that major successes require.