The following is Part II of our ‘quick take’ interview about the recent passage of and what to expect in the implementation phase of The CHIPS and Science Act of 2022. This recent conversation was with:
Dr. Jennifer Buss is a long-time friend and OODA network member who has contributed insight to the greater national security community for years. Dr. Buss serves as the CEO of the Potomac Institute for Policy Studies, which develops meaningful science and technology policy options through discussions and forums and ensures their implementation at the intersection of business and government. She has extensive experience examining policy issues in support of NASA and has been involved in their strategic planning processes for astronaut medical care and cancer diagnostics and therapeutics. She manages a variety of OSD programs including an outreach effort for the Department of Defense to the start-up community across the country to find innovative technologies to meet the challenges faced by the Services and Government agencies. Dr. Buss performs science and technology trends analysis and recommends policy solutions to some of the country’s most pervasive problems. She has also directed and assisted research on numerous government contracts, including systematic reviews and gap analyses. Dr. Buss is an authority in her scientific field with national recognition in her area of expertise. She is responsible for major projects requiring integration/coordination across multiple scientific disciplines; and
Dr Melissa Flagg, a Senior Advisor at the Center for Security and Emerging Technology (CSET) at Georgetown University, where she previously was employed as a Senior Fellow. Melissa works and has worked in a variety of consultancy, senior fellow, and board member roles. Previously she served as the Deputy Assistant Secretary of Defense for Research, responsible for policy and oversight of Defense Department science and technology programs including basic research through advanced technology development and the DoD laboratory enterprise. She has worked at the State Department, the Office of Naval Research, the Office of the Secretary of Defense for Research and Engineering, the John D. and Catherine T. MacArthur Foundation, and the Army Research Laboratory. She holds a Ph.D. in Pharmaceutical Chemistry and a B.S. in Pharmacy. Dr. Flagg recently authored “No Time to Waste: The Pentagon Needs an Innovation Overhaul” with the tagline: “… learn to love the valley of death.”
In Part II of the interview, we discuss the operational capabilities required to provide true foundational leadership in the semiconductor industry of the future, the talent pipeline challenge, what we are tracking moving forward, and, finally, with the passage of the CHIPS and Science Act of 2022, what is our strongest scenario narrative?
“Who is going to translate this CHIPS Act activity so that we really do have a new foundation for leadership in the future?”
Dr. Melissa Flagg: What I like about The CHIPS Act is I think if we are serious about winning in the future, not just winning this linear race for “slightly better” where we are building on legacy kind of investments. We are going to fundamentally new technology. That requires I think, the kinds of investments we have here around people and around research and collaboration. What I worry about more than anything here is that if we’re not careful, we are good at funding science and we are good at giving money to companies. What we’re not necessarily good at is translating the things that we are learning from the science we fund and the research we fund into rapid uptake in a way that we can implement it.
So translational research is a weakness in this country. It is very difficult if something cannot be immediately monetized or that just does not have a lot of clear goals. On the science side, everybody that is working in research is focused on prestige. They want high-impact journals. That means novelty, which then moves on to the next question. And they want prizes, which means novelty as well. That is bad for translational research. If you look at industry, they want things that are de-risked and immediately commodify.
Daniel Pereira: Applied technology.
Flagg: Yes. Applied technology. So what I am questioning is the National Science Foundation (NSF) playing that translational role, which is not their historical strong suit. Who is going to translate this CHIPS Act activity so that we really do have a new foundation for leadership in the future?
Pereira: Right. That gets to a core issue moving forward, so thank you for that. That is helpful.
“…we should be standing up a community college attached to every single one of these fabs. And we should be standing up Co-op universities. These are vocational schools where you go learn a skillset. And they need to be associated with these fab locations so that students are, no kidding, working and learning in real-time. We are not doing any of that here.”
Flagg: There is also a huge talent component here. I would say I want as much semiconductor talent as I can get from Asia in the United States with butts in seats and U.S. visas here. Because if something goes wrong in the Pacific and we are in a military situation, I want as much of that talent in this country as possible. Second, I want supply chains that are short, not long, and that doesn’t cross a lot of contested waters, right? So I want as much of it here as I can get here.
