Sharp Tech with Ben Thompson - The Chip Ban Seven Months Later, China's Response, More on Intel and Tower Semiconductor

Episode Date: May 8, 2023

China's ongoing response to last fall's sweeping export controls on advanced semiconductors, the importance of Japan and the Netherlands imposing their own set of export controls, and more on Intel's antitrust struggles and how the company (or the U.S. government) might respond. Plus: A correction about water risks and a clarification about the Suns app.

Hello and welcome back to another episode of Sharp Tech. I'm Andrew Sharp and on the other line, Ben Thompson. Ben, how you doing? Good had a very busy morning of watching sports, which is fine for me. I have all day to record this podcast and do some writing. You're the one that I have to ask how it's going. Late at night, big day in front of the TV. Are you ready to record?

I'm ready to go, man. A late night pod here. Love a good late night pod. late Sunday night in the aftermath of Suns Nuggets, starring Matt Ishbia, who flopped expertly right before halftime. I'm not sure whether you saw that, but... I did see the replay, yes. It was a great follow-up to our conversation about the Suns last week,

and we'll hit the Suns later in the show. But yes, I'm in great spirits. It's been a great sports weekend here. And we're going to start with Chips. It's Chips Day here at Sharp T. Over the last two weeks, you have interviewed both Chris Miller, who wrote the best-selling book Chip War and Gregory S. Allen, who has published a number of excellent papers on the chip export controls and the way they've been implemented over the last six or seven months here.

Both interviews were terrific, and I encourage all Stratecari subscribers to check them out. Or if you're not subscribed, this is the type of thing you're missing out on. But the point of today's episode is to switch it up and put you in the interview chair in large part because I'm curious about what you think on a lot of different aspects of this conversation. So is that okay with you, Ben? I will do my best. Okay. So I'll provide some context for anyone who's new to this story. On October 7th of last year, the Bureau of Industry and Security released new export controls that severely limited the sale of advanced.

high-end microchips to China, and also limited the sale of manufacturing equipment that might be used to build advanced microchips. And at the time, the announcements were a bit of a shock. I would say the export controls were a lot more severe than anybody expected, and they were considered an inflection point in the U.S. China relationship, and also maybe China's tech progress generally. Does that summary sound good to you? Is there anything I'm missing from the the background to the story? Yeah, I think the important thing, and Gregory Allen and I spent a lot of time talking about this on that particular interview is those export controls were in the big picture,

something that did feel somewhat inevitable. And this goes back to the Trump administration when they cut off ZTE and then Huawei from sort of advanced chips and really flexed sort of that capability that the U.S. had to limit China's leading companies from advanced chips whenever they wanted to at the drop of the hat. And there's a few interesting things that happened since then. Even if you set aside the fact that eventually Trump sort of backed off on ZTE after a sort of entree from Xi Jinping, all of the Chinese companies started sort of hoarding equipment in chips. And you saw this in the earnings reports of, the earnings calls of all these semantics

companies where they were talking about non-market demand. Not like basically demand that that was exceeding what they would expect sort of in normal times. And what that was is every Chinese like the Chinese sort of fabs were basically like, look, we got to start buying as much as we can. Triple the orders.

Yeah, from land research, whatever we can get from ASML, from applied semiconductor, like all these different sort of companies, assuming that something like this was coming down the road. So at the time, so it's kind of one of the things maybe in retrospect, it was surprise, not a shock or shock not a surprise. I guess shock not a surprise, maybe the better way to put it, where the ban was large. And I think the, there's a lot of debate to be had about whether any of this is a good idea for various reasons.

But if you're going to do it, you should sort of try to make it comprehensive. Make it as comprehensive as you can. And it wasn't maximally comprehensive in that you can still sell equipment for trailing edge chips to China. But it was pretty comprehensive as far as the limitations that were put on selling anything advanced, the degree to which even U.S. persons can be involved with companies that are building advanced chips. And also fairly sophisticated as far as some of the bans on chip themselves, like which Nvidia chips are banned, which are not. tracing the metrics on things like interconnect speed and not just sort of chip speed was actually kind of surprising. You're not going to expect that level of sophistication, but it's also

something that's been sort of burbling and they've been working on going back to the Trump administration. So directionally, it's not surprising that we wound up here. And if anything, it's just over the last year or so it happened faster than some insiders would have expected. Is that right? I mean, there's like an argument that it should have. have happened even more quickly, but given the seriousness of it, it's kind of the remarkable things that happen as quickly as it did, if that makes sense. Like arguably should have been even more, if you're going to go down this route, the sooner you cut it off sort of the better.

But even despite that fact, you know, the fact that it was the sort of totality of the ban happened now was, I think, a bit of a surprise. Right. Yes. And it was interpreted as essentially a declaration of economic war by some people on the Chinese side. And so relations have devolved since then on a number of fronts completely unrelated to chips. Have they though? I mean, I don't know that things have gotten worse per se. Well, the balloon wasn't great. They canceled Blinken's trip. I mean, things aren't in a good spot. But if the

argument is that they weren't in a good spot all along, then I'll buy that too. This is sort of the eternal question, right? You know, it's like on one hand, it's very fair. And I think there's a lot of credence to the fact that the U.S. is not necessarily approaching all this correctly. I've obviously expressed that in terms of Taiwan, where actually I think there's an aspect where China and especially Taiwan is fine with living in the gray. You know, as long as everyone gives China the appropriate lip service. Like, yeah, sure, you know, we understand you think Taiwan's yours. And really, everyone's going to act like Taiwan's a real country. And the fact that when it's front and center of the U.S., he's like, no, we have to, let's resolve this. Let's drive through a resolution.

no resolution to drive through. So that is a legitimate area, I think, to get fresh with the U.S. At the same time, China is the one that is building up its military. China is the one that's been quite belligerent sort of internationally in lots of different areas. And, you know, it's an eternal debate as to who is to blame, who is not to blame. What I think is always wrong, not always, but in this case, I think definitely wrong, is saying it's only one side or the other. And that kind of applies to the chip stuff and whatever effect it had on the relationship. So, I mean, like I said, it's gray. It's all great.

Well, and we cover a lot of the gray over on Sharp China. But one of the reasons I wanted to talk to you about this is because if it's me and Bill going back and forth on the export controls, we can only talk with so much detail in terms of what's actually happening here. So I put together questions. I'm taking advantage of the research that you. you did for the Chris Miller interview and the Gregory Allen interview. Number one, big picture. Do we have a sense of what the impact has been after seven months here? The export controls were imposed exactly seven months ago.

