Silicon Triangle: Matt Turpin On Mitigating China's Nonmarket Behavior In Semiconductors

>> Matt Turpin: So BlackRock's Investment Institute published a study on July 25th looking at geopolitical risk, the ten most likely geopolitical risks that investors need to pay attention to. And number one on their list was potential conflict over Taiwan and the US-China emerging long-term strategic competition, right? They listed that as the number one geopolitical risk to pay attention to.

>> Kharis Templeman: Well, hello everyone, I'm Kharis Templeman. I'm a research fellow here at the Hoover Institution. And it's my pleasure today to chat with my friend and colleague Matt Turpin, who is a visiting fellow at the Hoover Institution specializing in us policy towards the People's Republic of China, as well as economic statecraft and technology innovation.

He is also currently a senior advisor at Palantir Technologies. And prior to joining us at the Hoover Institution, he served as the US National Security Council's director for China and senior advisor on China to the secretary of commerce. In those roles, he was responsible for managing the interagency effort to develop and implement us government policies on the People's Republic of China.

Before he entered the White House, Mr Turpin served over 22 years in the US army in a variety of combat roles in the United States, Europe, and the Middle East. And he was also an assistant professor of history at the United States Military Academy at West Point. He retired from the army in 2017.

He is also, and most importantly for today's conversation, the co-author of a chapter in our new Semiconductor Working Group report on the challenge that China's potential emerging dominance in the semiconductor space poses for the United States and for Taiwan. That chapter is co authored with Robert Daly. It's entitled Mitigating the Impact of China’s Nonmarket Behavior in Semiconductors.

And so, Matt, I thought I'd start us off today by asking you to expand a little bit on what you mean by non market behavior. What is the PRC doing that qualifies as nonmarket in the semiconductor space, and why should we be concerned about that?

>> Matt Turpin: Yeah, well, Chris, thanks so much for having me on.

It's a real pleasure, and I wish our colleague Robert Daly could be with us as well. All that's good in that chapter is a credit to him, and I largely just trying to help along, and it probably slowed things down. So I'll do my best to walk us through some of our conclusions.

Non market behavior I think what weve seen over a number of years from the PRC is a broad set of efforts by them to gain market dominance through a variety of subsidies and interventions in the market which make it so that commercial entities find it very difficult to compete.

And whether that's through forced technology transfers to force companies to turn over technology in order to gain market access into China. Cyber enabled economic espionage, broad industrial policies that provide unfair benefits to chinese companies so that they can be able to gain market share and produce goods at artificially low cost, driving others out of the market.

These are the kinds of behaviors that we've seen now for years. We've seen this happen significantly in the semiconductor sector for the last ten to 15 years. As Beijing identified for itself that semiconductors was an area that they wanted to dominate and they wanted to move the value chain to become a market leader.

They viewed the position that the United States and Europe and Japan had in this sector as a significant vulnerability to themselves from a national security perspective, which has now made it an area of really pretty sharp rivalry between the two countries.

>> Kharis Templeman: China has used this strategy of non market behavior to develop dominance in a lot of different industries and market spaces.

And we haven't in the past pushed back on this dominance as a kind of core national security interest of the United States. Chips seems to be different. Can you tell our audience a little bit about why we should be concerned about PRC dominance in the semiconductor chip space?

As opposed to, say, autos or televisions or whatever else they might have developed up this dominance in?

>> Matt Turpin: Right, so I think, first for the audience, I think it's important to remember that this understanding of the importance of semiconductors and how they fit within sort of our national security landscape is not new.

Semiconductors, from their invention in the 50s and in the 1960s, have been at the centerpiece of US technological advantage in terms of a military advantage. From their invention, the US government placed significant export controls on them. This was seen as one of the most important aspects that the United States would have as a real competitive advantage over the Soviet Union.

These are pieces of electronics that were first used in the space program and ballistic missile programs. And as we developed them out into sort of the commercial sector, and this is what gave Silicon Valley its name, is that it was really this sort of centerpiece of a US defense industrial base.

