Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More<\/em><\/p>\n\n\n\n The Chips & Science Act was a bipartisan law passed to provide $52 billion for the U.S. semiconductor industry. It was created in the name of ensuring national security and a secure supply chain for critical electronics goods at a time when relations with China were frosty.<\/p>\n\n\n\n The act became law in part because it promised to bring high-value jobs back to the United States, decades after those jobs left for low-cost areas in Asia. But Donald Trump is president-elect now and the Republicans are firmly in control of the federal government. We\u2019ll soon find out if the love for electronics, chips and the jobs they bring is still there. <\/p>\n\n\n\n Under Trump, new leaders have been tapped such as Vivek and Elon Musk to cut government spending via the Department of Government Efficiency (DOGE). Will they continue to support the Chips & Science Act? And do they see the value of investing in semiconductor factories further with a second act to finish the job of completing the chip factories that have been started? <\/p>\n\n\n\n To answer these questions, I did an interview with Scott Almassy, a partner with consulting and accounting firm PwC. He has been running the company\u2019s semiconductor practice for a long time during his 20-year stint at PwC. For that job, he has had to stay on top of the intricacies of the chip business, not only from the view of Silicon Valley but also in places like South Korea.<\/p>\n\n\n\n Here\u2019s an edited transcript of our interview.<\/p>\n\n\n\n VentureBeat: Could you start with some of your background?<\/strong><\/p>\n\n\n\n Scott Almassy: <\/strong>I\u2019m a partner with PwC. Obviously we\u2019re one of the large accounting and advisory firms. I\u2019ve been here 20 years. Currently I\u2019m our U.S. semiconductor leader. Our business is split between audit and advisory, audit being assurance, public companies, capital markets, audit opinions, and then advisory is consulting. I sit over both of those, but I\u2019m an audit partner by background. In my 20 years I\u2019ve been in the U.S., mostly in Silicon Valley, and also South Korea for three years. Virtually all my clients have been semiconductor companies, from foundries to the fabless guys at the end, putting the final products out there. I\u2019ve seen the end to end throughout my career.<\/p>\n\n\n\n As far as perspectives go, our industry has\u2013especially starting with COVID, it\u2019s been quite in the spotlight. Now everyone is curious about shifts, about the industry. You have the CHIPS Act. You have China. You have the rest of the world trying to onshore, reshore, whatever you want to call it. At the same time you still have the 30-plus years of muscle memory for Asia, moving everything there. Now people are figuring out how to bring it back and\/or diversify.<\/p>\n\n\n\n VentureBeat: There was bipartisan support for the CHIPS Act. That\u2019s why it passed. Where does it stand after the election in terms of what might be modified about it, or whether the money that\u2019s there is going to get spent or allocated or not?<\/strong><\/p>\n\n\n\n Almassy:<\/strong> A number of different perspectives. You\u2019re right that it was bipartisan. In theory it would be harder to unwind, not only from an administrative perspective, but a political and emotional perspective. You have a number of states that were super excited that that funding was rolled out and large players would build in their states. That makes it difficult to unwind. Initially, and obviously we\u2019re only seven days past it\u2013initially there was a bit of consternation. Are the funds going to get doled out? Some folks, including potentially Commerce, who\u2019s in charge of giving the money out, want to make sure they dot all the Ts and cross the Is. Whether they needed to expedite that, whether the companies that were granted the money needed to work together to get that across the finish line and locked in before the change in administration.<\/p>\n\n\n\n At least what I\u2019ve heard and what I\u2019ve read recently is that the initial CHIPS Act \u2013 the $51-52 billion, whatever number in pure cash, and then the tax incentives would take it higher \u2013 probably isn\u2019t at risk. That money will continue to be doled out. An interesting thing to watch might be\u2013I don\u2019t know how familiar you are with the CHIPS Act, but effectively the money was earmarked, the $50 billion plus. Commerce then set out to figure out what it would look like and what they wanted people to do before they gave them the money. That whole thing was almost a clean sheet. Trying to figure out, is it limited on how you can expand in China? Or not necessarily China, but countries on the list. One thing to watch out for is if these contracts are signed prior to the new administration coming, the money might still get doled out, but do they try to put additional restrictions on it, put a spin on it?