On this episode of The Six Five – On The Road hosts Daniel Newman and Patrick Moorhead are joined by Dr. Mukesh Khare, Vice President of Hybrid Cloud at IBM Research to discuss the CHIPS Act and how it could impact the semiconductor space.
Their conversation covered:
- The importance of the semiconductor and chip business
- A little overview of IBM’s role with the CHIPS Act
- A dive into the American Semiconductor Innovation Coalition
To learn more about the IBM Research, check out their website.
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Daniel Newman: Hello everyone, and welcome to The Six Five – On The Road, here in Albany at the NanoTech Center. I’m Daniel Newman, one of the hosts here at The Six Five, joined by my always-esteemed colleague, Mr. Patrick Moorhead. Welcome.
Patrick Moorhead: Great to be here. And I love on-the-roads better than anything, but what I like even better than on-the-roads are on-the-roads talking about deep tech, and it doesn’t get more deep into tech than NanoTech.
Daniel Newman: It doesn’t. And I also love talking about big topics like policy, the technology change the world. You and I like to say things like semiconductors eat the world, or you can’t run software on air. And this was kind of a big week in this semiconductor space with the CHIPS Act passing. And so I felt like The Six Five had to kind of take the moment and have a conversation and maybe we are in the perfect place to have that conversation.
Patrick Moorhead: And it is a great time to introduce our guest here, Dr. Khare from IBM, who is VP of hybrid cloud at IBM Research. Talk about this. Welcome.
Dr. Mukesh Khare: Thank you. Great to be here with you.
Daniel Newman: It’s a real pleasure to have you here with us. As I was kind of setting this thing up, we were like, “Wow.” We were coming to visit. We were here to learn and kind of look at this bigger picture, future of computer full stack thing that IBM’s really building. I think you call it something like the golden stack, actually.
Dr. Mukesh Khare: That’s correct.
Daniel Newman: But it happened to fall on the calendar right around the same time that this multi-year saga of the CHIPS Act is coming to a conclusion. I think it’s very close, very close, meaning it’s really done, except I think there’s one more signature left, a fairly important one.
But I think we’re at that point now, Pat, where we can start talking about this thing and Dr. Mukesh here has some really great insights. So bringing you to the fold to join us on The Six Five, I think it times really well.
Patrick Moorhead: Absolutely. I think the best place to start, because we have a lot of different viewers of The Six Five at different levels of understanding of semiconductors, but I’m pretty sure I know the answer, but I want to hear it from you. Why should we care about chips? Why should we care about semiconductors? And why is this so important? Why are so many people talking about the CHIPS Act?
Dr. Mukesh Khare: So Pat, as you know, semiconductor is the most foundational technology that the world runs on. We don’t talk about it, but it is the technology. It’s the technology that became… Well, that was invented in the US. Semiconductor business started in the US, and that essentially enabled almost exponential growth in the IT industry in particular. And then we all use IT for everything that we do, whether it’s our cell phone, making a phone call, or your cars. In fact, cars became such an important topic that you can’t buy cars these days because cars don’t have chips. Cars use hundreds and sometimes thousands of chips inside those cars.
So clearly everything that we do and everything we use, semiconductor is the foundation. The chips are the foundation that goes inside, whether it’s your dishwasher or your toaster oven or your refrigerator. So clearly, chips, the pandemic really made this topic of chips, when pandemic created disruption in the supply chain, and then we all realized chips are so important and we need to pay attention to this. Clearly, that made it bring to the forefront. Now the countries, nations, US, everybody understand how important semiconductor and chip business is.
Daniel Newman: I love that you said that. I think the way I’ve explained it, we’ve talked about in our show, is that semiconductors had a moment throughout the last two years in the pandemic where it went from something that only kind of geeks, nerds, researchers, scientists, talked about, and then suddenly became like a family dinner discussion. We can’t get chips because people started to realize, “Well, I can’t run my software. I can’t go on Facebook. I can’t use my iPhone. We can’t get enough PCs. Can’t do our Zoom calls.” It was really something that was like an aha moment.
So as this legislation went through, I think it gained a lot of momentum. We kind of talked about what it was and why semiconductors are important, but maybe sometimes I would say some companies rise immediately. And these are the companies people think about when they think about chips. There’s other companies, IBM being one, that are doing a lot of things, making a lot of contributions, but maybe don’t always come first in mind when it comes to semiconductors. And I think there’s an opportunity now for what you’re doing, the work you’re doing to rise to the top. I’m going to get to a question here, I swear. With this passage, I guess I’m kind of interested, what do you think IBM’s role is with the CHIPS Act? What role do you see the company playing?