And so for a long time, this has been an important aspect of a military advantage. And of course, this contest with the PRC over this is not new either. You can go back to really the end of the Obama administration. Just four days before the election, November 2, 2016, you've got Penny Pritzker, the former commerce secretary in the Obama administration, giving a speech at CSIS.

Really laying out the real problems with Chinese nonmarket behavior in the semiconductor field, the importance that it is to US technological leadership, both for national security and economic prosperity. And she really lays out, really, a roadmap for how the United States will need to respond to these sorts of things.

And so if we were to take that from really now close to eight, seven or eight years ago to where we are today, you've got a us government that has seen what Beijing is trying to do and has sought to put into place a series of counter moves to prevent Beijing from moving up the value chain into the most advanced chips, while also having to deal with the reality that China is taking actions in more mature legacy chips.

I think, for our listeners, they should understand that while chips are ubiquitous, I mean, they're in a variety of different goods that we use on a daily basis whether it's your smartphone that has about 160 different chips inside of it. Some of them are the most advanced ones that really just invented in the last year or 2 and some are 20 or 30 years old that still are like the workhorses of electronics.

And so there's this sort of broad variety of different types of chips, and increasingly they power, really everything across our society. And so they become essentially the linchpin of a number of different other industries and technological sectors that are important to us. And that's why I think the actions that certainly this administration has taken on semiconductors should really be seen as an effort to sort of narrow in on some choke point technologies that have important reverberations across other industry sectors.

Automobiles, aerospace, commercial electronics, military technology. When you work in semiconductors that touches all of those industries, cuz it's an important component in each one of them.

>> Kharis Templeman: I wonder if we could step back a little bit and look at the broader strategic picture here. You and Robert argue in the chapter that whether we want to call it this or not, we're really in a new cold war with China, that China is not just a strategic competitor or rival, it's really an adversary of the United States.

And maybe another way to put this question is you argue that China wants to replace the US eventually as the global hegemony chips and dominance of high technology are one important part of that long-term strategy. So could you describe a little bit why you think we're in a new cold war, why that strategy is a fundamental threat to the United States, and then how they might, if we don't push back against the chinese efforts to dominate this space, how they might succeed.

>> Matt Turpin: Yeah, well, that's almost due its own. The debate over whether we're in a cold war and what this rivalry looks like is certainly a big and important topic. I'll try and sort of briefly kind of go through what I think sort of stands out as sort of where we're at.

First of all, I think it's important for us to think of a cold war as a condition. It's a geopolitical condition, and I differentiate that from sort of what we would think of as being a hot war, being actual military conflict. A Cold War is one in which two rivals are sort of pitted against one another and are competing vigorously across all domains, economic, commercial, technological, ideological, informational.

Yet, they are avoiding direct military conflict. And if we go back to George Orwell, in the article, the essay he wrote, really within two months of the dropping of the atomic weapons to end World War two. He talks about nuclear weapons, about creating this condition of a cold war in which both sides are essentially unconquerable.

That cold wars push competition into other domains, that while states don't give up their desire to gain an advantage over their rival, they judge the cost of direct conflict as being far too high. And so it pushes that competition, that pushes that rivalry into these other domains. And I think that's an accurate characterization of the condition that we find ourselves in today with Beijing.

And so, and I think it's important for us to understand that this condition, I think, from Beijing's perspective, has been in place now for quite some time. Largely because they view the United States and the international system that we helped build and we maintain, one that is sort of a liberal international order.

They view that system as an existential threat to their own regime. They view that system as being purpose built to undermine regimes like theirs and to advantage democracies and other sort of liberal forms of governance. And so from that perspective, they feel a very deep need to change the way in which the international system works to better favor and advantage them.

And of course, in doing so, that places the United States and our friends and allies in a very disadvantaged position and that's what's sort of at the root of where we're at. And so when you think about how Beijing would go about creating that condition in which they can set the rules and rearrange the international system, one of the key aspects is gaining a technological advantage.

