Latest / The ReForge Podcast / Reindustrialization News Rundown: Chips, Ships, and Minerals | ReForge 023
Transcript
- 0:02SPEAKER_01: Welcome to the Reforged Podcast.
- 0:05SPEAKER_01: I'm Matthew Chad, and we're here to explore all things AI, automation, and the American worker.
- 0:11SPEAKER_01: Proving that the American reindustrialization is possible, pivotal, and pressing.
- 0:17SPEAKER_01: Thanks for joining us today.
- 0:18SPEAKER_01: Let's get into the episode.
- 0:22SPEAKER_00: Welcome back and welcome to episode 23 of the Reforge Podcast.
- 0:27SPEAKER_00: Today we are going to be giving you the reindustrialization news rundown, some of the latest stories, some of their impact, and big things moving in the reindustrialized world.
- 0:39SPEAKER_00: So let's go ahead and jump right into it.
- 0:44SPEAKER_00: And we will get into it now.
- 0:46SPEAKER_00: So DOW, Department of War is suspending the CMMC phase two rollout.
- 0:55SPEAKER_00: So DOW ordered an immediate halt to CMMC phase two requirements, suspending the November 2026 deadline for third-party cybersecurity certifications and launching an immediate 60-day review.
- 1:12SPEAKER_00: So basically, they're going to go through with a 60-day pause, full top-to-bottom program reassessment review.
- 1:20SPEAKER_00: It's underway.
- 1:26SPEAKER_00: So the existing phase one self-assessments and the NIST, National Institute of Science and Technology, Standards, whatever, cybersecurity requirements remain active.
- 1:38SPEAKER_00: A lot of people are upset, frustrated with kind of the bait and switch, if you will, because that phase two has been for a lot of these smaller shops incredibly expensive.
- 1:52SPEAKER_00: They've spent a lot of money on third parties, they've scheduled them out, they've basically put out all this money, and now you know it's getting yanked away.
- 1:59SPEAKER_00: Frustrating, yes.
- 2:02SPEAKER_00: Um, but ultimately, you know, this highlights kind of that classic tension between speed and security.
- 2:08SPEAKER_00: You know, rebuilding America's defense industrial base, that core production capacity requires bringing, you know, thousands of these smaller shops and manufacturers into that defense industrial base fold.
- 2:25SPEAKER_00: Um, but as too many of these shops know, you know, the massive compliance costs of trying to get that approval, trying to get that nice signed certificate, is a massive, massive barrier to entry.
- 2:40SPEAKER_00: Um, so it's frustrating, but at the end of the day, you know, the the the key piece is that those phase one pieces, that isn't a sunken cost.
- 2:53SPEAKER_00: Um, you know, it's not a sunken opportunity.
- 2:56SPEAKER_00: All of that is still incredibly, incredibly important.
- 3:00SPEAKER_00: Um, you know, the the shops that are are trying to look forward, this is an opportunity to really double down, make sure you've got your house in order.
- 3:08SPEAKER_00: Cybersecurity is critical.
- 3:11SPEAKER_00: Um and frankly, I think the right way to position this is not as a sunken cost piece.
- 3:17SPEAKER_00: I I think it's honestly government is acknowledging a very difficult truth.
- 3:23SPEAKER_00: You know, if these cybersecurity mandates and requirements are gonna bankrupt the supply chain, are gonna prevent these shops from actually being able to deliver, you know, that doesn't leave us anywhere with the supply chain.
- 3:36SPEAKER_00: Supply chain's not gonna be able to deliver the hardware.
- 3:38SPEAKER_00: Um sucks, yeah, but at the end of the day, this is a positive development.
- 3:44SPEAKER_00: Um, hopefully, if they do bring back phase two, it is a bit more reasonable and really sets up a lot of these uh smaller shops to take advantage of you know the opportunities that contracting allows for.
- 3:59SPEAKER_00: Um, let's hope that you know that that they're using their head on this and doesn't become more more political fodder.
- 4:08SPEAKER_00: Uh moving on, more big news.
- 4:12SPEAKER_00: Apple has announced that they are have signed a massive semiconductor sourcing agreement with Broadcom.
