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Commerce chief lays out blueprint for chip manufacturing in America

Kai Ryssdal and Sarah Leeson May 10, 2024
Heard on:
Commerce Secretary Gina Raimondo discussed chips, China and jobs with Marketplace's Kai Ryssdal in Washington. Nancy Farghalli/Marketplace

Commerce chief lays out blueprint for chip manufacturing in America

Kai Ryssdal and Sarah Leeson May 10, 2024
Heard on:
Commerce Secretary Gina Raimondo discussed chips, China and jobs with Marketplace's Kai Ryssdal in Washington. Nancy Farghalli/Marketplace

In the year since U.S. Commerce Secretary Gina Raimondo and Marketplace’s Kai Ryssdal last spoke, her department has been busy. Artificial intelligence has risen to the forefront of the business world. Our economic relationship with China remains complicated. Domestic semiconductor manufacturing is poised to skyrocket. Funds for national broadband expansion are falling in line. And at the center of it all are Raimondo and her team.

The secretary sat down with Ryssdal in Washington to discuss the progress made and the evolution of the Commerce Department’s agenda. An edited transcript of their conversation is below.

Kai Ryssdal: I want to start where we left off last time, a year or so-ish ago, with you: industrial policy, the [Joe] Biden administration, getting the government into this economy, CHIPS Act. You’ve been busy. Lots of loans and grants. We were in Phoenix a number of weeks ago looking at the [Taiwan Semiconductor Manufacturing Co.] plant out there. Three of them are going to be built now. Extraordinary. They’re huge, many, many billions of dollars. Here’s my question. The CEO of Intel, Pat Gelsinger, came out, maybe that day that the president was there, and said, this is great, but we need a CHIPS Act II. And my question is: Come on, really?

Gina Raimondo: Well, you can’t blame him for trying. You can’t blame him for trying. First of all, aren’t they massive? They’re unbelievable.

Ryssdal: The biggest thing I’ve ever seen.

Raimondo: I wish everybody in America could see them. I was in Texas with Samsung, they have 50 cranes in the air right now. Each of those clusters will employ, you know, 15,000 people, right? It’s gonna be a number of years, but at scale by the end of the decade, they’ll be humming. I’m not going to comment on the need for CHIPS II. What I am going to say is I feel great about where we are. When you came here about a year ago, I didn’t have a team. No money was out the door. We hadn’t even put the applications out. Today, we have 200 people here working on chips. We’ve committed almost $30 billion. All the leading-edge manufacturers in the world have committed to scale in the United States. So as you say, it will take years, but I couldn’t be happier.

Ryssdal: Fair enough. You’re not going to comment on what Mr. Gelsinger said, but here’s the question in a different way. Is there a moment when the government says, “You know what, we’ve given you the seed corn. Go forth and profit”?

Raimondo: It’s a good question. Let me say this. The whole point of the CHIPS program was to be very targeted for national security purposes. And this is a key thing you need to know: For the $30 billion of taxpayer money that we have announced, the private sector has announced over $300 billion. So I would say this is working. You know, we have given the seed corn, and they’ve invested 10 times private capital. Whether we need more down the road, I don’t know because $50 billion is pretty small relative to what’s needed. But we may not because, as I said, they’ve already invested 10x private capital for the public capital. So we’ll see. We’ll see.

Ryssdal: Are you satisfied that the early signs of the long game that the Biden administration is playing are paying off?

Raimondo: Absolutely. I would say, in addition to the fact that they are investing $10 for every dollar we’re investing, no one thought we could get TSMC, which is the world’s biggest, most successful company, to do three [fabrication plants].

Ryssdal: So here comes a trickier question. Is TSMC more important than Intel right now?

Raimondo: No, they’re all important.

Ryssdal: They’re all your favorite children.

Raimondo: They’re all my favorite children. Look, here’s the goal. You said the right thing. It’s a long-term bet. It is a long-term bet. When will we know we’re successful? If in 2030, we are making 20% of the world’s leading-edge chips in the United States of America.

Ryssdal: 2030 is, like, tomorrow.

Raimondo: Yeah, it’s gonna happen. It will happen. Right now, just so your listeners know, right now we make 0% of these chips in America. We buy 90% from TSMC in Taiwan. By 2030, I want 20% made in America. To hit that goal, you need several companies. You need Intel, plus TSMC, plus Samsung manufacturing at scale in America.

Ryssdal: I don’t want to get too geopolitical about this. But since you mentioned Taiwan, you were up on [Capitol] Hill yesterday, right? I forget what day of the week it was where you said, look, if the Chinese go into Taiwan to take TSMC, it would be disastrous. You’ve spent a lot of time in your first three years on this job dealing with China. Specifically more in the past year or so. Where do you strike the balance between cooperating in a global economy which needs us both and worrying about national security and saying to the Chinese, “You know what, back off”?

Raimondo: Yeah. Look, we don’t want conflict. We don’t want to escalate. The president has said to me, has said to all of us on his team, we want to deescalate. We want to trade with China wherever we can. Of course, we had President Xi here at the end of last year. So I see it as, I think our trading relationship with China is, like, $700 billion. That’s a good thing. It creates American jobs. So we need to trade where we can but protect what we must. And right now, making 0% of the world’s leading-edge chips in our country when we invented the chip industry? That’s unacceptable.