<\/p>\n\n\n\n I\u2019m not sure there can be wholesale changes. It\u2019s not restrictive. But the terms are written with preventing China\u2019s growth in mind, making sure jobs are made, making sure you\u2019re not doing buybacks. All that stuff is already in there.<\/p>\n\n\n\n VentureBeat: The other piece of the picture that seems new is the likelihood of tariffs happening. If there\u2019s still a supply chain that exists outside the U.S. and they supply parts into the semiconductor factories, are the costs going to go up for that reason? People were pointing out things like the cost of game consoles. A PS5 Pro costs $700 now, and it might go to $1,000 if it\u2019s affected by tariffs. That\u2019s something that is manufactured in China. AMD is the key supplier on that. But I don\u2019t know which pieces of that are going to be affected by tariffs, if any.<\/strong><\/p>\n\n\n\n Almassy: <\/strong>It\u2019s an interesting point on tariffs. Your numbers are accurate. If a piece of technology\u2013let\u2019s say it\u2019s entirely fabricated outside the U.S. It\u2019s ultimately imported into the U.S. as a completed console or phone or whatever it is. The price point on those things\u2013I\u2019m not going to say it\u2019s price inelastic, but the demand tends to be there because the products are expensive as it is. I don\u2019t know what the right number is, but barring a 100% tariff that doubles that to $1,500, I get the sense\u2013I don\u2019t have empirical evidence, but anecdotally, with tariffs in Trump 1, China just passed those on from the high end. Where you really start to get the impact is on the materials, the commodities, the steel and aluminum, the things that really go into the beginning of supply chains that build things that aren\u2019t $500, $600, $700.<\/p>\n\n\n\n My perspective, tariffs may very well become a thing. But when you talk about a supply chain that\u2019s outside the U.S. and the ultimate finished product comes in, maybe there\u2019s a combination of passing some costs on to the consumers and absorbing a bit of it into margin. But I\u2019m not sure it will have a huge impact on, one, company behavior, and two, consumer behavior, or three, the general supply chain. If you look at a lot of the things that are coming into the U.S. from a semiconductor perspective that are not these consoles, these finished products, or selling to OEMs and ODMs\u2013it\u2019s a lot of things that end up in data centers or AI-type things. Cutting-edge places where you may not necessarily be deriving a product from it, but it\u2019s almost a service. You can layer that in with an additional 10 cents per hour or whatever cost, if you\u2019re one of the large guys with pricing power.<\/p>\n\n\n\n VentureBeat: What\u2019s the state of the chip industry in terms of sales? I saw the SIA\u2019s November 5 report. It said semiconductor sales were up 23% in Q3. As these things are happening, what\u2019s your view of how healthy the global chip industry is right now?<\/strong><\/p>\n\n\n\n Almassy:<\/strong> I do think it\u2019s a healthy industry at the moment. There was an apex back in 2021, 2022. You get these incredibly high numbers. We were sub-$500 billion globally, and then you shoot up close to six, and then drop back down. There was that overbuying, double buying, triple buying, whatever you want to call it. There was a bit of absorption.<\/p>\n\n\n\n The industry recently was buoyed a little bit \u2013 or a lot, depending on how you want to frame it \u2013 by AI. But underneath that, you have a number of different sub-sectors that are rebounding at different paces. Memory is recovering a bit. Even within memory you have the standard DRAM that runs the simplest of devices, all the way up to the high-bandwidth that runs these AI models. That\u2019s started to recover. You see that a bit in the results of Samsung and Hynix and Micron. As far as the handset makers go, there was a bit of a blip in China a few years ago. That seems to be starting to recover.<\/p>\n\n\n\n Generally my sense is that the industry is healthy. The numbers month to month have been trending quite well. It doesn\u2019t surprise me that quarterly you\u2019re over 20% higher. I\u2019m not sure that will sustain itself for the next 12 months, but I do think growth is in the cards. Maybe high single digits. You have different aspects of the industry coming back at different levels. Overhanging it all you have auto, which seems to be a long-term growth vector for many years. It continues to be many years down the road. It\u2019s a generally healthy industry. But it is cyclical.<\/p>\n\n\n\n VentureBeat: Along with these revenue numbers, getting back to the U.S., are we starting to see more jobs in the U.S. coming because of construction from the CHIPS Act?