- 4:21SPEAKER_00: So nearly, or more excuse me, more than$30 billion has been committed by Apple to make to buy American-made chips.
- 4:30SPEAKER_00: So this is a five-year deal, um, specifically targeting US fabricated produced components.
- 4:38SPEAKER_00: Um, and you know, from a supply side of it, this is great.
- 4:41SPEAKER_00: This is providing kind of that essential key long-term demand signal.
- 4:45SPEAKER_00: It provides a certainty for those domestic uh fabs, particularly Broadcom in this case, but other suppliers could see this as a genuine commitment to American production.
- 4:56SPEAKER_00: Um the other big piece, you know, subsidizing construction of these new fabs um is really only half the battle.
- 5:05SPEAKER_00: Um, as too many shops out there know, a lot of the guys trying to get in on reindustrialization movement, trying to take advantage of the moment.
- 5:12SPEAKER_00: You know, the having the build-out is great.
- 5:16SPEAKER_00: You know, we've talked about what it takes, you know, that long lead time, but having the demand, having reliable buyers um is at the end of the day, critical for survival, survival and for these companies to scale.
- 5:30SPEAKER_00: Uh, you got to be able to have the right signals, you got to be able to use that to lock down your financing and get you know extensions of credit or whatever you need to really push the needle.
- 5:38SPEAKER_00: Um, this is huge.
- 5:40SPEAKER_00: So Apple stepping up with 30 billion um, you know, is only part of it.
- 5:46SPEAKER_00: Um, you know, that provides the the long-term demand signal that capital markets are looking for that are they really require.
- 5:53SPEAKER_00: Um, and it helps justify you know the billions of dollars we're seeing in uh US semiconductor infrastructure.
- 6:00SPEAKER_00: Customer locked in, that's great.
- 6:02SPEAKER_00: You know, you know, contrast that with some of the AI stuff.
- 6:05SPEAKER_00: There's all this conversation about is it really um a bubble, how much of a bubble, is that demand genuine, you know, or soft?
- 6:12SPEAKER_00: Um, you know, when it comes to Apple and this commitment, this is showing a great strong signal for it.
- 6:21SPEAKER_00: Uh so great job, Apple.
- 6:23SPEAKER_00: Let's see more of your spending, continue to push towards American suppliers.
- 6:28SPEAKER_00: Um, we got to keep pumping up that that domestic uh production number there.
- 6:35SPEAKER_00: All righty, moving on to what's next, the good stuff.
- 6:41SPEAKER_00: The US government.
- 6:45SPEAKER_00: Um, the this administration has announced that they're they will be working for aluminum tariff relief to help spur new U.S.
- 6:55SPEAKER_00: smelters.
- 6:56SPEAKER_00: Uh, the administration is rolling out targeted tariff relief on imported aluminum feedstock exclusively for companies that are actively investing in new or expanding their existing U.S.
- 7:08SPEAKER_00: smelting capacity.
- 7:10SPEAKER_00: Um, if you talk to anyone, yeah, I'm sure Zayn Hegsberger would agree, we do not have anywhere near enough capacity.
- 7:17SPEAKER_00: We the demand is dramatically outpacing um what our supply currently is.
- 7:24SPEAKER_00: So we've got to bring back on that U.S.
- 7:26SPEAKER_00: smelting capacity.
- 7:27SPEAKER_00: Um, unfortunately, that's not a quick move.
- 7:31SPEAKER_00: Um, that is a multi-year process.
- 7:34SPEAKER_00: Um, hopefully, this is going to provide uh a little bit of short-term relief for the buyers of that capacity.
- 7:41SPEAKER_00: Um, you know, the policy itself appears to focus strictly on primary aluminum products.
- 7:48SPEAKER_00: Um, for example, it looks like Century Aluminum is already taking advantage of it in their new Oklahoma smelter.
- 7:55SPEAKER_00: Um, and it appears that that is a partnership with Emirates Global Aluminum.
- 8:00SPEAKER_00: So we'll have to get into that a bit more on that deal.
- 8:04SPEAKER_00: Um, but at the end of the day, if it's not ideal that we're we're still reliant on, you know, this foreign supplies for aluminum, considering how much we consume in the country.