Pereira: So let’s talk about standing up that talent component with existing tensions surrounding Taiwan, what is the timeline on the build-out of that talent pipeline? Jen, what is your perspective?
Dr. Jennifer Buss: Longer than the five-year monies of the CHIPS Act, <Laughs> which is an irrelevant timeline probably. I was interviewed about six months ago and I brought this issue to the reporters’ attention – and they were floored by the number of people that we just wouldn’t have to run these fabs. I don’t care if each of these companies received – call it ten billion to build new state-of-the-art fabs. It is more sometimes. But for a state of the practice fabrication, it’s a lot less, right? You can build them up in a replication quickly – 18 months at $4 or $5 billion for a state of the practice fabrication facility.
But we have zero people to run them. I’m not kidding. Zero. We would be building shells of buildings and we can buy all the equipment, but we don’t have anybody to run them. We don’t have anybody to maintain them, and we’ll be building empty cities as China has historically built empty cities. So that is my number one biggest fear. So Melissa’s point about letting immigrants in and giving them visas and helping them stay here: we have no choice if we are going to do this.
Flagg: I would also say we should be standing up a community college attached to every single one of these fabs. And we should be standing up Co-op universities. Yes. Not just research universities where we train PhDs to be physics professors. And then we hope we can poach a few of them to go work. These are vocational schools where you go learn a skillset. This problem is not going away, so learn how to design a chip.
And they need to be associated with these fab locations so that students are, no kidding, working and learning in real-time. They are upskilling as needed in the community. But also for the high-end talent, we need people doing co-ops so that as you are working on your undergrad degree, you are working in the industry and realizing there are practical applications. Or, as you’re getting your master’s degree or Ph.D., you’re working on a relevant question. So that you’re learning what that means. You’re not just trying to chase some prize from a university or an NSF grant. We are not doing any of that here.
“I would build on Melissa’s idea of having a community college next to all these fabs that are being built and being part of this NSTC (National Semiconductor Technology Center). That very well could be one and the same network, which makes complete sense.”
Buss: No, the CHIPS Act doesn’t cover any of it. And so there’s a couple of programs out there that industry does. So I’ll give one example of a big memory company here in the United States that is investing K through 12 in not just STEM education, but very specifically in electronics and electrical engineering. There are government programs like DoD SMART fellowships – but they are small and few and far between, and they’re not targeted at one technology area. And they’re mostly producing PhDs with no actual experience. Now that person owes time back to the government. So they get some experience, but it’s not that co-op that Melissa is talking about. But I do want to give credit to some of the programs that do exist. There have also been programs where the government has a hiring agreement….
Flagg:….but none of these programs are aligned to semiconductors. And none of them are in this legislation…
Buss:…one. One program is aligned to semiconductors at UC Davis…
Buss: So there is one.
Pereira: I want to come back to that question of ‘standing up’ new organizations and a realistic timeline. Assuming a ‘baton pass’ to Intel and industry leaders, what do the first four to six weeks of the life of The CHIPS Act monies look like? We can click through some of the organizations mentioned in the legislation that need to be stood up out of whole cloth.
Buss: Everybody has got their hands out, but nobody knows for what. I’ve seen a whole lot of discussions about the National Semiconductor Technology Center (NSTC) that some of the FFRDCs (Federally Funded R&D Centers) are volunteering to run. And so it’s another way for them – it’s not a bad thing – but it is another way for those FFRDCs to integrate themselves into the process.
I don’t know if we will get a lot of value from them running it. I’m not saying the Potomac Institute is the right place by any means, but I worry that there won’t be enough big vision for what that should be. And I would build on Melissa’s idea of having a community college next to all these fabs that are being built and being part of this NSTC. That very well could be one and the same network, which makes complete sense. But I can almost promise you, that is not how anybody is thinking about it – and it may not turn out to be very useful.