And of course, if you go back to 2015 when they published Made in China 2025, so one of their main broad industrial policies. Really, semiconductors is at the centerpiece of that, right? Gaining, preventing the United States and its allies from being able to have a chokehold over the most advanced technologies and semiconductors is one of those key aspects that they need to remove so that they can have that advantage.

So we've seen that laid out now for nearly a decade and we've been running sort of a behind the scenes battle, right? So again, the United States has been taking a number of actions for years now. We go back to President Obama. One of his last actions in office is to block in recipient the acquisition of a German semiconductor tool manufacturer called Axtron.

One of the first actions by the Trump administration is to use CFIUS to block the chinese acquisition of a us semiconductor called lattice semiconductors. So these actions have been going on behind the scenes, and not too many folks have noticed it. I think Chris Miller does a great job in his book Chip Wars, laying this out and letting people see that this is a bigger thing that's happening.

And so I think we're now seeing this accelerate and come into sort of the public knowledge. But to me it's one of those things where it's now, it's now simply illuminating what has already been there.

>> Kharis Templeman: Okay, so let me piggyback on that a little bit and ask you to talk a little bit more about basically the two major tools in the us policy toolkit.

One is carrots. We provide incentives for chip manufacturers to move some of that manufacturing onshore to the United States or alternatively, friendshoring it to other friendly partners and allies. And then what you've just referred to are sticks, controls or ways to block. Ultimately, the CCP backed companies from gaining control over sensitive technology.

I mean, you've been right in the middle of these debates and conversations for the last, you know, five, six, seven years. Can you assess how we've done so far in both of those using both those sets of tools?

>> Matt Turpin: Yeah, so if we break it into these two categories of sort of carrots and sticks, historically, we've relied upon simply, a really Vibrant, innovative commercial market to really drive the sort of the carrot side.

Until the CHIPS and Science Act certainly there had been some significant NSF funding and various other sort of government R and D funding in the past that have covered advances in chips manufacturing. But really, the CHIPS and Science Act launches a sort of a departure. In which in many cases, we could see one, that Beijing's actions in the commercial space were undermining the prospects of ability of our companies to be able to compete fairly and be able to provide us the sort of chips and outcomes in ways in which they weren't essentially going to start popping up and being manufactured inside the PRC.

And so we needed to start to intervene in certain ways to ensure that both for having manufacturing expand inside the United States, but also to be able to strengthen and diversify that manufacturing of chips in third friendly countries, that we could enable that. And so that's really what the Chips act is sort of about, is to be able to bring that about.

And it's really a sort of a new intervention that we hadn't taken in quite a few years around this. The stick side, I mean, obviously, as I'd mentioned, this is not the first time the United States has taken measures to restrict a rival or an adversary's access to semiconductors.

Again, this goes back to the invention of semiconductors as one of the first sort of things that the us government takes actions to prevent and restrict its export to unfriendly countries. The difference with, with where we've been with semiconductors on the PRC is that in the 1990s and the early 2000s, we began to lift some of those restrictions on the export of advanced chips to China.

Particularly as China became the global hub of electronics manufacturing. It then became really centerpiece of driving commercial manufacturing, is that China needed to have access to those most advanced chips to be able to put them into the electronics that they were manufacturing. Of course, they used that leverage to then gain access to those chips for their own military and national security purposes.

And it's really that action in October of 2022 that the Biden Administration took, which was begin to take sort of serious efforts to really restrict China's overall access to the most advanced chips. Up until that point in time, it had been an effort to only restrict to certain end users.

So actors that we would see handing most advanced chips off to chinese military units or things like that, well, then we would place a restriction on that individual company. But then certainly another front company could be stood up almost immediately. And so the October 7 effort was to essentially do a block on all things into the, to the PRC as a jurisdiction, which essentially returned us back to the kind of cold war export controls that we had had in place yet.