Ryssdal: Are we vulnerable right now?

Raimondo: 100%. Yeah, absolutely vulnerable. Look, there are leading-edge chips in this room, in your fantastic Apple [iPad], in your phone, in your car, every piece of military equipment, fighter jets. We don’t make it in America, by the way. I talked to you just about a year ago. The word that didn’t come up when we spoke last time about chips? “AI,” artificial intelligence, right? All AI runs on chips. So are we vulnerable? Yes. We want to lead the world in artificial intelligence. You can’t do that unless you have the chips that run these big models.

Ryssdal: You have said American businesses are expressing their frustration to you about the lack of a level playing field in China. How do you negotiate that? You have to have that trading relationship, but you have to fend them off somehow on one hand, and at the same time American businesses say, listen, we need in there, but we need it to be fair. What do you do?

Raimondo: You do exactly that. You have to do both. You have to call China out every time we see that they are treating American companies unfairly, which is what I did when I was in China. I didn’t pull any punches. I met with the premier and the vice premier, my counterpart. I said, look, when you go into American businesses unannounced, raid those businesses, demand consumer data, that’s not fair. That’s not right. We can’t operate there when you put restrictions on U.S. companies that favor Chinese companies. You know, hospitals, for example, and the government buying products favoring their companies over ours. That’s not fair. So, you know, look, my approach is just be matter of fact. You don’t have to be escalatory. Just say that these are the facts, and you need to knock it off if you want us to do business there.

Ryssdal: Is this what you signed up for when you became commerce secretary?

Raimondo: I’m not sure I knew what I signed up for. I just loved the president, loved my country, so I took the job. The one thing I did sign up for was to revitalize American manufacturing. I believe it, so it’s core to who I am. And we’re doing that. And so I love that.

Ryssdal: We were out in Phoenix, as I mentioned a minute ago, and one of the things we did, we went to the local pipefitters union, where they are bursting at the seams — no pun intended — with trainees and new journeyman and people coming in to help build those factories that TSMC is building. Talk to me about labor force for a minute. I know you’re not secretary of labor, but it’s a huge component of how we get from here to there. Are we ready for that, do you think?

Raimondo: We’re getting ready. You know, I’ll be very, very honest with you. Are we ready today? Probably not. Do we need to go as fast as we can to get ready and build the pipeline and build new training programs and create new apprenticeship programs for pipefitters and welders? We have to do it. You know, just what you said before, the size of these facilities, you can’t realize it until you see it yourself. I was at Samsung in Texas. They’re building one building that’s 11 football fields in length. It will take probably 5,000 construction workers for that one building. They don’t exist today. So we need to put on steroids apprenticeship programs, community college programs, vocational tech in high schools if we’re going to meet the need. I like our chances. We’re building the pipeline. Some of the money that we’re giving to these chip companies, they have to spend on workforce. So we’re telling Intel, TSMC, you know, tens of millions of dollars, we’re saying you need to invest this working with local colleges, universities, high schools, labor unions.

Ryssdal: Child care. We talked about this last time.

Raimondo: Child care, same thing. Like if you’re gonna meet the need and have the workers, you got to find the people, men and women alike, and train them for the jobs.

Ryssdal: So one of the other projects we’re working on is broadband and what’s going on in the central states in this country. And I guess the question is, when you think about supply chains for higher-tech products like fiber optics, like those things, how do you get us there when that’s not traditionally been a strength of ours?

Raimondo: Yes. This is a great question. So one of my jobs is to make sure every American has the internet. You know, we’re investing $40 billion. And I sat down with my team at the very beginning, and I said, “Map out for me the whole supply chain: the fiber-optic cables, the electronics, etc.” So much of it is not made in America — a vulnerability. So I said to the team, “How do we fix it?” We are fixing it by not giving waivers to companies. Just let me explain this for a second. So, a U.S. company will come to us — say, a U.S. company that makes the fiber-optic cable that they run to your house so you have the internet. Much of that is made in China. And they come to us and say, “We want a waiver to be able to continue to make it in China because it’s not cost-effective to make it in America.” And I said, “No. Waiver denied. Figure out a way to make it in America.” And guess what? They have. Turns out, when you pressure these American companies and tell them if you want to participate and get taxpayer money to do this you must make it in America, they figure out a way to do it.

Ryssdal: You said — I forget if it was C-SPAN or “60 Minutes” — the other day, “We’re gonna make building hardware sexy again.”

Raimondo: I did. My children have not let me live that down.

Ryssdal: I was just gonna say. So maybe I should get your kids in here because come on, really?

Raimondo: You sound like my son. He’s like, “Mom, don’t ever use that word again in public.” I hear you and yet here I am. I mean it. You know, look, my dad — I grew up in a manufacturing family, OK? Like, he made watches for a living and he loved it. He would come home at night and his hands were grisly, and he loved making things for a living. I think people like to design. You have a cool watch, I’m looking at it. You have a cool iPad. It’s fun to design things. It’s fun to make things with your hands. It’s fun to see what you’ve made instead of just coding all day software. So, yeah, I’m sticking by what I said.

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