Dr. Mukesh Khare: That’s a very important question. IBM are a very strong supporter of CHIPS Act. As you know, we have a very broad hybrid cloud and AI business, which is a business in the IT industry. We build our own systems. We want to make sure that we get supply of chips for our own business. Our business needs chips, our Z system needs most advanced chip technology. Access to chip technology is central to IBM’s business. That’s one part of the reasons that we really, really care. And we are really proud of the fact that chip Z got passed through two steps, one more step to go, which should happen very soon. So we do… Yeah. We…
Daniel Newman: I was crossing my fingers with you. We’re good. We’re good.
Patrick Moorhead: Don’t do that, Daniel.
Dr. Mukesh Khare: Yeah. So we do care and we are very, very strong supporter of CHIPS Act. In addition, the way IBM plays a role is that IBM, over a period of time, evolved our business model on how we get chips for our own business. We used to be a manufacturer of chips. In 2015, looking at our business, we decided we are going to double down and focus on research and development because we want to make sure that there is a technology for innovation and technology that we need for our business. And we will partner with companies to manufacture that chip for us and for themself.
So we are very much focused on the research and development part of CHIP Act, which is about $10 billion to $11 billion investment that is called out as a part of CHIPS Act. And there is also a proposal to build in national semiconductor technology center. And that’s a great proposal. Essentially, it enables democratization of access to research and development in the world of semiconductor technology. So this will, in our view, enable big companies, small companies, startups, universities to participate in this chip R&D ecosystem. So we are very excited about it. As more companies and more universities participate, it will definitely benefit all of us collectively who consume these chips for our business.
Patrick Moorhead: Yeah. I think we’ve learned over the years that one company can’t do it all and really a collaboration of large companies, small companies, startups is really the way to go. That’s really how innovation flourishes and we get to that next step. So a lot of these conversations we’re having, some of them tend to be global, because they’re connected between countries. But there’s also regional-specific or even country-specific conversations that are having. How are you looking at the difference between these two?
Dr. Mukesh Khare: Yeah. That’s another great question. The semiconductor industry is a global industry. So we need to acknowledge that. There are companies all over the world who are contributing into this broad ecosystem. Now that said, because semiconductor was not that cool lately, we started to forget about.
Daniel Newman: I always thought it was cool.
Dr. Mukesh Khare: You always… So we started to lose our leadership in semiconductor for the US and the western world. The supply chain and the manufacturing of, especially leading edge chip, became very imbalanced when it comes to the global supply of, or manufacturing of these leading edge technology.
So I think to us, the CHIPS Act, what it does, it enables… It kind of shot in the arm where it enables to reverse or try to reverse the trend so that the US and the like-minded countries can participate at the equal playing field. They can help invigorate semiconductor industry. And as you said, this becomes the topic at the dinner table. So kids get excited and they want to become part of semiconductor education system and become part of creating new next semiconductor. And again, the industry that US created.
Daniel Newman: So we’re here at the Albany NanoTech Center and IBM is part of this ASIC coalition. First of all, cool name. I think we would all agree that definitely fits. I don’t know how much our audience recognizes the coalition, but obviously I feel as you’ve been able to explain it in some of the conversations we’ve been able to have offline, that that partnership, that coalition is very interesting. Talk a little bit about what that is, what it’s comprised of, and sort of the role of the coalition as a whole, with the CHIPS Act and sort of the ongoing development of semiconductors.
Dr. Mukesh Khare: ASIC. It’s a cool name. ASIC stands for American Semiconductor Innovation Coalition.
Daniel Newman: Works, though.
Dr. Mukesh Khare: It works perfect. We like acronyms. We like cool acronyms. So we, together with many of our partners, worked to create this coalition. This coalition now has more than a hundred partners in that, which includes large companies like big names that we can all recognize, many small companies, many startups, as well as a lot of universities, top universities, as well as HBCUs and national labs, other consortiums. It’s a collection of this entire ecosystem of contributors in the semiconductor business.
We have all come together, especially towards the R&D part of the CHIPS Act, to develop what is the right R&D agenda that we can help propose as a part of creation of this national semiconductor technology center. What is the right thing to do to help democratize access to this very difficult leading edge technology? Today, barrier to entry in semiconductor is very high. And that’s why you don’t see a lot of VCs investing in semiconductor. That’s why the number of startups are not as many in semiconductor.