Has it been as seismic as some people expected it might be based on some of the conversations you've had? I think the conversations all along has been, we'll have to wait and see. I mean, I think, you know, like it's sort of a stop going forward. the situation where China has stockpiled a ton of chips, has stockpiled a ton of equipment. So, like, they're not running out sort of in the immediate future. We certainly saw the effect four or five years ago on companies like ZTE and Huawei that basically got obliterated from the cell phone market because they could no longer get chips.

So, like, we know this can have meaningful impact. China has come out with announcements about we have our own sort of large language models and sort of things that are trained on this. And Vidia has came out with a chip, especially for China. that is basically the same speed as the AI chip they sell in the West, but as lower interconnect speeds. The reason that matters is these large language models are trained on these very large systems that where you have all these chips that are executing relatively simple instructions,

but completely in parallel. And the limitation is getting them enough data so that they can sort of go through those calculations. And the interconnect speed limits that. So to the extent, and this is something that Jensen Huang talks, about the Nvidia CEO is, you know, he argues that the future is not competition between chips, but competition between systems. Like, like, tons of chips that go into building a broader system that can all be tied together. And China has been, is now limited on the size of the systems they can build.

It's like, well, can they just build a bigger data center? Well, yes, but there is sort of limitations that sort of are going to come from that. What will those limitations look like? We'll sort of have to wait and see. I do think that the sort of bigger question is, does this focus China's efforts actually in a place they should have gone? And this is one area where it can potentially sort of backfire. Until the Japan, China was super focused on catching up on the leading edge. Like there was a ton of investment put on, you know, into Smic, their sort of foundry, TSM,

sort of equivalent and really push them. They showed like a 7 nanometer chip or was shipped, which is definitely possible to build given the technology they had, probably not economically. I'm sure that was one of the most uneconomic chips sort of ever produced, but it was still possible. And the reality is it was always hard to go down that route, particularly when ASML agreed to not sell them the most advanced lithography systems, which was a year or two ago. It was already kind of clear they weren't going to go down that road.

but now it's really clear so it's to be hard to really build 7 nanometer 5 nanometer TSM's coming out with 3 nanometer this year and that's always been a challenge and it was kind of a quesotic attempt where you can imagine talking to say Xi Jinping to the extent he knows or understands

what's going out with chips it's very easy to sort of get focused on sort of the top line and it's like a moonshot Yeah that's also happening in this country We're focused on getting the leading edge fabs built in Arizona as opposed to any of the trailing edge stuff. Right, exactly, which I mean because it resonates. Like who can make the fastest chips?

That seems like a very important thing. And there's a bit where it sort of aligns with, again, I mentioned sort of the moonshot project, right? It's like, look, China, we've put a man in space. You know, like we've built nuclear weapons, just like sort of the USSR did. And we can build a fast chip, right? And I think that's the framework and state of mind that political leaders in particular will take to this. area, again, for very understandable reasons. It's sort of a headline thing. That's the frame of reference you have for building this stuff. And I think one of the points that Chris Miller made

very well that I completely agree with is chip production is very, very different. The key to chip production is not the fastest chip you can make once. It's the chips you can make at a 99.99,999% degree of accuracy or whatever it might be, right? Or maybe on every step, right? And it's all about yields. Because once you get it right, like the inputs to here are these silken crystals, but even these silicon crystals are relatively cheap on a sort of per wafer basis. You know, like the inputs, the actual cost of goods of a chip is very, very low. It's all about investment and the capital costs of the equipment. And the way you get a return on those massive capital costs, which run into the billions per fab is by having a very high yield where it's it's turning out a bunch of chips that you can sell for a

relatively to their capability low price but you're selling so many of them that you sort of make money and and it's not just a question of oh they can just subsidize you can't subsidize your way past bad yields right the it's so expensive to build a fab and you know it's so you know it's time consuming it takes three like six months to build a chip from like start to end if you include like the test and the packaging and all this sort of stuff that like if you don't have good yields you're just not going to start making it going forward but then the question is how do you get good yields and the way you get good yields this is the sort of tacit knowledge the sort of bit that accumulates in an organization like a tsmc or like an intel where you just kind of know how to do it right like and you can write down everything you do but there's so much understanding that goes into it you accumulate that understanding over time. TSNC's been making chips for decades.

Intel's been making chips for decades. And the way you get to where they are today, I suspect, is by going back to, like, say, 90 nanometer chips and getting being super awesome at it, and your yields being good. And then moving down, going down to 45, going down to like 24, going down to 14, going down to 7. And that is not a sort of palatable answer to a somewhat. that's coming in over the top and saying catch us up on chips now. Right.

They don't want to hear, let's get really good at making 50-year-old chips, right? They want to have the headline and sort of catch up right away. But in the long run, building a super strong foundation is better. Now, the problem for China is they have built a strong foundation at those old chips. Let's say 90-natometer, for example. They can make 9-9-8-3s back and forth. They have a huge number of 20-9mm. It's probably the level where they're sort of most effective right now.

They do have 14-90mere in production, but they can make these advanced chips, but they're made with American equipment. And they're made with Japanese equipment, and they're made with Dutch equipment. And so you have to get all these sort of pieces. And what this chip ban, I think, has made super clear to China is not just that we have to be working our way up at the SMIC level slash TSM level. We have to back down, and they have good processes and point. at SMIC to make 20... All we don't know, it was a 20-animity-chips. Right.

Can they make all the pieces of equipment that go into make 20-an-a-demeanor chip? No, they can't. So what they ought to do is go back to as far as their equipment is capable and work their way back up the curve. Build from there. Either that means 2005-era technology, if you want to catch up in, say, 30 years or 15 years or however long it's going to take, you're never going to catch up unless you build the foundation.

It's the way it works. You have to build that foundation. If you don't build that, you're always going to be at the mercy of the U.S. And so to the extent this chip man ends up being a good thing for China, it was, you know, what, we needed to get cut off from stockpiling equipment. We actually have to go down to the foundations of chipmaking. And we're only going to build EUVs like ASML does if we can actually build, you know, immersion lithography, which was sort of the step before or, you know, and sort of worked on that line.

And so if this ends up turning out for China, it's not going to turn out in the next five to ten years. It's going to be in the 15 to 20 year time frame where they built up an equivalent sort of infrastructure and base of not just putting the chips together, but all the pieces that go into that. Right. And is there evidence that they're doing that? Because to be clear, what you're talking about as far as 28 nanometer or 90 nanometer, these are trailing edge chips that are in cars, that are in appliances. Do you have any other examples? They're not like the iPhone chips. They're not the AI supercomputer chips,

but they are chips that the entire world relies on. There's chips in everything. I'm looking around here. Like I have like audio equipment. There's chips and all that. I have these very switches. There's chips in that. There's a mic.

