Fortune Staff

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legacy

ON Semiconductor

on semiconductor

Lisa Su, Chair and CEO, AMD
Interviewer: Alan Murray, FORTUNE

Most Powerful Women 2022 - What’s Next For The Semiconductor Industry

What’s Next For The Semiconductor Industry

In the past 24 months or so. There's been both a shortage and a glut and plenty of international trade tensions just last week, in fact, the Biden administration imposed new restrictions on exporting us made chips to China and all of these global issues aside, the business of making computer chips is inherently complex and challenging. But tumultuous times in the space are nothing new to our next corporate leader. A. M. D. Chair and chief executive lisa Sue has been there, done that more than a few times. She brought a. m. d. back from the brink of bankruptcy when she took the top job in 2014 and did so by examining the company's core competencies and taking deaths. And today she ranks number 21 on this year's most powerful women list lisa joins fortune. Ceo Allen Murray today to talk about being a a fierce force in tech and what it takes to navigate challenging times. We welcome them both to the stage Lisa, thank you so much for being with us. Thank you. So you are in the eye of a hurricane. I mean you look at your stock price, there was a chip shortage last year. Your stock price soared up over 50%. Now we have a computer slowdown and the stock price has plummeted your product. Computer chips has become a geopolitical weapon. We're spending $50 billion of taxpayers money to subsidize subsidize construction. And then just last week we imposed export controls on chinese exports, which I think account for about a quarter of your business? So having said all of that, how do you keep your cool, I mean what is your secret to keeping your composure in the midst of this whirlwind of activity? Well I have to first start by saying does everybody have their semiconductors? Do you have everything you want now? Well you know, it's it's been an amazing right? I have to say. I think the the most important thing that you know I keep in front of me is the fact that um we work in an industry where it really changes people's lives, it really makes everything better. It really allows you to do things you can't do and that's you know the role of semiconductors and yes, it's a little bit ups and downs. I think the pandemic um really, you know kind of highlighted how important semiconductors are and everything that we do And um you know as an industry we've worked hard to make sure that we have enough and now we may have a few too many. But overall I think um you know, it's it's just a wonderful ride. But but looking to the future, I mean last year your your stock price was what $155 now, it's a $55 which is right. What what what's your sense of where this market is going over the next five years. But my sense is probably neither is right, but we can say that, you know over the long term, um everybody needs more technology I think no matter what you're doing, whether it's for your business or whether it's for um you know in your personal life or whether it's to solve the next, you know, big health care crisis um or it's to solve climate change, you need need more technology and that's what we do. So from that standpoint, I feel wonderful about the long term and you know, in the in the medium term, there's always things that we have to navigate and I think that's part of life as a Ceo these days are a little it's a little bit different because you wake up on any given day and you wonder, ok, what am I going to do today? But that's all right. Well let's let's talk geopolitics, which I suspect is a topic that is not taught at M. I. T. Engineering school. Um but you're in the middle of it uh and the latest news is the president's decision last week to put export controls on chips sent to china, that's a big part of your business. What do you think about that? Well, you know, I think the thing about the the semiconductor supply chain or even the technology supply chain is is actually a very very global business. I mean we send, you know, we designed parts here, we send them um you know, they're manufactured somewhere in ASia, they go through many different steps. So it is a very complex and distributed supply chain. So sure, export controls does add a bit of volatility to it, you know, I think the key in, you know, this is, it's it's very important to keep in mind what we're trying to do and, you know, certainly for the very, very most advanced things that we do, you know, there are national security interests and we totally get that. Um, it's also important to understand that, you know, china is a big market and we believe that it will continue to be a big market going forward, and so it just needs to be navigated that will export controls affect your business uh for the, in the short term, probably not a lot, you know, in the medium term, I think we have to see um, you know, sort of how things play out. But my view of the world is you can always adjust one strategy. Um, once, you know, we have, you know, sort of the overall box in play. Yeah. Do you think it was a mistake for the president to do what he did? Did you argue against it? I would not say that, I absolutely would not say that. I would say that there are national security interests and the national security interests are very much front and center and we're also working very closely with the administration through the industry associations, I think, you know, Gina Raimondo is fantastic. I mean, she truly does have, you know, both, you know, sort of, you know, both angles of what needs to be considered in mind. So I want to come back to that in a second. What percentage of your chip these days are made in Taiwan? The majority are made in Taiwan. So we saw it that they get to know you this morning, this room is filled with women who sit on boards of many of the largest companies in the world, many of which have china businesses, my senses, every board with a significant business in china has war gamed in the last year. What happens if china takes action against Taiwan? How do you think about that? You're from Taiwan, you were born there. How do you think about the risk that she Jinping decides to do something in Taiwan comparable to what Vladimir Putin did in the Ukraine? Well, I think the overall, you know, conversation I think is right in every boardroom, it's not just about china and Taiwan, it's also about, you know what we've all experienced, which is disruptions in supply chains that really weren't expected right over the last few years. So, you know, as we war gamed this, it's about all having multiple sources, having diversity. I think that's one of the reasons that, you know, the chips and Science act is such a good thing for the United States because it, you know, kind of reinvigorates manufacturing the United States and research and development in the United States, you're in favor of that, I'm absolutely in favor of it, I