Daniel Newman, Principal Analyst at Futurum Research, joined Closing Bell to discuss the recent wave of pledges from tech companies to manufacture semiconductors in the U.S., amid heightened trade and geopolitical tensions.

Domestic Chip Manufacturing Investments Grow as U.S. Seeks Economic Self-Reliance

all right, President biden declaring in no uncertain terms that american manufacturing is back Taiwan semiconductor investing $40 billion in two new Arizona chip making facilities and announcing plans to sell chips directly to Apple. TSMC at, As it's known for short saying it will provide more than 10,000 high paying tech jobs in the us. And it is part of a national plan to reassure manufacturing in an effort to make the American economy more self reliant in the face of trade tensions and geopolitical struggles. Not to mention a pandemic. So joining me now is Daniel Newman, principal analyst at Future and Research, a digital innovation advisory firm. Daniel. It's good to see you. It's been a while. So I guess let's start with what this means for America. Is this a big win? Yeah. You know this is a process that chips and Science act came into vogue because of the supply chain shortage but I really believe the forcing function that made this act passed had more to do with what you said, the geopolitics, the national security and the resiliency that we need America wants to be the leader in technology and the process technologies that are now leading are all being manufactured overseas in Korea and Taiwan and we want to bring it back here. So TSMC a Taiwanese company is gonna come here gonna bring more capacity more manufacturing and they're going to hopefully work right alongside competitively. But in terms with intel in terms of bringing that capacity here to the US and making sure we don't run into the problems we've had over the last couple of years. Okay, well off the bat more jobs. 10,000 jobs I think was the number, that's good jobs growth. But daniel I think for the average America For instance, one who is waiting a long time for this iPhone 14 to ship amid some protests in China and overall challenges that persist in the global supply chain for American consumers. Does this mean cheaper prices and perhaps faster delivery times? Yeah, there's very little to indicate a short term improvement in terms of delivery time. These fabs take years. We talked a lot about the Ohio super fab that was being built by Intel. That's going to be multiple years T s m just tooling in which means they're not, you know fully in production yet and that's gonna take some time. You've got to staff these fabs and of course the talent issues that we have here with still having some immigration, the B one visas and having the right types of people because you've got jobs that are construction that are building out these fabs. Then you've got the jobs inside which are, you know, ph D s from the world's most prestigious universities which are in short supply right now so this isn't going to immediately fix our problem. But the whole purpose of the chips and Science act was a process to become more resilient and for us, the people that want more stuff. Uh this is part of that process and so we are gonna be waiting a little bit longer but it is good to see TSMC alongside intel and others bringing more manufacturing here helping to make us more resilient and of course deal with the national security issues when we know the the tension with China and Taiwan is real and could still bubble up to being something much more significant over the next few weeks, months or years. That's right. Look, there's so many layers to this story, Daniel which is why we're leaving it with it here on our show today. But you're right, there are concerns about national security and I think what the biden administration is trying to get at according to the president yesterday is that this will allow the US to maintain its dominance as the world's biggest economy even as China does try to become a tech leader which is sort of at the root reports would say of its own interest in Taiwan because more than half of the market share of the semiconductor space chips, crucial in every electronics product out there do come from TSMC. Right? Yeah. You said that really well. I actually had the chance to have dinner last night with marvell technology ceo matt Murphy and he was with joe biden yesterday at the at the announcement and the sentiment is really good and I mean T sm has proven TSMC has proven the ability to manufacture a huge capacity at the leading edge Now, of course we talked a lot about the leading edge because this is our iphones and this is some of the other technologies that you know in our Pcs and our ai some of the stuff that's also been part of this export story. But of course we also have to solve the problem with some of these lagging edge which is that 16 nanometer and above all the car shortages, some of the PC and device shortages have been these older technologies. So we're taking it a day at a time in terms of seeing TSMC Samsung intel, all these companies bringing more capacity here. Globalfoundries has been building more capacity and resiliency in the US to keep our technology leadership strong. But also to make sure that we are thinking about national security, we just don't know with china and that's the problem. The uncertainty is so significant that we have to be extremely careful because at any point this could change directions and we would be in a, in a really difficult spot with 0% at this moment, 0% of the leading edge being manufactured here in the United States. So it's good to see TSMC intel and these others really, you know, investing big coming here. But one thing is I don't see on a price side, how we're going to gain much of an advantage because that labor price differentiation is going to have to be settled. Okay, that is interesting. Look, we can could continue the conversation. I have so many more questions asked, but we do need to leave it there for timing Daniel. We appreciate the time that Daniel Newman, principal analyst at the digital Innovation and tech advisory firm, Future Research.