There's chips in here. Like there's, there's a- So what percentage of the chips there are made in China? Because I've seen you mentioned a couple different places that China should now try to corner the market on these trailing edge chips. Well, right now the majority is made in TSM. And I do have a chart in chips in China.

I wrote an article last year. I don't have in front of me. But a growing percentage is made in China. There's an obvious rationale to that. Number one, a lot of this stuff that these ships are going into is made in China. So having it sort of right next door can make sense. Number two, they're like, again, there is a non-economic reason for them to invest in this capability because the goal is to work their way down the sort of learning curve.

Right. And right now there's no economic reason for anyone in the West to make trailing a ship capacity because it's just like it's old. The only reason those fabs make money is because they were built 20 years ago. They're fully depreciated. And so every chip they make, even if that chip costs five cents is five cents of profits, right? Like they have no, they have no.

Five cents more than nothing. That's right. They have no capital costs or depreciated. They've already paid for all the equipment. And so, uh, but for China, like, there is a strategic. motivation, which is learning how to do this, right, and learning how to make it sort of at that level. So as far as, you know, going this route, I think it's challenging, you know, the thing to be concerned about in the West because not only do I think this is the route to catching up in their chip industry,

but also it's the one that also makes the most geopolitical sense. Right. In the meantime, it gives them some strategic advantages and leverage that wasn't necessarily there when it was more distributed in terms of trailing edge production. Right. I mean, ideally they sort of flood the market and push out any would-be sort of competitors. Now, again, there would be competitors or have zero depreciation. So maybe they can't do it because their marginal cost of production is basically going to be zero. So they can lower prices to compete. But I would want to sort of, again, there's multiple motivations. Number one, you need to learn. Number two, like lots of stuff that's made in China needs those chips anyway. And number three, to the like the big mistake China is made with chips sort of all along that was kind of. Counter to what Japan did, counter to what South Korea did, counter to what Taiwan did, is those companies became a part of the global supply chain. Like, you know, Japan starts with sort of memory and sort of came to dominate that space. South Korea took over memory and then also, you know, they really dominate memory. They are a bit in logic.

TSM has been really in logic. Thanks to TSM, thanks to TSMC, sorry, Taiwan's been in logic. But the key part is they're part of the global system, right? And so Taiwan has a huge amount of geopolitical leverage because the U.S. feels dependent on Taiwan, right? Yeah. And that's not like, it is dependent on Taiwan. Right. It's in pretty real ways.

Right. And so like the U.S. weaving aside whatever you want to say about, you know, democracy or stand up for democracy. Absolutely. Right. The reality is there's a hard like, it's like, you know, the Middle East and oil, right? There's, there's a hardcore sort of geopolitical interest beyond it. There's other things too, like Taiwan's position, like the shipping lanes going to Japan and like things along those lines.

But, but really there's a core interest that supersedes any sort of like fluffy talk, like you from a real politic perspective. Yeah. And I don't want to mock the fluffy talk because I do think a lot of people genuinely care about Taiwan's right to govern itself. And particularly democratically elected governments should remain in power. We're not rooting for autocracies here. I mean, speak for it. No, just kidding. Sorry, I just want to add that qualifier. It's late here on the East Coast.

I'm laughing with you, but I'm not mocking the idea of democracy. This is a situation where what's that Seinfeld episode where the comedian converts to Judaism for the jokes. That's true. Because I know holds far. Because I live in Taiwan, I get to make all the jokes that I want. So that's sort of my claim there. So China always sort of decline to do this. They never became a meaningful part of the global supply chain of semiconductors, even at a time when the U.S. was not paying attention and would have allowed that to happen.

And I think there was a bit where, you know, I think Chris Miller sort of argued this in his book a bit, which I think rings correctly, which is China made the mistake of thinking chips were important for too long. They've actually been overly invested in chips or not overly invested chips, but they've viewed them as too important for too long. And so they've been sort of kind of trying to be indigenous too much. Like if that makes sense. What do you mean by indigenous, just self-sufficient in terms of their semiconductor industry? Right. Self-sufficient. Like we don't want to plug into the Western sort of chain.

Right. So let's try to do everything and be good at everything. Right. Which never really happened. And we just talked about that. lots of reasons because one of the issues is even your local companies around you, they're just going to buy Western chips, right? Like this is the part of the free.

This is where free trade, quote unquote, hurt China. It wasn't just the U.S. could buy cheap goods for China. It's that Chinese companies could buy high capital goods from the U.S. like chips, right? And so that part of the Chinese economy never really developed, like all sort of the super high precision manufacturing, right? Like China still doesn't have their own jet plane or jet engines, right? I mean, I think they just did like a, finally did a test flight or something, but they have never gotten to the high production, like this super high end manufacturing where it involves a lot of this knowledge that's not publicly available.

Like how do you make a jet turbine that, that lasts that you get high yield? Again, all these things require high yields, right? This idea that you're going to be able to produce something consistently that that lasts for a long time. It's a very, very different problem than the sort of manufacturing that China has been very good at. They're good at, you know, and so that's the stuff that the West is super good at. And there's, I've made the analogy before, right, trying to be the bodybuilder that only works on arms, right? Like the, and, and so this bit here, by the way to have gotten better, would it like be a part of the global supply chain? You start there.

And then you sort of come to dominate that part of the market. And it's like a land and expand into the supply chain sort of thing, which they never did. And that's probably, that's the core of their. their chip strategy mistake is during the 2000, 2020, in front of 2020, 2015 is maybe a 1995, 2015, where China was all the business people in the U.S. wanted to get in China. They were lessing after this market.

Everyone decided that the, you know, China of the last 10 years is the reality of China forever and decided to completely ignore the last 2,000 years. And, you know, whatever you want to say about the sort of approach, the Clintonist sort of, you know, Clinton invites him WTO sort of thing. There's obviously a whole separate debate to have had about that. But that was the time where they should have been putting subsidies in the ship industry with the goal of inserting themselves into the supply chain such that the U.S. could not dream of doing something like what they just did.

Like imagine if Taiwan was the belligerent actor here from the U.S. perspective, they're going to cut Taiwan. No, they can't, right? Yeah. And China never, yeah, they just never did it. And now they're in a tougher position because of that. And we'll have to build it up from scratch sort of starting. from the beginning. Well, so one company that did do it is ASML.