“…as we start to see more of that advanced packaging and 3D construction of chips, it’s going to be much more important for NIST to have those standards in place…”
Pereira: And then how about the stuff that’s sitting in Commerce that Melissa mentioned, like advanced packaging and testing? What do we think that looks like in the first six, or eight weeks?
Buss: So NIST is going to continue doing what NIST does. We have been engaged with them over time, writing standards for different types of technology, and how they can influence policy or put standards together for industry. I’m not sure that anything’s really going to change with NIST having designation. Go ahead, Melissa, you have a point….
Flagg: …I’m quite bullish on NIST…
Pereira: ….As am I…
Flagg: I have had very positive interactions with NIST. They run their Manufacturing Extension Program which runs supply chain data, or funds a supply chain database in Missouri, Utah, and Florida. And the one in Missouri, I’ve been tracking it since I got here. And it’s amazing…
Buss: …yes. I think as we start to see more of that advanced packaging and 3D construction of chips, it’s going to be much more important for NIST to have those standards in place, and doing that now is hugely important – so that they’re not backtracking and having to fill it in later.
Flagg: I think they have such a strong relationship with industry historically, and that industry wants standards so badly and they know how to work with NIST. NIST knows their job and coordinates to an agreeable standard that’s best for the nation and they do not try to dictate, which is what DoD sometimes tries to do. And DoD does not excel necessarily in the world of standards. So I’m quite bullish on NIST and the money that is going to NIST. But the reality is – the money that goes to NIST is tiny here.
“What is U.S. companies’ demand for chips? How can they build their products here? Once the chips are produced here, what chips do we need to be producing to meet those industry demands to drive the U.S. economy? Those are not research questions. Those are “today, building the thing” questions.”
Pereira: I share the same bias: the role of TCP/IP and the internet, the role of SMPTE and IEEE, and NIST historically. I am always looking for that standardization activity in and around a claim of “transformative innovation” at speed and scale. So in my mind, it all tacks back to NIST in the end. Industry is OK with the blind leading the blind for a brief period, but it will always argue for standardization early – for speed and scale of adoption across industry sectors.
Buss: So, yes, I am a huge believer and I think NIST does a wonderful job, not just working with industry, but the industry associations and getting the buy-in from even broader groups and the small companies that don’t have a big say in what’s going on. What I meant is that NIST is going to do what NIST does – and it’s a good thing.
Pereira: I think Melissa and I took your initial comment as positive and fleshed it out. So I think we are all in agreement on the crucial role NIST could play moving forward. So one last organization here, the DARPA Electronic Resurgence Initiative? What has been its fate in the first six to eight weeks? I feel like that’s one of the more clear-cut organizations…
Flagg: ….DARPA will be putting together an industry day, and they’ll be putting together solicitations. But it’s not going to be visible in the first six-day weeks necessarily….
Buss: …I want to circle back to something Melissa mentioned very early on in this conversation. I want to hammer it home: The CHIPS Act should not have been about research and development necessarily. It really needs to be about production and acquisition: What is U.S. companies’ demand for chips? How can they build their products here? Once the chips are produced here, what chips do we need to be producing to meet those industry demands to drive the U.S. economy? Those are not research questions. Those are “today, building the thing” questions.
Flagg: Especially for NIST, because there are four billion dollars over five years, which remember is less than a billion every year over five years, to do some interesting things that will, in fact, come back to all of what Jen is describing: grow the manufacturing in the U.S., dealing with supply chain disruptions, and dealing with these databases all over the place which they have already in a few states, et cetera.
What I would also say is to remind folks that the second half of this act, the science part of the Chips and Science Act has some relevant stuff. So I think that it’s important for folks to remember that there is a big fifty-plus billion sitting over in this other science part of the act that they would do well to start leveraging before it gets sucked into traditional peer review programs.
“I would be watching Korea to see what Samsung does and to see what direction Korea goes in because I think they could be our biggest ally…”
Pereira: So the closing questions are: what are your top two or three things you are tracking in the next few months? What are we looking for? And, based on your participation in our Stratigame last October, what is the strongest scenario narrative so far?