And more evidence that what we've returned to is essentially this cold war, right? But when you look at the October 7th rules around the most advanced semiconductors, this looks like the kinds of controls we had in place on the Soviet Union and its allies during the Cold War.

And so to certain degree, that's another aspect of how we're returning. And then I think what's most important is that the Biden administration has been relatively successful at convincing the handful of other countries in the world who have access to this most advanced technology to also place their own controls, which, again, hearkens back to something called Cocom, the coordinating committee, whose job it was, which is to do multilateral export controls during the cold war against the Soviet Union.

And essentially, we formed a similar sort of process on that with Japan, with the Netherlands, with Taiwan, increasingly with South Korea, for them to be able to take actions and to sort of match what the us government is doing. And so I think what we're seeing is a ratcheting up of this process so that we figure out sort of what is the right position to be at to prevent the flow of the most advanced chips to China, while simultaneously making sure that we are taking actions to ensure their own commercial companies can continue to operate and do what they need to do.

And that is a difficult and daunting task that the Commerce Department, the Bureau of Industry and Security has responsibility for and is continuously trying to adjust.

>> Kharis Templeman: Yeah, so I'd note the Biden Administration just this week announced a new series of restrictions on outward investment. And I would note, and the normal politics of this have been pretty scrambled.

It doesn't line up on partisan lines at all, unlike most everything else in Washington. And so I wonder if you could provide your own assessment of whether the Biden administration has got the level of restrictions and the categories correct or whether you think they need to ratchet up or expand or what else should we know about this issue?

>> Matt Turpin: Yeah, so what happened this week was signed, I think, on Monday was a long rumored executive order that has been sort of popping around the administration and talk on Capitol Hill now for really since the end of the Trump Administration. And it was about essentially so if we think of sort of three aspects of this, sort of, and I know we talked about tools earlier being carrots and sticks.

But if we sort of think about this in a different sort of way, in which we think about restricting exports is one way to sort of exercise economic statecraft in which you deny a rival the most advanced technology, you restrict the physical export of that technology. Another way in which you sort of exercise economic statecraft is by denying an adversary or a rival the ability to purchase a company that makes that most advanced, right?

And that is what we think of as inbound or foreign direct investment screening or restrictions. And that's something that is done underneath CFIUS, the Committee for Foreign Investment of the United States, which has been in place since the 1970s, another Cold War invention. And that job is to look at so that a foreign rival can't come in and buy a us company that makes the thing that you're already restricting.

So that's what CFIUS sort of does. And of course, there's a third aspect that, that this action by the Biden administration represents, and it's the export of capital and know how from the United States to start a company somewhere else. Right, to start an operation to make something advanced in another country.

And up until this point in time, while we had had some restrictions on investments into the PRC, and certainly we have restrictions on investments in other countries, I mean, nobody invests in North Korea, in Iran. So I mean, underneath sort of IEPA, the International Emergency Economic Powers Act, we can block folks from making investments in certain jurisdictions.

But we had not taken many of those actions against the PRC. And so now we have an executive order which talks about countries of concern. And really in the annex of that executive order, it really names just the PRC, Hong Kong, and Macau. And it really labels that out as a place where they're going to begin screening and making certain restrictions on investments.

And I think that what we've seen from The administration is a tentative first step. Truthfully, I don't think that it's nearly enough to be done. This is a very tentative first step. And there's probably a year in the order it lays out, a year in which the Treasury Department has to come up with rules for this.

So it's probably a year away before there's any enforcement. And to be honest, we have known about this problem four years now, and it's been studied. And I think we could have moved much faster and we could do much more in this space. But it is the decision that the administration made.

Certainly there are voices on the Hill who advocate that we not restrict investments like this, and there are voices that are asking for much stronger investment or much stronger restrictions on this. And so I suspect that what we'll see is, over time, a development of this tool, this set of authorities over time.

Obviously, one of the other things that has been debated is does Congress act to be able to create the legal foundation for investment restrictions? You know, some would argue that the International Emergency Economic Powers act has plenty of authority there for the president to take these actions. It is the authority the president used to sign this executive order, and others would claim that he needs to have Congress take some action on this side.

