Jordan Strauss, Managing Director at Kroll and a Kroll Institute Fellow, joined Closing Bell's Kristen Scholer to discuss the importance of America becoming less reliant on other countries for chips, and returning semicondictor manufacturing to the U.S.; something he describes as an important step for 'national security.'

Closing Bell

Senate Passes $52 Billion CHIPs Act to Increase U.S. Semiconductor Production

Welcome back to cheddar news is closing bell. Everyone will the house on thursday passing a big $52 billion chips act as it's called, which gives subsidies to companies planning to produce microchips here in the US. This is a big one for US companies. So these incentives aiming to help the US become less reliant on rivals like china for chips and perhaps less than some of the supply chain issues in the midst of a global semiconductor shortage that's been lasting years. Well, President biden expected to sign it into law in the coming days and joining me now is Jordan's Strauss Managing director of Kroll, a corporate investigation and risk consulting firm. Jordan thanks so much for coming on the show. What does this legislation mean for us? Semiconductor manufacturing? Hi Kristin, it's always nice to spend a friday back with cheddar. You know, look, this is one of those rare times when we actually are entering a weekend with great national security news. And that that that also means that there's gonna be some really great economic uplift sort of across the chip and consumer electronics sector. And certainly for all of the american companies to make the things that you need in order to make chips, you know, the economic uh, fallout from this is going to be good and positive and will happen over the next few years. But it's important to remember this is a national security imperative. That's likely why I got so much bipartisan support and an economic act Second break that down for us. How does this help national security? So right now, and it's important to remember that America is the country that invented modern semiconductors and that really really kind of had ownership over that space for for decades. But now we're almost completely dependent on Asia in particular on Taiwan for semiconductor production and semiconductors going to everything every piece of consumer electronics. I mean anyone who's tried to buy a car in the last year knows exactly the kind of pain the shortages can bring on the economy and particularly geopolitical tensions rising between the U. S. China and Taiwan. Our ability to do this on shore and by the way other countries will follow suit here is becoming a national security imperative, you know a good way to think about it. Is that chips are the new oil. So you know when we talk about the importance of domestic energy production now its domestic chip production and there are a couple of specific things that the bill is going to do Over the next 5-10 years. That will really help that. Okay, so before we walk through those elements I want you to again just break down for consumers, how does this impact their own security allows them? I'm sure to actually buy the goods that they want on time. Hopefully for cheaper prices. But is there any sort of security in making the chips at home that could make the actual chips themselves safer than if they are manufactured abroad. Absolutely. So awareness and oversight and the ability of U. S. Regulators and US law enforcement that to access and see what the cradle degree of manufacturing processes especially for increasingly complex things like electronic vehicles, self driving cars, IOT connected devices is really critical. One of the great things about this bill is that over time it will distribute into regional text centers um funding to develop expertise and to do chip fabrication. So we're less likely to have extreme concentrations of of national security, critical chip fabrication throughout the United States. And you know, from a from a core security standpoint, this just lets us stand on our own two ft a little bit better, reduces our dependence on others and you know, helps us manage our supply chain end to end for everything from guided missiles to to phones. We know Jordan that manufacturing these chips takes extreme focus pretty much perfection right to get it right. And a lot of commitment obviously that will need to see these us companies invest in. Could we see more startups pop up in this space with $52 billion dollars in backing by the government to bring some of this back home. Absolutely. And the bill contains tens of billions of dollars for advanced research and development over the next 5 to 10 years to. It is important to remember that, you know, it took us a while to fall behind the rest of the world and semiconductor production. It's going to take a lot for us to get back on our own two ft. So this is not going to be like a light switch. We have to build fabrication plants, develop expertise, developed supply chains internally. This really will take 5 to 10 years, but it should enable any technology focused organization, whether it's a software company that depends on uh chips for servers or a hardware company making cars or heavy machinery or anything else. So it really will help across the board. And kristen I I remember, you know that the White House and the Justice Department, we spent a lot of time thinking about like, well what's the world going to look like in 20 years and what are the things that we can do now to make America stronger when, when that time comes. And it's so rare to see this kind of long term national security investment and it's so delightful uh, to see it going into a weekend. So it really, it really will five years from now be a game changer. And that's terrific. I think a lot of people are looking forward to that Jordan, whether it's because of prices, ease of use national security and I think all of the above, that's Jordan Strauss, Managing director of Kroll Jordan, thank you