Flagg:…that’s a short question…
Pereira: <Laughs> …I wouldn’t say I’m good for those…
Flagg: For me. I think the immediate thing that I would be tracking is to figure out if this is going to be real or not. That means: are there orders for equipment going in? Getting some of this high-end equipment, to put in a fabrication, can take years in some cases. I mean, there are backlogs. So are orders going in? Are people getting visas? Is ground being broken on fabs? Is Intel still just putting out leases or are they hiring people? I mean, there are some very clear signals early on which reflect if industry is doing what we asked them to do. We didn’t talk about the research security aspect of this – but there is also some strong language about where you are not going to be able to do business if you take this money.
And so I think we’re going to have to find out if this is enough money to incentivize people to do what we want them to do. And so I would be looking for that. I think I would also be watching Korea closely because I think Korea’s a super interesting country in that we are closer to them, and they are in a tough neighborhood. They’re putting in a $400 billion investment. And they’re doing this in lockstep with their industry. I’ve read up a bit on that in the Korean business trade publications.
So I would be watching Korea to see what Samsung does and to see what direction Korea goes in because I think they could be our biggest ally here if we decided to make them our biggest ally. And on the science side of things, I would be looking to see, and we can talk about this at some other time, but I have got to throw it out there: Do we ever decide to take a community college seriously? And do we get vocational schools stood up ASAP, otherwise, just to hammer home Jen’s point, we’re going to have empty cities.
“…you will start to see more students in engineering schools in general and chemical engineers, as some of the new processes require some serious chemistry to be able to assist and facilitate production. We will see big salaries in those jobs.”
Buss: Along those same lines, I’d like to see if NSF going to use this as an opportunity for change. I would love to see a total change in NSF’s ability to really address applied science – or that crucial technology transition and technology transfer aspect of what it is really going to take for the United States to make a change in the semiconductor industry.
I would also repeat Melissa’s point in different terms: we will see soon enough how seriously industry is taking these incentives. Do they start to invest their own money to start breaking ground now, even before they get USG dollars? And, if they are not slated for government dollars, do they believe in that tax incentive and that they can make money on chip production? So they’ll be able to do that, in that that there are licenses out there. You can buy a license to go and produce a chip that some other company already produces and there’s money to be made there. So the 25% tax incentive is huge.
So, if companies start to do it on their own, that will be a key indicator. And then if universities believe in this and the professors, and academic institutions really believe in it, you will see an influx in more undergraduates, if not at a community college level or an associate’s level, but at an undergraduate level. You will start to see more students in electrical engineering or maybe mechanical engineering, engineering schools in general and chemical engineers, as some of the new processes require some serious chemistry to be able to assist and facilitate production. We will see big salaries in those jobs.
“…it could be a lot worse. I’m not saying we’re out of the water yet. There are still some sharks in the water, but it could be a lot worse.”
Pereira: So, overall, with everything that has gone on since we did the OODA Stratigame in October 2021 – has it been enough to not be in a worst-case scenario? I’ve been encouraged, but I also think we are treading water in a worst-case scenario and that policymakers are still grappling with the strategic severity of the challenges ahead?
Buss: I would say it could be a lot worse. I’m not saying we’re out of the water yet. There are still some sharks in the water, but it could be a lot worse.
Flagg: I would just say, I think that when Xi [Jinping] saw the U.S. pass a bipartisan bill, a bill that passed because we are so mad at China that we were willing to agree on a bill – that cannot be good for U.S./China relations. And he’s watching this, and his people are watching this. And so I would say: We don’t know where we are. We just took a left turn, and we need to see if this takes us somewhere different. Does it not make much of an impact? Or does it create a new diplomatic environment with which we must deal? And I just don’t think we know the answer to those questions yet.
Dr. Flagg and Dr. Buss are both members of the OODA Network. Join the OODA Network.
No Time to Waste: The Pentagon Needs an Innovation Overhaul by Melissa Flagg
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