think it's a great it's a great step towards this notion of ensuring that we have, you know, good geographic diversity and A. M. D. Will take advantage of that. You're looking to diversify your supply chain. Absolutely, absolutely. But I don't know if that quite answered the question of how you're preparing for the possibility of something happening in Taiwan, I mean I think you have to plan for plan A B. C. And D. Like any strategic maneuver and I would say plan A B C. D. Includes understanding, you know, where there are multiple sources for and it's not just the United States, right? That I think that's the key thing is it's a very global supply chain the whole world. Can you tell us a little bit about growing up in Taiwan? I mean what got you to where you are today? What were the characteristics of your upbringing that enabled you to be the extraordinary ceo that you are? Well, I was actually born in Taiwan, but I came to the United States when I was two. So I don't know how much I grew up in Taiwan or I grew up in new york. Um but you know, my parents were you know very much around as typical asian parents are very much around math and science and ensuring that educ was, you know, first and foremost in um you know how we grew up, how my brother and I grew up and so it's, you know, for me it's about, you know, building tech, so I know sometimes that sounds boring, but it is actually kind of fun to be able to walk down to the store and say, hey, that's my product, you know, I worked on that, so that's that's what's always been interesting for me, and can you, I want to open it up to uh questions, so please, if you have one raise your hand now and we'll get the microphone uh to you quickly. Um but you came to a. M. D. With a clear sense of of needing to make some changes. Can you talk about how you how you've done that? Well, you know, the the key in our business is really, it's it's about what happens over the next 5 to 10 years actually, when I think about technology, you know, I started in this industry 30 years ago and everybody said like this is the end, like, you know, a few more years and we're done, we're never gonna do anything better. And the truth is, people are extraordinarily smart, there's always something more that you can do, and uh so it's it's very much been around, you know, making significant technology bets and saying, hey, we can change the world um if we make these decisions over the next uh next five years, so it's communication, a lot of it is communication, a lot of it is strategy and a lot of it is um you know, getting um extraordinarily talented people to work together. Yeah. Question just right here please and introduce yourself please. We can't quite see through. Uh my name is christophe ceo of ludo. Um my question is about scaling I think when you took over A. M. D. It was about five or $6 billion market cap and now it's about $100 billion market cap. And it's just one of the most extraordinary stories honestly in business period. And I'm just it's a tremendous challenge to be all of those different companies along the way from five billion to 100 billion. So I'm just curious how'd you do it? Yeah. So you know, it's like running a different company every two years, that's how it feels. We started, you know, it was like 8000 people, we now have 25,000 people. We've done the largest semiconductor acquisition um in history um a few years ago, I think what's been really helpful is I like to think of it as how do we run the, you know, the smallest big company there is. And and so there is a tremendous thing about saying, hey look, you know what, we're actually not that big. We actually have um a you know, we have, you know, sort of lots of things in front of us and that's what we're always thinking about, like what is in front of us, what is the next five years bring and um and that's really helped us grow as much as we have and by the way that incredible performance earned you a spot not only on the M. P. W. List at fortune but on the world's greatest leaders list. So congratulations on that other questions or question back back there. Yes Bridget Thanks Lisa, thank you for joining. I'm Bridget faucet from city and I'm just curious if you could comment on the manufacturing of semiconductors and the intense water that's needed. And as you think about Taiwan challenges just in the last 24 months China of course the diversification piece is important but how do you think that as it relates to water as well? Yeah. Yeah. I think it's your your point is a very good one. Which is it's it's also about natural resources and semiconductors. So it takes you know if you think about how long it takes, it actually takes us six months to build you know chips and the natural resources that are required. You know, Taiwan is an island that has you know very very very um you know great manufacturing capability but it's it's actually running out of some of these natural resources and as a result you know the diversification is important and us is one thing but there's also many other um you know whether you're talking about some of the things that are going on in europe or you know, across, you know, other countries in Asia, I think that helps bring the entire ecosystem together. Question over here. Hi kim Store in, I actually used to run global brand for you, lisa. And so I'm kind of curious back then, which was a few years ago, part of the culture at A. M. D. Was this focus on being the underdog and and that really lit the fire under us to to be better to think differently. And you know, really led the transformation that you drove. So I'm kind of curious now that I mean I guess is that underdog mentality, what's that culture shift been and and how have you seen that transform the overall organization now versus the beginning of the transformation? Yeah, it's great to see you kim so thank you for that. You know, it is true, it is about cultural transformation. We did spend a lot of time thinking that hey we are the underdog and you know, frankly being the underdog can be very helpful at times because you don't have that many resources, but you have incredible heart and going forward. And I think today it's much more about um we're a leader and we have to kind of chart our path over the next five years, but it's a different path than everybody else um in the in the industry. But I think the most important thing is that we do it our way and so, you know, we just went through because we, you know, we just acquired a very large company, Xilinx last year. We started, you know, a whole new cultural transformation for the next five years of a. M. D. And we're under A. R. R. Brand moniker is together, we advance with the idea that we advance not just by ourselves but with our partners and with the entire ecosystem. So absolutely, there's there's a lot of transformation there as well. And are you having fun in the process? I'm having a blast in the process. That's great. Well thank you so much for being with us on the N. P. W. Thank you. Thank you.

