The Six Five team dives into the 2022 LeaderShIP Event.
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Transcript:
Daniel Newman: So, I went out to Washington D.C. and attended… Something else you and I really enjoyed talking about, is IP, intellectual property, innovation, antitrust, and this meeting called Leadership takes place in Washington. It’s basically a combination of regulators, policy makers, lobbyists, analysts, enterprise business leaders. And, I think the “item” that came to the forefront of this meeting is semiconductors are having a moment.
Anyone that probably watch television or the news three years ago, you would’ve said, “What do you think about semiconductors?” They would’ve been like, “What’s a semiconductor?” Nobody really even knew. It was a small little industry, not really, but it was a small little industry in terms of government officials didn’t really care. They cared about automotive. They cared about manufacturing. They cared about jobs. And, in the end, what happened is we had this little pandemic, and amidst this pandemic, we had, I don’t know, some supply chain issues for things like vehicles that people care about, iPhones, and other devices, and laptops that people care about. And suddenly, we couldn’t get things or televisions and whatever toys we wanted to buy, we could couldn’t get them. And, what happens when suddenly people can’t get their stuff is that lawmakers take notice.
And so, semiconductors came into focus and effectively what’s going on now is, over the last 30 years or so, the United States has done a couple of things. One is, in a very positive note, we’ve continued to be the leader on a world scale in terms of the design and research of next generation semiconductors. We’ve also concurrently become completely dependent on the rest of the world to do all of our manufacturing. Sounds a little bit like what we’ve done in oil and gas, and what we’ve done in information services, and employees, and consulting and we basically outsourced it all. And so, when suddenly, China shuts down and Taiwan shuts down during the pandemic, when companies didn’t know what was going to happen, we couldn’t get our stuff, couldn’t get our chips. And the whole supply chain was exposed as broken.
This meeting was focused on a couple of different things. And Pat, we could probably do a whole show on this. We did have a great episode with the chief economist of Qualcomm, where we talk about a lot… But the meeting addressed two or three things, addressed the Chips Act, which is all about repatriating some of our manufacturing. It also focused on the need for government policy makers and lawmakers not to lose sight of the fact that we are the leader in terms of research, and design, and intellectual property, which companies like Qualcomm, but a lot of other companies create this IP needs to be protected. And that was a big part of this story too is because we have lawmakers in the current administration, people that basically want to take power away from the inventors of technology to give more power to the implementers.
And so, going back to many conversations that we had over the years, this was what happened with the Apple, Qualcomm case. But this is what’s happened with China and just about everything we invent, is when you take away power from the inventor to license and protect that license, you actually risk the leadership of our country in terms of… Sorry, design, research, and then ultimately the manufacturing of semiconductors. So that was a big topic in focus. And so, the Chips Act really was about how much do we need to bring back in terms of repatriating, and do we need to bring it back? And there seems to be some mixed opinion there. The other key focal point was China, right? Was how big of a threat is China. And there seems to be some inconsistent reactions to that, because they’re a big trading partner. A lot of our stuff comes from China.
And so, in any actions that we might take to give the U.S. more power and take some of that away from China, there’s always risk on the geopolitical standpoint. So, that was a big topic in focus. And then, it was how do we protect the inventor? And that largely the implementers are getting stronger and stronger, both here in the U.S. and on a global scale. And those that are spending the money, decades of research, Pat, which you often say a lot of R… Or sorry, very little R and a lot of development. Well, the R, the people taking 10 years to help develop a standard, like 5G or 6G, how are they actually going to be protected if they spend all that time and all that effort to carry forward innovation, and then people license it and pay appropriately for that work that’s been done.
So, again, it’s hard in a few minutes to summate all that went on at this meeting. But, I guess, my take and conclusion is that we’re at a very interesting crossroads for policy antitrust and national security. My biggest takeaway here is that we have to not only focus on repatriating manufacturing, that’s part of what we have to do, but it’s actually, we cannot lose sight of the fact that we are leading in innovation and design in the semiconductor space. Semiconductors run everything we do, our phones, our cars, our software, our clouds, all on semiconductors. Pat, can’t run it on air. And, long story short, if we don’t protect, we take away things like injunctive relief, we allow implementers around the world to take the IP that’s being developed here and run with it without having the ability to use the legal system efficiently, we’re going to create a lot of risk for our ongoing leadership. And we’ve already done that with our manufacturing. So, hopefully we have a plan, but I wouldn’t say I left confident. I left even more uncertain as to exactly how we’re going to take this forward.
Patrick Moorhead: You preach buddy. You preach. That was a good eight minutes.
Daniel Newman: That was not eight minutes. That was four.
Patrick Moorhead: Oh, it was? Okay. Well, time flies when you’re having fun.
Daniel Newman: It felt like forever.
Patrick Moorhead: So, no, I’m going to try my best to be additive here. It’s not this simple, but it’s funny, we’re sitting back looking at Germany’s reliance on Russia, and they were warned. And now, they’re really looking not as smart as it could be with the invasion of Ukraine. Well, we’re even bigger reliance on China, as a company for some very strategic infrastructure that we have for military, for banking, finance, healthcare, and things like that. So, here we are, we are in this situation. And, I think you’d be a fool to think that there’s less than a 50% chance that China invades Taiwan at some point and tries to repatriate it, like Crimea, or Donbas, or something like that. So, we really need to be serious about this.
And, I’m with you on, you must give inventors back the value that they’ve created, otherwise they’re not going to create. That is just the wheel of innovation. Government can’t be the innovator, right? And, you can’t make money off of research, the big R, and don’t confuse the R and the D, then it’s going to stop. And essentially, if we’re not doing the research in this country, then somebody else will. Our government is not going to be able to do the research that requires there is not a single country out there that does that. I think the only caveat there might be some of the university research that China does, which is funded by the government, but we haven’t made that work great here.
And, it’s a game. The folks who don’t want to incent the research and the innovators are just like you said, they’re the people downstream. I’m not going to name names, but they’re the people who want to make everything open source, because they have been the arbiters of aggregation, of all that innovation. And, they’re some of the top companies that are out there that are fighting against giving money to the innovators out there.
So, very important stuff. I’m hoping that we don’t degrade and go back to an era where we were four or five years ago, where there was a question on whether there was going to be benefit from innovating or not. And, I think we also have to have a long-term strategy, not one that goes between different administrations, because as we’ve seen, any yo-yoing has the effect to limit the amount of research that companies do out there.
Daniel Newman: Yeah. You said a lot of great things. And, I’m going to pretty much leave it at that. I think what’s super interesting is that most of our policy makers can’t see past next week. Everyone’s focused on manufacturing because that’s the problem we’re trying to solve. It’s the paper cut, right? I need a bandaid. We need to do it. But, it’s not the only thing. And so, hopefully, we’ll focus on both, doing what we need to do for this short-term, but also protecting ourselves and the leadership we’ve invested in the long-term. So Pat, great analysis, great adds. You have a wealth of knowledge in that space. So, don’t sell yourself short on that one, buddy. You’ve been in this space forever.
Author Information
Daniel is the CEO of The Futurum 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.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