- 8:15SPEAKER_00: But you know, this is one of those things that hopefully helps stabilize pricing a little bit, uh, gives shops a bit more visibility because at the end of the day, you know, this is just crunching and crushing their um bottom line.
- 8:27SPEAKER_00: That instability and uncertainty of tariffs has been a huge killer, um, really creating issues.
- 8:32SPEAKER_00: So the end of the day, if this provides a little bit of short-term relief until we get that domestic capacity online, that's great.
- 8:40SPEAKER_00: Um, you know, we're moving past generic tariffs, hopefully, and into more conditional behavior-driving type policy.
- 8:47SPEAKER_00: Um, I've said it before, I like to see this administration and frankly, you know, ongoing future administrations continue to have more focused and direct industrial policy that is targeted to actually induce supply into the market.
- 9:05SPEAKER_00: Blanket tariffs don't do that.
- 9:06SPEAKER_00: A more targeted approach that helps you know subsidize or encourage that domestic reshoring of capacity is huge.
- 9:14SPEAKER_00: Um, primary aluminum, obviously, critical vulnerability for defense, aerospace, shipbuilding, component manufacturing, you name it.
- 9:22SPEAKER_00: Um, you know, we need it.
- 9:24SPEAKER_00: So um great news, you know, in the grand scheme of things, by linking kind of that tariff relief to your CapEx on US soil, building here, bringing back capacity, you know, that's great to see the administration treating, you know, trade policy and hopefully an early indicator of some sort of industrial policy um as more surgical, as a more surgical lever to drive and force domestic capacity expansion, reshoring.
- 9:53SPEAKER_00: Um, hopefully this is the start.
- 9:55SPEAKER_00: Um, but we're gonna have to kind of wait and see what that looks like.
- 10:00SPEAKER_00: Um, but you know, with that, um, we have you know, our next story, a new executive order uh from that is key for strengthening uh kind of critical critical minerals or critical materials, excuse me.
- 10:18SPEAKER_00: Um and what we've got is the Department of War uh is tightening the restrictions on the foreign critical materials.
- 10:27SPEAKER_00: So along with the aluminum announcement, uh we just talked about the DOW is cracking down on waiver policies that um until now have let defense contractors uh buy critical minerals uh from frankly, you know, nation states that we shouldn't be.
- 10:45SPEAKER_00: I mean, Russia has been a huge supplier of it.
- 10:47SPEAKER_00: Um I am of the you know opinion that Russia is a very significant geopolitical adversary and we should not be sending a dollar there, um, similar to China.
- 10:58SPEAKER_00: Um, but the waivers for adversarial sourcing of rare earths and specialty minerals are supposed to now be significantly harder to obtain, uh, which should force uh suppliers, contractors to really uh accelerate kind of that allied domestic sourcing.
- 11:16SPEAKER_00: Um, historically, there's been little required in the way of proving that you really overturned every stone looking to find that domestic supplier of these things.
- 11:31SPEAKER_00: Uh, we've made some huge discoveries in recent years.
- 11:34SPEAKER_00: There is uh early indications of some increased refining capacity.
- 11:39SPEAKER_00: We're still severely constrained, so uh we're not going to see those waivers go away completely.
- 11:44SPEAKER_00: Um, but it really does put the onus on a lot of uh these companies to put in more of an effort.
- 11:50SPEAKER_00: Um it this is this is a good signal in my mind.
- 11:56SPEAKER_00: Um, you can't decouple the supply chain if you keep granting, you know, exceptions.
- 12:02SPEAKER_00: You know, it's been too easy for people to simply say, Yeah, we can't find anything, throw their hands up to the air, and you know, they just keep sending money to China and Russia.
- 12:11SPEAKER_00: Um by closing, you know, some of these loopholes, the these you know ridiculous pieces of the waiver process, DOW is gonna um kind of it is gonna force some pain.
- 12:23SPEAKER_00: Um, it's not gonna be easy, uh, but it it these contractors have got to get it together.
- 12:29SPEAKER_00: We've got to be able to push that demand.
- 12:30SPEAKER_00: We need to be sending that demand signal domestically, um, and it does give an opportunity to source from allied friendly nations.