So the idea is that how we can put our brains together and roll up our sleeves and get going on, what’s the right technical agenda? How can we help, reinvigorate this ecosystem of semiconductor innovation towards the goal of, again, addressing the supply chain issue, bringing in more and more manufacturing back to the US, as well as like-minded countries, and also creating a workforce that you need to support all of the thing that we are talking about?
So that’s the idea here. And the fact that the CHIPS Act is passed, we have created several work groups around technical agenda, work group around workforce development, startups, how do we treat IP? We are all working together so that when the government is ready, we can have a proposal which is based on the collection of a section of this industry. So that’s the whole thing about chip ASIC coalition.
Patrick Moorhead: Yeah. So I want to double click on the last thing that you talked about, which was getting, I don’t know if I call this advice for lawmakers as we go into this to get the best advantage out of the chips. Kind of things to keep in mind. We’ve seen what Albany in partnership with the state of New York has been able to crank out. I wish we could teleport our audience out here, because it is incredible seeing the buildings, but I think more importantly, seeing the innovations that have come out of this. In another conversation we talked about 2nm nanosheet, nanotubes, I mean just incredible things that have come out of here for decades. So what advice do you have for lawmakers from here on forward?
Dr. Mukesh Khare: Thanks. Thanks that you brought up Albany NanoTech. Albany NanoTech is a very unique and also the only such public private partnership that exists with more than $15 billion of investment on this site to build this incredible facility, where various members, between companies and universities, they come together. It’s a template. It’s a very successful template. Many companies have benefited from it. So we can leverage. One thing we can suggest is learn. This is a model that has been working for the last 20 years. This model can be used as a template to scale at the national level because we understand the CHIPS Act is a national act, and this could be a model that can be scaled beyond where we are.
Second thing I will say is that we don’t have any time to waste in the chip race basically. So instead of thinking about, go build some facility, greenfield somewhere which could take five years, use some of these existing capability and the existing template that already is there. Help them grow, help them scale, so that the goal should be that as soon as the department is ready, the implementation and execution can start in six months. And the ASIC coalition is ready. Considering the infrastructure and the talent that ASIC coalition has, the implementation of the vision of NSTC can be done within six months from where we are right now. So leverage the existing facilities and reinforce those facilities so that it can grow and serve the bigger purpose that the CHIPS Act is calling for.
Daniel Newman: I love that he mentioned that about the time horizon. I think in the-
Patrick Moorhead: Time to market is a lot.
Daniel Newman: … conversations you and I have, we inform the press often, whether it’s on broadcast or in… That’s been the question, Mukesh, has been, how long is this going to take to be material? Like those automobiles that were sitting in fields that couldn’t be completed, this act is not going to single handedly change that scorecard. It’s all about really planning out for the future. It’s getting more resilient, building more strategic, public private partnerships. And also of course, maintaining those very important global partnerships that we have. This isn’t a US versus type of thing. This is a US and the world type of opportunity. But it’s a moment for us.
Patrick Moorhead: Yeah. And can I pile on there too?
Daniel Newman: Absolutely. Absolutely.
Patrick Moorhead: And these are my words. A lot of people think about tax money coming in and it’s going to go to waste. And what I’ve seen, I think this is a good example of it, and I think you’re being very pragmatic, that if you have a system that works, that is a money maker and a job maker, not a money spend with really nothing longstanding at the end, this is very different. And there is a model that does work, and it seems to me that it would make sense for us to double down, invest as a country.
Dr. Mukesh Khare: Thank you. That’s exactly the way we see, and that’s what we would like to advise, that leverage this capability, leverage this public private partnership, help grow and help meet the cost that we are all trying to do. Yeah.
Daniel Newman: Mukesh, it has been a lot of fun having you here. I think it’s always great when serendipitous moments happen and we show up at the time when something like this is taking place. And then of course, that you were so generous with your time to sit down with us.
Hopefully everyone out there was able to digest all of this, because if you’re watching news and media, there’s a lot here. And this is complicated. Like I said, we went from people really not even ever thinking about chips, to it being at the dinner table, to it becoming one of the most important pieces of legislation for our country. It’s great to have you here, Mukesh, to help break it down for us. Pat, love going on the road.
Patrick Moorhead: No, it’s great. I just want to thank all our viewers out there. And if you like the show, please subscribe. And Dan and I are always available for feedback. But with that, Dan and I are going to sign out. Thank you so much, Mukesh. Have a great day.
Daniel Newman is the Principal Analyst of Futurum Research and the CEO of Broadsuite Media Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. Read Full Bio