I think it probably is a good idea to have Congress take an action and be able to sort of do this. It's how CFIUS got started is that the executive branch took action, and then we had it substantiated by Congress afterwards. And so maybe that's the same path that will follow this.

But I think that it really needs to be done as we sort of think about the economic statecraft tools that we're going to use and apply over time. You need to have sort of these controls over exports, over inbound investment and outbound investment to be able to sort of calibrate how you're going to act.

And truthfully begin to incentivize and encourage companies that maybe China is not the place where you should be putting most of your eggs. You should be moving them to other places because of the vulnerabilities that are presented with a long term rivalry that we have with them. Those are the kinds of things that I think need to happen over time, but we're not quite there with what, what came out this week.

>> Kharis Templeman: So some of these actions do seem to be having an impact already. Exports to China are down. FDI going into China has actually fallen pretty dramatically over the last couple of years. I know from my Taiwanese friends and colleagues, they're quietly talking about shifting a lot of production outside of China.

And so, do you see these trends as, once set in motion, are they inexorable? Are we likely to see these continue? Or is there something that the chinese side can do to reverse these trends? They do have a vote here, for instance. They can attempt to increase investment in new ways.

They can encourage workarounds and so forth. So what is your own thought on how likely it is we'll see this trend continue?

>> Matt Turpin: Yeah, so in terms of sort of the broader trend that we're witnessing, because obviously that foreign investment going into China and trade and all that, that's sort of much broader than just the semiconductor realm.

And so if we were to look at that, it's just sort of like, what's the broader trends that are going on here? Of course, Beijing could adopt policies that would turn that around. It would be the kinds of domestic economic reforms that might make foreign investors and business leaders much more confident in being able to stay and that theyd have a much better chance to be able to compete in the country.

But its Beijing that I think we should keep in mind is doing the most to cause these trends to happen. Certainly the US government and Japan and Europe have taken actions and that's had an effect. But we should remember that much of this is being driven by Beijing and their own set of policies internally, as we see sort of a deep securitization of the chinese economy.

And so I think that's one important trend. Of course, Xi Jinping could reverse that, but I think it's very unlikely to see that. They're making these decisions for their own sort of domestic political decisions. And for him to reverse this would be to sort of walk back his own set of policies.

And so I think that we're unlikely to see that. And the other would be, is that, I think certainly Beijing sees themselves in a cold war with the West, and the United States and specifically. So they are therefore seeking to make themselves less vulnerable to the kinds of dependencies that they have on us.

And so they're seeking to do that. I think it's important for folks to remember that being decoupled is not a prerequisite of the start of a cold war. Economic decoupling is the product of a cold war. It comes from the waging of it. It happens over time as each side follows its own logic, which is it wants to make the other side vulnerable and dependent upon it, while making itself less dependent upon the other side, right?

And that as each side does that, cumulatively, that means there is less economic interconnective tissue that sort of connects the two countries, right? And so I think just thinking about the sort of the logic of how the condition of a cold war will unfold over time is that that is likely to be the kinds of outcomes that you see.

Now, could that reverse? Well, it would mean that fundamentally that broader condition changes. Could we get back to a period where the United States and the PRC do not view each other with deep suspicion and hostility? Sure, but for the United States to do that, it would mean that we would largely view that the PRC has given up on its desire to protect an authoritarian regime and change the international order to protect itself.

And for the PRC to give up on its position, it would be that it would have to stop thinking that the United States is going to do things to protect the international order and make the world safer democracy. And so I guess those things could happen. I don't find that very likely.

And I think what we're watching now is that business leaders and investors are seeing that that is, in fact, the case. I would point everyone. BlackRock's investment Institute published a study on July 25 looking at geopolitical risk. The ten most likely geopolitical risks that investors need to pay attention to.