It will be built just outside of Columbus, Ohio.

Biden touts new $20 billion Intel semiconductor factory 

Tech

Biden touts new $20 billion Intel semiconductor factory 


I made clear while I was running for president and from day one of this administration, we are going to invest in America. We're investing in american workers. We're going to stamp everything we can made in America, Especially these computer chips. This historic investment for Ohio one of the largest investment in semiconductor manufacturing in American history, Brand new $20 billion dollar campus outside of columbus. Ohio 7000 construction jobs, 3000 full time jobs. And I was kidding Pat earlier, I said I may need a job. And I said, well it's not bad you start over 100,000 bucks on the line. But I got to get some training. I think we're better positioned than any nation, any, any nation to seize these opportunities, but we have to keep it going. I think our best days ahead of us. Last year we took a big step toward that front with the bipartisan infrastructure law and I want to thank Senator Brown, Senator Portman for their hard work and getting that done. That law is gonna upgrade everything from roads, bridges, ports, airports, railways, transit to make our economy move faster and reduce prices for families. It's going to create better jobs for millions of americans all over the country, rural, urban, suburban. And it means America is the most attractive place for companies like intel to invest and make their products because of the law this year. For the first time in two decades, our infrastructure investment will grow faster than china's for the first time in decades. This is a game changer. Now, now we have to build on that progress, and that's what this today is about. It includes Congress acting on our competition bill, which I mentioned earlier and my administration is going to keep using all the tools we have to reassure our supply chains, strengthen our economic resilience and make more in America.