<\/strong><\/p>\n\n\n\n Almassy:<\/strong> Definitely construction jobs. In the grand scheme of labor it\u2019s not significant, but there are thousands of jobs required to build these factories from a construction perspective. That\u2019s been good. Once those are up and running, there will be jobs for folks needed to run the fabs, run the buildings, run everything that requires a specialized skill set that may be lacking in the U.S., because it\u2019s not something that\u2019s been focused on. That will be interesting. You have the construction jobs now, and then once they\u2019re in production, will there be enough bodies with the requisite skill set? We\u2019ve heard of TSMC sending some of their folks to Phoenix as an example. But how sustainable is that to get this off the ground?<\/p>\n\n\n\n It\u2019s definitely spurring the economy, spurring jobs. A number of projects were already in play when the CHIPS Act was finalized. They had started these projects in anticipation of getting the funding. But then you had a few more announced once the funding was finalized. Jobs are there. For years, the U.S. has pushed more toward design and cutting edge, going through the R&D, as opposed to manufacturing. It\u2019s naive to think that overnight, or over the course of a couple of years, we\u2019ll immediately reactivate that muscle memory. But it\u2019s going to be necessary.<\/p>\n\n\n\n VentureBeat: Is there any good way of measuring how that progress is going? Whether in terms of people graduating in these areas and moving into the industry, or\u2013that\u2019s probably a big question. Is the supply base there to surround these factories?<\/strong><\/p>\n\n\n\n Almassy:<\/strong> Exactly. Initial enrollment numbers this year and next year\u2013if people see that this is something that the U.S. is taking seriously, they can say, \u201cI\u2019ll get my degree to coincide with when these buildings are up and running.\u201d We wrote a point of view\u2013this was back during the supply chain shortage. What can companies do to try to mitigate the potential downsides? Part of it is cooperation between companies and universities. Asia does that really well. Taiwan does that. When these companies go into these new territories, whether Ohio or Arizona, do they try to partner with universities, things like that, where you\u2019re getting a work force that\u2019s been trained in your processes for four years? Again, those don\u2019t happen overnight either. To your point, I do think you measure it by enrollment, and then you measure it by those who stay through to graduation. It\u2019ll be interesting.<\/p>\n\n\n\n VentureBeat: Are we expecting global demand to be good for when these things come online?<\/strong><\/p>\n\n\n\n Almassy:<\/strong> Generally yes, but I do think it will be interesting, because as I said, it\u2019s an incredibly cyclical industry. I don\u2019t believe that there\u2019s ever been this significant a proposed increase in capacity globally. Now, with that being said, the semiconductor industry now looks a lot different than it did in the past, when it was basically just computers. As went the computer, or as went the mobile phone, so went the industry. There are enough different sub-markets, if you will, that demand will stay strong. I do think there will be places for that capacity to go. I\u2019ll put it that way.<\/p>\n\n\n\n Do I think that we\u2019ll get to a point where the fabs are fully utilized, such that we\u2019re in another place where there\u2019s nowhere to go and prices can go up, though? I don\u2019t think so. What it will do, I think, is allow people to reassess their supply chain and where they want to source things for different products and different manufacturing lines.<\/p>\n\n\n\n VentureBeat: I suppose people are going to want to relitigate this. \u201cHey, it\u2019s a different administration. Now we want to see whether we\u2019re really getting our money\u2019s worth.\u201d What do you see as the pros and cons now, if they\u2019re any different than what they might have been before?<\/strong><\/p>\n\n\n\n Almassy: <\/strong>For the existing one that was passed, I don\u2019t see much difference. There were already a lot of guardrails in there, particularly because it was a big amount of money. It was the first program that went out. Obviously the Inflation Reduction Act followed, and that has a trillion-dollar price tag. That\u2019s infrastructure and broader things that maybe people will see every day. But they wanted to make sure they weren\u2019t just burning $51 billion.<\/p>\n\n\n\n I don\u2019t know if they\u2019ll relitigate it. I don\u2019t know what would have happened if Harris had continued on. But I imagine that 2.0 would have been in the cards in some way, shape, or form. When that $50 billion was earmarked, that only represented about 20% of the cost of the projects that were in flight at the time. Something else would have had to happen. You know how lobbying goes. Chuck Schumer\u2019s a big proponent of all that. I would imagine the chances of a CHIPS 2.0 are probably less at this point, just given, at least initially, the priorities laid out by Trump. Again, who knows? Do they go public-private partnership? Do they take companies and say, \u201cYou\u2019re a buyer from this fab, put some money in\u201d? But I don\u2019t think we\u2019ll see a CHIPS 2.0 where they say, \u201cHere\u2019s X billions to continue to grow.