They are arguably the most important supply chain company in the world or one of them. Yeah, I mean, but by and large, built on U.S. Technology, which is originally invented by Intel, which is one of the great ironies of this, that Intel was late to adopt EUV in particular. The whole lithography bit is interesting. That was an area, that was the other area where Japan really moved in on the U.S. And there was even a sense. back in the, you know, I want to say 80s or 90s, that lithography is important and is it good

that we as the U.S. are losing the capability of doing lithography. Lithography is basically, it's like taking a photo or an inverse photo where you have a mask and then you're pushing light through this mask on this photo-resistant layer that is sort of etching in the lines, but except it's doing it at like a microscopic level, like the atomic level. It's pretty insane stuff. And obviously, like everything, lithography started in the U.S. But that was the other real equipment area where Japan really moved in. And when did ASML enter the picture from that point?

So what happened was wafers were made. The size of the wafer was, it started, I think, I was saying that was in 90 or 100. But then went to 200. It's at 200 for a long time. And in the 200 millimeter era, Japan dominated lithography. Canon, particularly Nikon, particularly Nikon, was sort of the strongest player here. And what happened was 300 millimeter wafers came along.

And ASML and TSM, and I think TSM really pushed ASML on this one in particular, they realized, okay, the way you're dealing with 300 millimeters versus 200 millimeters, the distribution of weight and like the mass of this on this like paper thin sort of wafer, it's different, right? And so how do you sort of move that through? Because you're trying to get yield. And the yield is not just a function of the number of chips that are good or bad,

but the number of chips you can produce like per minute or per hour that are like going through these machines. You get these machines that cost hundreds of millions of dollars, right? So the more you can, the more throughput you have, the more sort of profitability you're going to have or the more not losing money you're going to have. And so what happened with this transition is the Japanese were kind of resistant to it. They had it sort of nailed. And their solution to dealing with these different sizes was basically just run it slower, right? But if you're running it more slowly, you're not getting the benefit of having a larger wafer. Doing larger waferes more slowly, you're getting about the same throughput as smaller wafers more quickly.

ASML basically completely redesigned their approach to lithography to accommodate and to be built around the 300 millimeter wafer. And they, in TSM and ASML work very, very closely together. And they kind of came up together. They're both downstream from Phillips. They're both sort of seeded by that. But particularly through this era, TSM saw this as an opportunity to catch up and really pushed ASML on this era, to build a new process around 300 millimeter wafer. And they succeeded.

And one of the reasons TSM caught up, this was kind of the first part of TSM catching up, is they just had higher throughput and built more chips. in less time than anyone else because of their partnership with ASML. And so that was the era where ASML started to get pretty large in lithography. Intel was still all, Intel was still all by and large with sort of Nikon. And TSM and ASML were coming along together and sort of catching up in the process. This was, I think, in the 2000s sort of era. And then that sort of led downstream to they had a similar sort of partnership when it came to switching to EUV,

which where the the light went from like 190, 103, I want to say, millimeters down to 13 millimeters. And you're trying to etch or 13 nanometers, I should say, you're trying to etch circuits that are like five nanometers, right? It's, it's very insane how it works. I didn't even know what a nanometer was until I started working for strategize. Right.

Yeah, so normal people, it's not a measurement we deal with. Yeah, it's, yeah, I don't want to get into the weeds. But like the, but the, but. Oh, we're in the weeds. Don't worry about it. We are pretty deep in the weeds. We are pretty deep in the weeds. But then as far as EUV, EUV was a project.

Everyone kind of knew this is like how are we going to get past, you know, this limit. Intel invented this. And then Intel was invested, I think, in ASML. There was some point where ASML was really struggling because they were spending so much on R&D to try to build this EUV. And EUV was supposed to arrive like in like, you know, 15 years before it did. And it was one of those things where everyone, you know, it's like, oh, yeah, it's all. it's vaporware. It's never going to show up. They're talking about this. And there was at one point where ASML went to Intel, Samsung, and TSM, and basically said, we need more money. And so they all

invested into ASML basically for the purpose of funding this research into R&D. And Intel invested the most, again, one of the sort of ironies here. And finally, ASML figured it out. I think around 2015, 2016, TSMC was the first to use it in their seven nanness. meter chip. And this is a good example of how you have to go down the curve, right? Like China wants to go straight to using EUV or whatever. But in 7 nanomere, the majority of the chip was made with immersion lithography, sort of the previous, the previous technology. There was just a little portion of it that was done with EUV. And that was important because that's where they worked out all like the, like how to use this. That bit of using EUV and those chips might have been unprofitable. I don't know. But you can imagine it was not very profitable, but they were figuring out how to do it. And then for five nanometer, it was basically almost all UV. And Intel basically until just like this past year only got to that level. That was the moment, that five nanometer moment when TSM leaped ahead. And it was because they've been working with ASML for decades.

And they would have been sort of stepping down this chain, figuring out how to do it. And this shows the interaction between the suppliers and the foundry. Like this idea of the 200 to 300 transition, that was working hand in hand, ASML and TSM, how do we set up a machine? How do we move back? I think TSM did something, or ASML was something like where a chip goes in and then it goes out and goes back in and reverse. There's something like some new way of processing that they did to sort of handle the

movement of this different size of mass in sort of a way that was like sort of productive. And it gets to why this is going to be so hard for China. None of this stuff is in isolation. All this stuff is so deeply intertwined. And as part of that process change, they had to, you know, they had to adjust how do you apply that photo-resistant layer? How do you do the cleaning bit where you wipe away the stuff that's no longer there? Like all those bits are all intertwined and interconnected. And the big challenge is having to do that all at once.

And that's why back in October, one of the immediate reactions to the announcement of the export controls was, okay, how is the U.S. going to get other countries on board? because there are these critical parts of the supply chain now. And, you know, ASML, these Japanese companies, the South Korean companies, they could all fill in the gaps created by the American rules. Yeah. And just to just double down that. Because I think it's really important to understand. The big risk here is not that the, you know, people take a static view of the world, but it's very dynamic. Right.

And the risk here is not that the Chinese buy the Japanese equipment and the Dutch equipment. and then they only need to invent the U.S. equipment. No, the risk is that the Japanese companies are much more capable and closer of replacing the U.S. companies, right? Yeah. Because they are, number one, they probably already built that stuff in the past before it became like a de facto monopoly. Number two, they're part and parcel of this process. They, like, they know what goes into.