- 12:38SPEAKER_00: So hopefully, again, another opportunity to uh really drive signals here in America, drive signals we need for the capital markets to catch up and support uh the investments in not only the extraction uh but the actual refinement and processing of them.
- 12:57SPEAKER_00: Um so yeah, we've got some warnings from industry groups that we're gonna have some short-term capacity issues.
- 13:04SPEAKER_00: Um I think that we have some level of artificial scarcity, um, but I think that that scarcity ultimately, you know, that's a catalyst for you know forcing private capital into domestic mining and processing.
- 13:20SPEAKER_00: Umpopular, short-term, it's gonna hurt.
- 13:23SPEAKER_00: Um, but we need it.
- 13:25SPEAKER_00: There's no excuse for us to rely on uh you know China and Russia and other unfriendly nations to give us those materials.
- 13:34SPEAKER_00: We've we've got to get it together.
- 13:36SPEAKER_00: Um you know, uh not much more to it.
- 13:41SPEAKER_00: Um next up, we've got Saronic as an that has announced Texas for their next uh or for their huge shipyard.
- 13:53SPEAKER_00: Um Saronic, they are the autonomous um shipbuilding company, uh really cool stuff.
- 14:01SPEAKER_00: They are putting it in Brownsville, Texas.
- 14:03SPEAKER_00: So in the Starbase area, um, which I think is pretty significant.
- 14:09SPEAKER_00: Um I've heard a few arguments that they were holding off California, uh particularly the California Forever type project, uh, but due to issues with the state legislature, um, they weren't able to make that, hence the shift to um what may or may not, in fact, be their backup.
- 14:24SPEAKER_00: Um, I think Brownsville is a great choice.
- 14:26SPEAKER_00: Texas, once again, coming in with huge, you know, huge economic development win.
- 14:31SPEAKER_00: Um, not really surprising, but$3.2 billion going to Brownsville, Texas to build what they're calling Port Alpha.
- 14:40SPEAKER_00: Um, and it is going to be the largest and most advanced autonomous shipyard in the country.
- 14:46SPEAKER_00: Awesome headline.
- 14:47SPEAKER_00: Um, sadly, not necessarily the biggest deal, considering we barely make ships in America and have been getting our butts handed to us by China for a long time.
- 14:58SPEAKER_00: Um, regardless,$3.2 billion to move the needle is going to be huge.
- 15:03SPEAKER_00: Uh looks like the initial investment is for uh roughly$835 acres, potential to scale that up to nearly 4,400 acres and create is expected to create nearly 10,000 direct jobs over the next decade.
- 15:22SPEAKER_00: So if you have not seen it, uh Saronic has some awesome, awesome um ships that they've been building.
- 15:29SPEAKER_00: One of them was recently used to uh rescue some downed pilots, I believe, in the Strait of Hormez.
- 15:37SPEAKER_00: Um, really impressive stuff they're doing.
- 15:39SPEAKER_00: Uh, and this facility for production is going to be dedicated strictly to their highly automated software-defined manufacturing of their medium and large autonomous surface vessels.
- 15:51SPEAKER_00: So this is um, I mean, this is what next generation maritime production, you know, shipbuilding is going to look like.
- 16:00SPEAKER_00: Um, we're not, you know, necessarily retro.
- 16:03SPEAKER_00: This isn't retrofitting, you know, a 50, 100-year-old shipyard.
- 16:08SPEAKER_00: This is kind of building ground, isn't kind of, this is building ground up.
- 16:12SPEAKER_00: You know, this greenfield approach um is, in my opinion, what's going to take for a lot of to build a lot of the industrial capacity we need.
- 16:22SPEAKER_00: Um you can't fix a lot of the systems that are simply so broken.
- 16:28SPEAKER_00: Um, you can, but it's a lot more expensive and not particularly efficient.
- 16:31SPEAKER_00: They are building an entirely new industrial ecosystem, you know, software-defined automation, but building incredibly important things.
- 16:40SPEAKER_00: So um I think it is great to see this show up in Texas again.
- 16:46SPEAKER_00: Major kudos to the state's economic development.