Number one on their list was potential conflict over Taiwan and the US China emerging long term strategic competition. They listed that as the number one geopolitical risk to pay attention to. I would remind folks that they also listed the lack of progress on climate change as number nine of their most likely risks.

And so, when BlackRock itself, world's largest asset manager, views this as the number one geopolitical risk, we should probably all pay attention that that's how markets are now starting to respond to this. I would remind folks that just this week, Dentons, the largest western law firm, In China decided to spin out and hive off its China business.

That is a big step. Its the same thing we saw with Sequoia just a couple of months ago, to spin out their China business. And so these are the kinds of things that are happening, and I think these are important milestones to watch and understand that as companies and investors make these decisions, it's really hard to imagine how these pieces get put back together again.

>> Kharis Templeman: Great. So I want to kind of bring our conversation to a close with one big question that is running through this entire report, and that is the issue of legacy chips. Your chapter deals with this a little bit. Just about every chapter touches on this question. I don't know that our report as a whole has a kinda concrete answer for the challenge.

So the big concern here is that while the PRC is unlikely to develop dominance in the most cutting edge chips, so that the TSMCs of the world are gonna continue their pattern of dominance in that area. The PRC's unique strengths and weaknesses in this area may well lead them to establish market dominance in the older chips, the seven nanometer and higher over the next few years.

And part of the reason is that those chips aren't especially profitable to make. But if the PRC is providing enormous subsidies to produce these chips and they don't have to engage in a whole lot of technological innovation, they could well dominate that sector and make the rest of the world reliant on them.

And so the big question then, or the challenge that that poses for the US and other partners and allies, is how do we avoid becoming overly reliant on a chinese supply of legacy chips when they're still critically important for all of the, or many of the electronic devices that we rely on in our modern economy?

>> Matt Turpin: Yeah, I mean, this is a real dilemma for us because, of course, the most advanced chips, they get a lot of attention, and I think we're likely to be successful in preventing the PRC, at least in the near to medium term, from being able to catch up in those chips.

They're likely to push their energy and their resources to an overcapacity in making more legacy chips, right? And, of course, when you look at how the economics of chip production works, you spend a lot of money to make the most advanced chips and to start and move the innovation window forward.

And of course, when you make those chips, you're not selling that many because they aren't yet integrated into a whole bunch of new products. And what you depend upon is your production of more legacy chips, older, more mature chips, for those to fund the research and development that's going to continue to push forward the new ones.

And so, of course, Beijing already knows how to make and is already producing those legacy chips. So as we look at where they're able to sort of work, we made a decision that we were gonna sort of draw the line at sort of 14 nanometer chips. And then anything that was older than that, right, your 28 nanometer and those things that are older, right, we weren't going to try and control, largely because Beijing already knew how to make those things, already had the tools, already had the know how.

And so really, it would make no sense in trying to take action in terms of an export controls on those chips. They already have them. And so as they build those out, one of our challenges is going to be is that in order to keep a viable and innovative commercial sector, theyre going to need to be able to sell their chips for a certain period of time to be able to recoup through revenues the money, to be able to invest in the next generation of chips.

Of course, I suspect that that's where well see Beijing move out. Again,, this is an old playbook. You gain market share by making the products artificially cheap through subsidization and overcapacity, making it so that none of the other companies who are relying upon commercial inputs, they can't compete.

They simply cannot sell their chips at a margin of what it costs to make them. Which means that as those companies get out of business, the PRC sort of dominates that entire sector of older chips. And, of course, for our military systems, it's older chips that we rely on for those of us with smartphones, and we replace these every two years.

You've good number of advanced chips in here, but if you're talking like an Arleigh Burke class destroyer that was built sometime in the early 2000s, obviously, those aren't brand new chips, right,those are older chips. The same thing with our military aircraft, the same thing with a number of our systems.

And so in many cases, a lot of our dependencies are actually, from a national security perspective, on a lot of older chips. Now, as technology advances, those newer chips will then come into those as we replace things. But that transition period about how do you keep an industry sort of healthy, given that the likely interventions by Beijing will be to make it very difficult for those companies to stay in business by trying to grab market share, that presents us with some tough trade offs to make here, like how do we do this?