It's that compounding institutional knowledge, right? That's one. And the institutional knowledge of not just making the device itself, but understanding how that device fits in the hole, which of making of this entire process, right? Because you have Tokyo electronic and lamb research and applied materials, all working hand in hand with ASML and TSMC as to develop these processes. It's fully integrated and intertwined. And so if you're China, if you want to, even if you can buy an ASML machine and you can buy Tokyo electronic sort of machine, you can buy, you know, whatever, how you're still going to have a hard time making the

Applied Materials machine. right or the lamb research machine but the japanese can probably expand their business into doing that much more quickly than you can and the reason this was such a threat is because not only does they then bring china up to speed but now they have this advantage of the world's second largest market buying their machines giving them r and d money they can reinvest and now the u.s companies are in danger of losing their monopoly or losing their dominant position so they're at a competitive Disadvantage, yeah. Well, they're facing competition in a way they haven't in a while because they have one arm tie behind their back, which is their competition has access to a market that they don't.

So Gregory Allen said that made in China, 2025, may have played a role in the Dutch thinking in terms of getting on board with these export controls because it was a pretty substantial coup for the Biden administration to get Japan and the Netherlands committed. to their own set of sanctions on chips and chip manufacturing equipment. Are you surprised that those countries fell in line? And as far as Made in China 2025, I think the thinking would be that China was always going to push out ASML in the long term. And so it was only a question of how long it took them to get there. Yeah, I mean, Made in China, 2025 is the classic comic book trope, which is what always gets the sort of antagonist in trouble. telling people what they want to do? It's the monologuing, right?

The monologing gets you in trouble, right? And there's a bit where... Mr. Bond. People were fine to basically, like, everyone was sort of not paying attention to China at all. And China's like, yeah, we're going to replace all these kinds of like, wait, what's going on? And it gets to that bit about who's actually to blame for this, right? It definitely is sort of a two-way street.

It also gets to, I think, the mistake in the Chinese mindset, which is they never, it should never bring their goal in the show. short to medium term to replace. They needed to integrate. It was through integration they would have like protected themselves, not by replacing. And I think underestimating from a leadership level in China, the difficulties in replacing, right? You have no idea what you weighed out in Made in China 2035 was sufficiently threatening to scare the U.S. and insufficiently realistic for you to ever accomplish.

Like it was just like, and this is the type of error that makes you worried about China. It's a Xi Jinping sort of error where it just like the out over his skis to a certain extent. And is there actually the infrastructure to back up the talk? And China likes to talk about, oh, we take the long view, right? And XYZ, Xi Jinping does not seem to take the long view. That's why it's kind of concerning about his sort of time and power relative to someone like a Deng Xiaoping, you know, that certainly was from that perspective. Well, it definitely becomes counterproductive at a certain point. It's a theme we return to weekly on Sharp China, where China can be its own worst enemy.

And as much as people want to talk about agendas in D.C. And how aggressive the West has become, you could just look at literally what she is saying. Everyone that's asking for the U.S. to sort of chill out is basically asking them, please ignore what China says explicitly. Right? Because, like, that's kind of the, again, that gets to why I, I do push back against people that say this is all the U.S.'s fault because you're asking basically for the U.S. to say, oh, don't listen to that. Like, literally, if you take, if you took China at their word, the U.S. would be more aggressive, right? Like, it's hard to overstate how explicit China is, especially in her Xi Jinping, about a lot of this sort of stuff. Okay. So before we move on, what about Japan and Netherlands and their calculus and all this? Why do you think they fell in line? I mean, there is the point that I just said, which is China made very clear they want to have a point.

If you're observing. Right. Yes. Japan in particular has been aware of this for a while. Number two, I think any realistic appraisal of how the world works is the U.S. is runs the world, right? Or at least the Western world. And I think you see, you know, there's that chart about, you know, who voted to condemn Russia, who abstained XYZ.

It's all Europe. It's Japan and Australia and things like that. And like that is the core sort of west, right? And at the end of the day, the U.S. does, by and large, call the shots for that. And that was part of the post-World War II deal, basically, which is we're going to rebuild your economies. We're going to integrate you. We're going to give you access to the U.S. consumer market, which is this was larger than

the rest of the world at that point in time. And we will provide protection for all of you. And you're going to then buy, you know, you're going to then give up, buy our treasuries to pay for it all, right? Like, that's like the circular thing. And that still holds, at least in Europe and in Japan and the U.S. At the end of the day, the U.S. does sort of call the shots. And we can talk about, wow, what a diplomatic coup.

There is a certain, like, if you're just talking about the brass tax of the way the world works, the U.S. tends to get what it wants in those specific arenas, in Europe and in Japan. Number three, the U.S. also has very explicit control in that, like I mentioned Trump, the laser maker, that makes the laser that goes into ASML. It's a German company. But that laser was invented by a U.S. company in San Diego, the name sort of escapes to me that Trump sort of acquired. And the way U.S. export law works is they cannot sell that laser if the U.S. says no, because it's basically U.S. technology.

Lithography is U.S. technology. Like, I don't know to what extent it extends, but again, ASML, EUV was originally designed by Intel, right? Like, and so all this stuff that even the Japanese or companies are doing, and that's not to discount the huge amounts of innovation and invention they've done. It's rather to say that, look, if there's some aspect of that that was invented in the U.S., we are going to, so, like, we have declared that leverage. We have the right to control that, right? And so the reality is, is, you know, it's, I think the diplomatic coup is having it come across that the Netherlands in Japan are willingly joining into. to this. But I think the truth is the U.S. had very hard levers as well. They could have gone to if they had to. Right. But it was essential and they pulled it off. And they're currently working hard with

South Korea as well. Not to discount, not to discount that to be clear. I mean, I think that, you know, the way it came across that it's coming, you know, the other ones announcing it, Japan announcing it. That is obviously ideal from the U.S. perspective. And from what I know, like on the way into announcing the export controls. They were lobbying behind the scenes to have everybody on side before anything was announced and they weren't able to get everybody on board with their own version of the export control. Yeah. I think there was a bit where the U.S. is like, look, we will sacrifice our companies first. Like, like, we'll basically put lamb research and apply materials. We'll put them on the line to signify our commitment to this. And so we're not

going to ask you to sacrifice Tokyo Electronic and in Nikon. And, and, uh, and ASML without showing that we'll do the same thing, which which which which was a I mean, again, I don't want to discount by pointing out the levers the fact that it was sort of a ballsy move in that regard. And speaking of our companies, this was a pretty amazing follow up to the point we made about Tower Semiconductor and Intel. It's from the paper that Gregory Allen released last week, quote, China has employed antitrust measures to prevent U.S. mergers before, but a dissent.