\u201d<\/p>\n\n\n\n VentureBeat: The basic argument is that it\u2019s an unstable world and this is a strategic industry, so it should be within our borders, as well as providing a lot of jobs, the kind of jobs that we want. That argument still seems the same.<\/strong><\/p>\n\n\n\n Almassy: <\/strong>Absolutely. It\u2019s just a matter of how you play to that message. Obviously there will be the China discussions. At the same time, if you take a step back, the fab, the front end, is only one part of the supply chain. There\u2019s also some money allocated in the CHIPS Act for advanced packaging, which in the simplest of terms\u2013previously you took a die, put it on a small chip, and you sell that one chip. Now you\u2019re putting three, four, five, six together. They want to do that too.<\/p>\n\n\n\n At the same time, it\u2019s 30 or 35 years of head start for Asia. If you\u2019re honest with yourself as an administration, you want to reshore. You want it in our borders. You want national security. You want all of that. But it\u2019s unrealistic for any sovereign nation to think they can get an end to end industry there. You have to weigh the pros and cons. What aspects do we want to ensure we own so we can hold some or most of the cards? What are we okay not bringing on shore, because the cost outweighs the benefit that we\u2019d get? It\u2019ll be interesting to see.<\/p>\n\n\n\n VentureBeat: AI is so much bigger now than it was when all of these plans were being conceived. You could have argued that semiconductors were the thing to invest heavily in with government support some years ago, but perhaps now people might say\u2013if you had a choice between investing in AI or investing in semiconductors, what would you choose, and for what reasons?<\/strong><\/p>\n\n\n\n Almassy: <\/strong>They\u2019re not mutually exclusive. You need the semiconductors to invest in AI. I was talking about a cyclical industry. It\u2019s almost the same cycle you had in the past. To your question, let\u2019s say the answer that someone gives is, \u201cAbsolutely AI. We need to invest in AI. We need to own LLMs, because then we can monetize that data and be more efficient and so on.\u201d Then 20 years down the road, \u201cOh man, wait, China and Taiwan still own all the stuff underneath that. If they decide to cut us off\u2026\u201d It\u2019s funny if you look at it through that lens.<\/p>\n\n\n\n To your question, a number of people would probably say AI, of course. It\u2019s new. But you still need the power to do that. If I\u2019m a government, what would I want to invest in? You want to invest in bricks and mortar. A majority of the country relates to that. They see it. It\u2019s tangible. But it is an interesting question. Where do you allocate your resources?<\/p>\n\n\n\n VentureBeat: It doesn\u2019t sound like there\u2019s been any new important signals communicated to this. We\u2019re really waiting until January to find out.<\/strong><\/p>\n\n\n\n Almassy:<\/strong> Exactly. It\u2019ll be interesting to see what, if anything, they do in the lame duck session here. There was an announcement late last week\u2013I don\u2019t know what body it was, but they sent a note to the large equipment manufacturers putting them on notice that a significant amount of sales to China had been noted for the fabrication equipment. There are already sanctions and restrictions on cutting-edge things. ASML, the Dutch company, can\u2019t sell certain things. Applied Materials, LAM, they can\u2019t sell some of their higher-end stuff. But there\u2019s still a lot that they can sell. A notice was sent last week saying, \u201cHey, we noticed this large percentage.\u201d I don\u2019t know if it\u2019s an inquiry, but lame duck sessions can be a bit volatile. Names have started leaking out of potential candidates for various positions. We\u2019ll start to see their leanings. Maybe that\u2019s where we start to see whether there\u2019s a tougher stance on China, or a move to a tougher stance on the Middle East. Saudi Arabia wants to get into the AI game. They want to do cutting-edge stuff. There have historically been mixed views, mixed relationships with the Middle East on a number of fronts. Where does this administration go with that? There are already heavy restrictions on China, which started under Trump and continued under Biden, but they\u2019ve still demonstrated the ability to continue to grow their domestic knowledge and manufacturing. We\u2019ll see.<\/p>\n
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