- 16:49SPEAKER_00: Um, you know, they've made it easy, and that's why we keep seeing projects show up there.
- 16:54SPEAKER_00: Um, I think that there is a reason they pick them.
- 16:59SPEAKER_00: You know, Texas is proving that traditional coastal hubs um have dropped the ball.
- 17:05SPEAKER_00: Um, and places like Texas that offer the land, you know, that that offer the regulatory environment most importantly, um, you know, they're gonna keep winning.
- 17:15SPEAKER_00: Uh, there's a reason you keep seeing factories show up in these types of areas, big announcements.
- 17:21SPEAKER_00: Um, that regulatory environment is huge.
- 17:23SPEAKER_00: And frankly, we need uh this shipbuilding to really uh really really move the needle.
- 17:30SPEAKER_00: Um, so great to see.
- 17:32SPEAKER_00: Exciting, congrats to Saronic.
- 17:34SPEAKER_00: Um, can't wait to see how this kind of plays out uh in in the next few years.
- 17:40SPEAKER_00: So big news there.
- 17:42SPEAKER_00: Uh moving on, what do we got up next?
- 17:46SPEAKER_00: We got TSMC.
- 17:48SPEAKER_00: Um, what do we got there?
- 17:51SPEAKER_00: Let's they are planning to spend another hundred billion um to uh add to their US manufacturing.
- 18:08SPEAKER_00: Uh there uh it is actually the largest foreign manufacturing investment in U.S.
- 18:13SPEAKER_00: history.
- 18:13SPEAKER_00: They're doubling down on their US uh footprint, bumping up the planned Arizona investment to a massive 265 billion total.
- 18:26SPEAKER_00: Um a lot of this is driven obviously by the surge in demand for processors by AI.
- 18:33SPEAKER_00: Um so this they are claiming the their Arizona campus is going to scale to at least 10 fabs, um, two packaging facilities.
- 18:46SPEAKER_00: Let's see.
- 18:48SPEAKER_00: Two packaging facilities, um, and a new US-based RD center.
- 18:56SPEAKER_00: Um, so that is great.
- 18:58SPEAKER_00: Uh initial reports or the early reports out of their Arizona Fab is that their yields are already matching uh their mature operations in Taiwan, uh, which is huge.
- 19:09SPEAKER_00: Uh their Taiwan facilities, obviously, some of the world leaders, um, but the you know, huge signals for for America being able to compete in the fab and um the the semiconductor space.
- 19:23SPEAKER_00: Uh early narrative uh you know has been that the plant in Arizona was facing delays and issues with workforce.
- 19:33SPEAKER_00: Um, I think the fact that we've seen them now match the yields in Taiwan and to see them expanding to 10 fabs um kind of puts that to rest.
- 19:44SPEAKER_00: Uh obviously, this is a highly advanced manufacturing process, very difficult, very important.
- 19:50SPEAKER_00: Um, but see them double down, put pump another 100 billion into it.
- 19:55SPEAKER_00: Um I at the end of the day, it proves US can still execute at the frontier of advanced manufacturing.
- 20:02SPEAKER_00: Um you know, when the capital talent and kind of that strategic piece or policy alignment are there um and in place, you know, nobody's nobody's gonna beat the US.
- 20:15SPEAKER_00: Um end of the day, this is great news.
- 20:17SPEAKER_00: Um, obviously I'm a little skeptical.
- 20:19SPEAKER_00: Uh, I think there's a bit of an AI bubble, but um having this domestic capacity, domestic production, huge for the US.
- 20:27SPEAKER_00: Um, great win, great news uh coming out of TSMC.
- 20:33SPEAKER_00: Let's see.
- 20:35SPEAKER_00: Next up, Pratt and Whitney.
- 20:39SPEAKER_00: Uh RTX's Pratt and Whitney Valox 1500 engine has cleared a critical design hurdle.
- 20:49SPEAKER_00: Um, and this is a new system uh that they have been building from the ground up, apparently, for the next generation of what they call collaborative combat aircraft.
- 21:02SPEAKER_00: Um, it sounds I've seen some renderings of it, but basically you've got kind of that um master slave master aircraft with a human pilot and then a series of slave drones uh that fly with it.