December 2022 analysis by the law firm Skadden finds that, quote, of the thousands of deals that China has reviewed, only three, less than 0.01 percent have been prohibited. Nearly all of the prohibitions, conditional approvals, and abandonments over the past 10 years have occurred in the technology sectors that are important to China's national growth, such as semiconductors. Five months later, the Wall Street Journal reported that essentially all semiconductor mergers involving U.S. companies were being significantly slowed or blocked outright. For semiconductor antitrust reviews, China has taken things from bad to worse. So it's not just Intel and Tower Semiconductor. This appears to be a trend that could prove pretty enduring as the relationship devolves. And I can't necessarily

blame China for trying to retaliate in various ways like this. But if you're the U.S. government or your Intel, like, what's the play here? What's the response? It's really not clear. I mean, Intel needs to have Chinese approval to the same thing as Microsoft in like the UK, right? It's not just a question of selling Xboxes in the UK. It's the entirety of Microsoft's business in the UK, where they need to abide by this decision. Intel, the last thing Intel needs right now is to reduce their market for buying semiconductors, right? They sell a lot of semiconductors to China, and so they kind of need to abide by China's decision. But it definitely speaks to the larger point that we've talked about, which is, is this

sort of, you know, there's a real disconnect between the globalized market nature of these companies and needing every single country or at least the large countries to sign off on every sort of merger and acquisition. And I disagree. agree with folks that think mergers and acquisitions are inherently bad or wrong. I think the Tower Semiconductor acquisition is a great idea, is a great example of where a merger and acquisition can be transformative in that its impact is not just acquiring a business. It's not just consolidation, which is sort of the bad, the good for the bottom line, but bad for the market thing that we want to be careful of. It's when there is a real strategic imperative to do it, which is,

you know, we're trying to add a fundamental capability that not only would it take us the long time to build, but our inherent culture will make it exceptionally difficult to build because our entire existence, i.e. Intel, has been predicated on telling people what we're going to do and they're going to have to deal with it, right? Right. It's not the sort of environment to build a customer service organization, right? They kind of need to acquire one. Correct me if I'm wrong, but there would be so many hurdles with Intel trying to build it themselves and build out what tower semiconductor does, then it would just be a waste of time. Number one, it would take a long time. And number two, it's hard like culture matters and and intel's culture this has always been one of the biggest hangups that even when i wrote about intel becoming a foundry a decade ago when i started your techery this was the number one pushback is intel is just constitutionally incapable of being a foundry they are they're so used like we are good at manufacturing our manufacturing our designers have to change their chips to accommodate themselves to our manufacturing in the way that we're going to reuse equipment and the way we're going to squeeze out a little bit of performance and then you

You customers, we will throw a chip over the wall and you can buy it or not. And you're going to buy it because it's the fastest chip on the market, right? That's how Intel operated for years, which speaks. You can understand how they got the trouble they're in today, where they want to shift to the foundry model where the design, the customer comes to them. Here's my design. I want to do this. And yes, there's some negotiation and figuring out how can we accommodate your design. But TSM is working hand in hand with you to sort of figure out how we can do it, XYZ.

They're not, and they have flexible manufacturing and they have different. lines, even at the same node size, they'll have multiple factories that operate all slightly differently and they will change the process to accommodate, especially a large enough customer to figure out how to do it. It's like the flow of who's in control is the exact opposite. And so you take this Intel culture, how do you build the exact opposite culture? It's just makes so much more sense to acquire a company that already is customer-centric, customer-focused, put that on top. And yes, you're going to have cultural conflict for sure between the new company and the old company. But that's happening under the surface in a way where you can ideally not have

customers stuck in the middle of it and just throwing up their end, say, fine, I'll just go with TSM. Well, so on the U.S. front, from a national security standpoint, how invested is the government in Intel having a non-disasterous foundry project? Like, would the government potentially try to ameliorate the losses if Intel exits China entirely? Are we not at that point yet? I mean, I think there's, you know, there's, I think a sense widely that Intel's big bet at the end of the day is not on being a foundry per se. Intel's big bet is that, you know, I made this comment on the interview. So forgive me for repeating myself is there the JP Morgan chase of chip making.

Too big to fail. Like the U.S. is going to make sure Intel succeeds regardless. And so yeah, the solution here would be, we have to do this acquisition and you have to help make us whole from all the chip sales we're going to lose to China. Right. It would be a pretty sad way to spend the chips act money, but maybe there's more appropriations that can be made to help keep Intel afloat and keep the stock from getting too depressing here. Yeah, I mean, but realistically, I'm not sure this argument about culture change and needing a different organization is going to get you more money from the U.S. government. the reality is they'll probably just, they're probably just not going to be able to acquire a tower, and they're going to have to build it themselves, and it's going to be a difficult and painful process,

and they're not going to probably build up that customer service capacity and going to have a hard time getting customers. Customers who, by the way, do want and need Intel to come along, because they are, you know, if you're fourth or fifth or six in line at TSM, like three nanometers coming out this year. Apple's going to take a huge ton of it for their iPhones. They're going to get first dibs, right? Then Nvidia has their sort of own fab at sort of the most advanced 5-9mm one. They're going to get their chips. If you're down the line, whether it be Intel wants three-nanator chips because they're so far behind,

whether you're like Qualcomm that's trying to make a comeback in sort of semiconductors, you're not even going to get the most advanced semiconductors for months, if not years. And because TSA-T also can't overbuild because the idea is they want to keep these fabs. Like TSM's long-term risk is they overbuild on the leading edge. And then five, six years on the road when they're fully depreciated, they don't have any customers because like who actually needs that sort of level of chip. And so these other companies want Intel to be there. But if Intel can't get the crap together, then it's like, well, I might as well just wait 18 months for TSM. Okay.

So domestically here, one thing that you hit on at the end of the Allen interview is something that I had been wondering about. is there any reason we shouldn't be using Chips Act money to build fabs in countries that have fewer security risks than Taiwan on the one hand, but also fewer regulatory hurdles and better cost structures than the United States? Yeah, this was Allen's idea to be clear. And I thought it was a really, a really excellent one, which is the fact that chips are globalized was an explicit choice by the U.S. Not just because of costs and manufacturing reasons. And it's a fairly dirty process and lots of things that. of why we outsource lots of stuff, right? But also it was something that was easily globalized.

There are small chips. They fly on planes. This is like sort of even pre the standardized shipping container. And also you had these relatively well educated and capable countries that could sort of step in and do it at a time when the U.S. is worried about sort of the domino effect, right? If Vietnam falls, if Korea falls or whatever, like we need to bring up the economies of Malaysia.