And getting that most of commercial electronics are still made in China, right, they're assembled in China. They have real good leverage at forcing their chips to replace foreign chips. And we've already seen this happen with Micron's DRAM chips. We've already seen Beijing take actions to force Micron's chips to not be put into electronics inside China, and that presumably their own chips.

Now, actually what's happening is Samsung and SK Hynix, but the reality is that eventually Beijing then replaces those with their own chips. And so that's the dilemma that we're sort of in. And we have some tools in that space that we could use, but we have not yet figured out how we want to use them.

Most of our tools are sort of after the damage has been done rather than preparatory.

>> Kharis Templeman: Does the chips in Science act actually provide new tools for us to mitigate this problem, or do we need something else on the scale of that act to really make a dent in this problem?

>> Matt Turpin: Yeah, I mean, the Chips and Science act, to my knowledge, does not really cover what is the likely second and third order effects of how China responds to our strategy of denying them the most advanced chips. So this sort of action counteraction cycle that we're in. So we've taken an action from a sticks perspective with the October 7th advanced chip restrictions.

And so what we should expect to see from that is that as they are denied in the advanced chips, they're gonna move and put those resources into mature chips. And as they ramp up that production, we should. Probably we'll be looking at the trade remedies that we have in that space and some trade remedies that we have in that space.

Are things like a Section 301 investigation, we could look at, is China's actions likely going to result in trade harms to the United States? Well, I suspect that we would come to the conclusion that it is, and therefore we could put preemptive tariffs on those products that would have it.

Discouraging Chinese companies and foreign companies, and American companies from putting Chinese chips into those things and replacing those that are coming out. We could also look at doing sort of preemptive anti-dumping countervailing duties. So anti-dumping countervailing duties are there for when a foreign country dumps products onto your market, you're able to use anti-dumping countervailing duties to essentially say there's being harm done to our economy.

Therefore, I'm gonna put a duty, ie, a tariff on the import of that. Again, discouraging that from happening. That set of authorities is almost entirely designed for after the fact. You have to wait until after harm has already happened, right? Presumably after our companies have already lost employees and already lost market share.

And so it's inherently an unsatisfying tool to use because you have to wait for it to happen. I would argue, and I think what Robert and I argue for in our chapter is that it's entirely predictable what we're going to see over the next few years. So why not take actions preemptively to ensure that we are protecting ourselves and our workers, and our companies from the likely actions that happen almost all in the trade space?

So that's the authorities we should be pulling on. It's the International Trade Administration at Commerce. It's USTR. It's the International Trade Commission. These are the actors that have the authorities that could act now, and we should probably do so.

>> Kharis Templeman: Great. Well, thank you, Matt, for this great conversation.

For those watching and listening, I'm Kharis Templeman. I'm a research fellow here at the Hoover Institution, and I've been speaking with Matt Turpin, who's a visiting fellow at the Hoover Institution and an advisor at Palantir. We've been talking about a chapter of which he's a co-author, entitled Mitigating the Input of China's Non-Market Behavior in Semiconducers.

That's co-authored with Robert Daley, and it's part of a larger report on the US, China, and Taiwan's security in the semiconductor space. We encourage you to check that report out. It's available online at the Hoover Institution's website. And in addition to this chapter, we've got a bunch of others describing the evolution of the semiconductor industry, Taiwan's place in that, the evolution of US, China, competition, and so forth.

Thanks again for watching and listening, and I wish you all very well, wherever you may be.

>> Matt Turpin: Thanks, Kharis.

>> Kharis Templeman: I'm Kharis Templeman. Silicon Triangle is a special podcast series of Matters of Policy and Politics.

>> Jenn Henry: This podcast is a production of the Hoover Institution, where we generate and promote ideas advancing freedom.

For more information about our work, to hear more of our podcasts, or view our video content, please visit hoover.org.