- 21:16SPEAKER_00: Um very kind of cool, interesting scenario.
- 21:20SPEAKER_00: Um obviously, combat operations continue to evolve and advance in the world of drone warfare.
- 21:26SPEAKER_00: This is um obviously an important step and something that's needed.
- 21:30SPEAKER_00: But having uh this milestone, you know, a purpose-built engine successfully um hitting that milestone where they have taken a purely digital first engineering approach.
- 21:41SPEAKER_00: Um it has uh they claim um led to you know high performance development, you know, more affordable uh uh equipment development and uh dramatically accelerated the development timelines.
- 21:56SPEAKER_00: Um this being a kind of a puff piece news announcement, there's not a ton of hard details and what that actually means and how they have actually kind of accelerated those things or improved the numbers.
- 22:09SPEAKER_00: Um, but at the end of the day, uh, you know, the future of defense manufacturing and even more broadly, the entire you know, manufacturing base um is going to rely on more of this type of work.
- 22:24SPEAKER_00: Um you know, in in the case of defense, you you can't build a fleet of you know, an entire, you know, air air force basically of you know autonomous drones.
- 22:36SPEAKER_00: If we're taking years and years and years to design and build these engines, um I mean you look at obviously the issues we're running into with munitions right now.
- 22:46SPEAKER_00: We have take have a three to four year timeline on you know tomahawk missiles.
- 22:52SPEAKER_00: Um depleting our stocks has put us in a precarious situation.
- 22:56SPEAKER_00: Uh being able to accelerate some of the development and manufacturing these things is going to be huge.
- 23:03SPEAKER_00: Um, you know, the Valox 1500, I am curious to see more.
- 23:08SPEAKER_00: Uh a little skeptical again, because this is kind of a the manufacturer's puff piece news announcement, but very cool piece of tech, it would appear.
- 23:18SPEAKER_00: Um, and you know, proving out digital first design.
- 23:21SPEAKER_00: Uh, I I think it helps to show that some of these legacy contractors are knock on wood, hopefully learning how to iterate a bit quickly, designed for scale, designed for a very different uh manufacturing environment and workforce that we need.
- 23:37SPEAKER_00: Uh not excuse me, not workforce, but uh production for that we require.
- 23:43SPEAKER_00: All righty.
- 23:45SPEAKER_00: So ran through that's your rundown.
- 23:47SPEAKER_00: Um, we've got more stories coming, but for this week, um some exciting news coming out of different segments of the reindustrialization space.
- 23:56SPEAKER_00: Um, at the end of the day, it's all great news.
- 23:58SPEAKER_00: We've got America building, we've got the capital going to it.
- 24:02SPEAKER_00: You know, this is what we need.
- 24:04SPEAKER_00: So money's going in to the key areas, we're building factories, we're we're increasing capacity, and hopefully we're making some real steps forward um on the reindustrialization front.
- 24:16SPEAKER_00: So, to all of you listening and tuning in, you know, thank you for joining us.
- 24:20SPEAKER_00: As always, whether we're talking robotics on the factory floor, policy that actually moves the needle, or next generation of makers, our goal is always the same to prove that reindustrializing America isn't just possible.
- 24:32SPEAKER_00: It's happening right now and it's pivotal.
- 24:34SPEAKER_00: We've seen it in the news today.
- 24:35SPEAKER_00: You know, we we've got the pieces moving.
- 24:38SPEAKER_00: Uh, if you enjoy this episode, make sure you subscribe and follow the Reforge Pod everywhere.
- 24:42SPEAKER_00: Uh, check out the Reforge Podcast for more and make sure you check out the our website, thereforgepodcast.com, to get our seven steps to reindustrializing America.
- 24:53SPEAKER_00: Until next time, keep forging a future.
- 24:55SPEAKER_00: I'm Colin, and this has been the Reforged Podcast.
- 25:02SPEAKER_01: Thanks for tuning in to the Reforged Podcast.
- 25:05SPEAKER_01: Make sure to like, subscribe, and follow us on all of our social media at the Reforged Pod.
- 25:11SPEAKER_01: We will see you next time.