Right. Let's strengthen some of these. partners. Yep. That's right. And so there's an aspect where there's always been GBLIL concerns as far as the outsourcing of chips. I do think I mean, it's tough because on one hand, you're like, we don't want to repeat the mistakes that we made before and leaving ourselves exposed to these global

supply chains, XYZ. And that is certainly a legitimate response. Where the counters is, it's just, the U.S. does not have the capability or the cost structure to make chips effectively. Like, we don't have the process engineers. We can't staff, like, TSM is fly. lying over a bunch of Taiwanese basically to run these fabs. We have, because of all the things about why manufacturing left the U.S. in the first place, whether it be regulation or reviews or all these sorts of things, it just costs a lot more to build here.

Getting labor to do the building is more expensive. I mean, you know, Taiwan, it's a bunch of imported labor from Southeast Asia that's building short of the fabs. And, you know, the U.S., you know, so there's just lots of sort of obstacles in the way to doing it cost effectively. And I think it's very compelling that, look, the, the, we, we need to have non-China and non-Taiwan capabilities. China for obvious reasons in Taiwan, because if China takes Taiwan off the chessboard,

we're in sort of big trouble. Yeah. And I think that, and we're just going to get much more bang for our buck by expanding Malaysia from, like Malaysia is very large in packaging and testing, Intel is a huge sort of operation there. What did they expand it into foundries or India? And it's a way to sort of bring them, especially India, more into our orbit where you're getting something that you desperately want is this sort of capability. And also we're getting lower costs.

And, you know, that sort of net that we talked about that is Europe and Japan, can we reboot that and continue that and expand that sort of over time? Yeah. I mean, back in March, Noah Smith wrote something on Substack pointing out that Canada would actually be. a better place than Arizona to build some of these fabs because of the immigration that's possible in Canada and also the climate and the lower cost of labor. And it's just an example of where thinking outside the box would be pretty interesting on this one because we don't have to go into too many of the frustrations that companies have had early on with the Chips Act. But for me, as a news consumer, it was eye-opening earlier this year when like in the span of two or three weeks,

You had the Wall Street Journal, the New York Times, Bloomberg, and the Washington Post. Each of them released their own scathing columns about some of the policy decisions that have been appended to CHIPS appropriation and all these grants and everything. And they all did it in their own little house style. So it's kind of fun to compare them. But it's just one of those things where I think right now there's a lack of clarity on whether this is being done for the sake of U.S. industry or U.S. national security, and that's getting people in trouble, because if it's strictly about industry, then sure, subject everybody to the same regulations and everything else and the environmental studies and all the litigation that anybody has to go through to build anything in

this country. But if it's national security, which is sort of how I understood it when all this was being discussed, there need to be fewer regulations and, you know, more accommodating. to get this going and just generally more urgency is what I would have expected. But so far, it's been a little bit rocky. I'm skeptical about Canada. I'll just so put that out there. Are you? Okay, fair. But the point, I think this is another sort of theme.

This applies to like antitrust sort of stuff, right? There's a large gulf between the theoretical idea of government action and the reality of what it actually ends up looking like. And I think that's something that's worth keeping in mind with sort of carping for for this sort of action. And we're, yeah, to your point,

we're seeing that. I mean, I think ideally, and I wrote about this, the limitations on investment in China that were attached to the Chips Act makes total sense because that's kind of the point. But there's this bit where it's like, well,

if we give you money here, then you can take money that would you have spent here and spent somewhere else. Like, at some point, that's just the reality. Like that's not a company problem or a law problem. That's a subsidy problem. That's the whole issue with subsidies is they're not additive. Their replacement. And, and, you know, maybe they make sense, particularly if a company is potentially running out of money, like say an Intel or something like that, or if you want to inspire non-economic investment. This is why I always thought that the Chips Act should be focused on trailing edge sort of stuff because there's no economic reasons to, build that. So kind of by definition, if that money goes to non-economic investments that ought to happen for a national security perspective, that's going to be additive because that money was not going to be spent otherwise. This fixation on Leading Edge was always going to result in this.

Intel's going to invest in the leading edge because their survival as a company depends on that. To give them money to spend on what they were going to do anyway is going to be wasteful. But give people money for the ideas that don't make business sense. That's right. That's right. And I think the bit about if it's not about national security, then it's not about pork barrel politics and getting jobs for my constituents and XYZ. But the reality we see from the defense industry is that's just, that's how things work.

Like, you know, why does the F-35 have parts from every single state in the union? Is that like, is that for economic reasons? That's for national security reasons? No, it's for, it's for congressional approval reasons. And that's just. Again, it's the reality of working with government. Right. And it's probably naive on my part to say that that shouldn't factor into it at all.

But I'm also sort of taken aback because this does seem like a very central issue security-wise. And that's the way it was framed when this bill was passed. And it's been kind of a illuminating look at the way government works sometimes. You're younger than me. Like I had to go through the same transition, which is like, well, turns out my high-browed idea. about how antitrust law should be applied to tech and all this sort of thing. It's actually just totally political. And that it's very easy to get stuck in the theoretical best and get sort of caught back by the reality.

And, you know, that's a lesson probably we all need to learn individually. Is there anything else you would want the U.S. to be doing in this space that they're not currently doing? Yeah. I don't know. it's a good question. I wish that Taiwan was not front and center. Like I think there's an aspect where this would be more manageable if it wasn't, you know, the topic de jour, people trying to build their careers and campaigns around this.

And now, you know, the military is latched on to it as a way to get more funding for XYZ. And it's tough because on one hand, it's like, well, this is the most pressing concern. You know, a potential confrontation with China is the largest sort of geopolitical risk sort of in the world and it's in tension with the fact that the best way to avoid that is to basically keep muddling along right but even as I say that the American part of me is you can't that's a terrible solution your solution cannot be just keep muddling along right and and uh but the Taiwan issue in particular like there's there's no other way other than other than sort of confrontation it's like China is going to suddenly say okay it's cool Taiwan can be independent country

And Taiwan's going the exact opposite direction as far as their desire to be to be sort of integrated. And meanwhile, TSM is as dominant as ever. So, yeah, it's an unsatisfactory answer, but it's a very unsatisfactory situation. No, and I do wish that that was more of sort of a baseline understanding of everyone that's having the conversation about the U.S. and China and what to do going forward from a policy standpoint. everybody should be very clear-eyed that any sort of push for resolution is going to end poorly. And like the status quo is really the best case scenario for as long as we can continue to kick that can down the road. And there are the U.S. can play the long game too. I mean, China's demographics are not ideal for sure of the long run as far as, you know, they're declining in population.