Intel CEO Patrick Gelsignger joins Brainstorm Tech explain.

Semiconductor manufacturing: How the U.S. can compete with the rest of the world

Conferences

Semiconductor manufacturing: How the U.S. can compete

So I want to talk about the geopolitical piece because it's put you in the somewhat uh I would say somewhat awkward position of of saying to the government, hey give us taxpayer money So that we can make sure you're not overly dependent on Taiwan and South Korea. Yeah. And you know what if you think about it at the highest level and let's uh you know, we just launched our two new fabs that we're building two new fan modules in Arizona. I just did groundbreaking on those about 45 days ago. Each fab modules about $10 billion. So I just announced 20 billion of capital investment hopped on the digger and started to drive around and help my team start dig the hole, right? No, they wouldn't let me actually start ignition. But uh you know, so if I was building that 20 billion in uh Korea or Taiwan, it's approximately 30 to 40% of subsidies right to do that would be seen from those governments. They're already getting those subs today. So Wow, how do you compete with a 30-40% subsidy? Because that means we're not competing with TSMC or Samsung, we're competing with Taiwan inc and Korea inc. And the subsidies in china are even more significant. So the position and when you think about it over the last 30 years in 1990 the U. S. Produced, 37% of all semiconductors are manufactured here, Europe produced 44% today, us is 12% and Europe is 9%. These industries have collapsed in the us and tell us half of that 12% is what we manufacture here. And it's never that the US said we don't want these industries, it's that the Asians said they do and they put extraordinary Public private policies, industrial development in place to go make it happen here we are 30 years later. And where the fans are for the next couple of decades is more important than where the oil reserves are. Right, it is that important to the nation, to the economy, to our nationals. And if the fabs are in Taiwan there's the risk that at any time the Chinese cross that 100 miles and take over. That's well saying on Tuesday morning, right, I'm on the flight uh, to go see the Credit suisse investors and what did the Wall Street Journal report that morning? Sorry I know that we're at the Fortune conference, forgive me. But there was 25 years, 27 sorties from china flew into Taiwan airspace on monday. Does that make you feel more comfortable or less? If you're now dependent on, you know, Taiwan is the singular source of technology for the most critical aspect of our human existence and our national security and economy for the future. And if you needed an exclamation point right, you know, idle Detroit factories, right? You know the cease of our medical, you know infrastructure, all of those kind of things. This is precarious. We need to take out

Lack of supply is delaying the production of cars and electronics.

What's causing the global semiconductor shortage?

International

Mm Mm hmm. A surprise that the pandemic has some role to play in the current chip prices as people pivoted to working at home last year, demand for personal electronic search, prompting gadget makers to increase order for chip set. At the same time, demand for cars declined, prompting automakers to cut orders. Now, with the pandemic easing, automakers are looking to make a comeback. But chip makers a busy, satisfying demand for booming electronics sales. With supply now suddenly outstripping demand chip shortage emerged. Consolidation of the chip industry exacerbated the crisis. To many of them was leading chip designers like Qualcomm. New video, even Apple and Intel actually outsource some or all of our production to contract manufacturers. The world's leading contract manufacturer, TSMC manufacturers about half of the world's made to order chip supply. You have a 30% is made up by roughly three over company. With so few leaders, the industry doesn't have excess capacity to absorb any extra demand for the U. S. And Europe. It also doesn't help that three of the four leading chip makers are in Asia. That regional dominance creates a bottleneck in global supply lines. Mm yeah, mhm for the U. S. A likely solution will be the onshore, more chip production that will increase both domestic and global capacity for manufacturing. But this isn't a short term solution. America has already invested billions in invigorating the domestic industry, but building manufacturing plants takes years for now, for any way out of this chip crisis is just to wait mhm.