They're, you know, all these people with single children now multiple generation don't want them to go off to war. Uh, China's economy, like there's been a big push to sort of restart, re invite people and know like this really is the best place to build stuff. You know, they, they have lost manufacturing to other countries. Uh, they, you know, they, they, there's in debt from COVID. There is all these sort of real estate issues being such a huge part of the economy and this sort of debt overhang. And there's also the political issues of it's kind of weird to say we want to invite everyone

back in and then we're like breaking into offices or like arresting foreign nationals or whatever might be. be right? Like I think there's a bit where the U.S. can play the long game here. And trying to force a resolution on Taiwan now is not playing the long game. Yeah, absolutely. And we'll see how all of it evolves here. But I appreciated this little chip check in because it had been too long since we discussed where everything is. And as I said at the top, I really enjoyed both of those interviews. Two notes at the very end here. Aaron says, I'm sure others have let you know that you can die from drinking too much water.

I knew this at the time, but you were so sure about it. I'm like, I don't want to correct him or what? Well, the thing is, I'm so used to your mispronunciation and being right when there's any sort of like question that pops up about some, some sort of a side that I reflexively was a little too confident. I looked it up, the National Library of Medicine, water intoxication. provokes disturbances in electrolyte balance, resulting in a rapid decrease in serum sodium concentration and eventual death. And the rest of the article was pretty grisly. So I do not recommend seeking out more information about water intoxication. But everybody, be careful. All things in moderation, one of the themes of the podcast. I'm glad that we had some accountability from our readers. Thank you for that.

You need to be accountable for promising things we'd get to this episode that we did not get to. But I was a little long-witted today. So, you know, no, you know, I promised we'd get a little bit of Ishbia talking in honor of his flop. Matthew says, am I understanding it correctly that Phoenix Suns games will stream anywhere to anyone on the Kissway platform? Also, what the hell is Kissway? If I could stream all the Suns games for free, I would seriously consider adopt. adopting them as my favorite team. And I think it would actually make me care more about the NBA overall.

So, Ben, I don't know whether you have an answer here. No, the answer is no. The answer is no. You are, this is part of the Wii agreement is you do have geographic restrictions. That's what I figure. On where you have rights to. And so the Kissway platform, I think as a kiss, I'd never heard a Kissway either. But basically, it'd be like a white label video streaming platform.

So you're not going to see the Kissway brand. You're going to search for an app. It's going to be the Phoenix Sun's app. but that app will check your location. And it's ironic because the streaming experience is usually it will check your location. And if you're in the local teams area, you can't stream, right? If you have league pass and you're in Wisconsin, you cannot stream Bucks games. You have to go through Bolly Sports, right?

This will be the opposite where if you're in Arizona, you will be able to use the Phoenix Suns slash Kissway app to stream Suns games. If you're in Los Angeles, you will not. And that's, and again, maybe that's something that, could and like the the the long run here is again perhaps all of the right the team is just recognizing right yeah and this is much more compelling I think everyone talks about oh the the NBA should get rid of things and just have week pass and you know and monetize that way you're never again the the numbers don't add up you're

not going to have enough consumers this super like incredible where you big bat would be we're going to make all non-national TV games freely available via streaming. So you can get the NBA app. You can watch any game you want to, except the big games. Those are on ESPN or TNT. And we're going to stir up so much interest and desire for cable that we're going to actually start significantly driving new cable customers, making us so much more valuable to them that they will want to acquire our rights.

Or I watched all these games this year. My team made the playoffs. And now I can't watch any of it. that's actually, and that's a, that is the ultimate manifestation of this funnel building that I'm talking about, where you're really, like, you need more free stuff in the age of the internet, just the way it is. You have to build interest. You have to get people's attention so that you can really monetize the sort of valuable stuff. But we're not there yet. This is just one team doing it. And the truly progressive, you know, aspect would be everyone doing it. I think the, yeah, week past revenue is a rounding error in this discussion. And the NBA, by the way, has experiment. with this. They made it cheaper this year. It was much cheaper to sort of get in. It should be cheaper. Yeah, absolutely. Yeah. And so, yeah, it should not be

B to C is not a viable long run. Like, no league will ever monetize as well going directly to customers as they can being a part of some sort of bundle. You're just going to make more money. You know, that's why

the ESPN is a bundle, right? ESPN is a bundle of college sports and the NFL and the NBA and the NBA and the NHL. That's why they are still valuable, have value themselves and provide value to their rights holders. And that's good for the leagues. This idea that the NBA would ever come close to the money they make now by selling their product directly to customers is the numbers just don't end up. Right. Yeah. Well, thank you for the clarity because Ishbia had said the sons will now be accessible to millions more fans in Arizona and globally. And I read that and thought to myself, I,

recall from law school, there's like a labyrinthine set of rules about where teams can be broadcast and the blackout rules and everything else. And so it would take all 30 teams getting on the same page. And that sort of idea, because it's funny, I think we agreed on like 90% of the Sun's segment on the last podcast. The only point where I was less convinced is the idea that the upside is that this could be a funnel for people to sign back up for cable. Suns regular season games, we're going to sort of sway people. And if you put all 30 teams on like free apps basically and league pass was free, I could see that maybe sort of moving the needle more than just the suns in isolation would. Oh, what a controversial statement.

If you get all 30 teams, it moves the needle more than having one team. Well, I don't think that the sons in isolation are going to move the needle at all. This is the insight you get at 11.51 p.m. on the East Coast. Look, man, I'm just gently being like you're full of shit if you're saying that the sons are going to convince people to buy cable. But the entire league, I don't know. Now I'm interested. Now I'm listening. But we'll see.

The other challenge is that owners have done horrible jobs and their teams appreciate regardless. And so I think the cheap owner response to all of this is that scarcity in the NBA makes franchise. valuations appreciate no matter what you do. So you're a sucker if you're not taking the short-term money. And I don't agree with that. And it's frustrating that so many owners adopt that short-term thinking. I think the warriors are kind of a good counterpoint to that. They've spent and the team has appreciated.

You do have to draft Steph Curry, though. But anyways. Dropped by previous ownership. Oh, that's true. So inherit Steph Curry. Stumble into Steph Curry. Just like Yonis and Middleton, which is why, you know, I hesitate to give Bucks ownership too much credit. It's like the two most important pieces to what's happened in the last few years were headed to you.

So congratulations. So you bought them or whatever you wanted to the rights, I should say, not about them. But, yeah, anyhow. Well, we're going to come back later in the week. And we have a bunch of topics that we weren't able to hit tonight because we did go a bit long on the Chip discussion, but I enjoyed it. Chip check-in day was a success. And Ben, let's come back soon.

Talk to you soon.