Letting the Chips Fall

Greetings, fellow TST’er! Here’s a rundown of this issue:

• The microchip shortage is causing a supply pinch, but could it also be a threat to our national security?

• How hybrid training could close the Covid gap for new employees

• Top Gun: Maverick—better than expected

• And so much more!

Industry Highlights: A Microchip off the Old Block

As I shared in the last issue, I had the pleasure of listening to famed business guru and CEO consultant Ram Charan at a conference earlier this month. His keynote centered around the dangers of our current supply chain model, and how our increasing reliance on China has put us at a significant global disadvantage. “Why do we buy stuff from China that we know we can manage ourselves?” Ram asked.

The answer, of course, is that American companies began outsourcing to China because it was cheaper. But after decades of relying on Chinese goods, the country finds itself in a precarious—and potentially dangerous—position.

According to Capital Economics, Taiwan Semiconductor Manufacturing Co. (TSMC) produces 92% of the country’s advanced semiconductors—the microchips needed to build our laptops, smartphones, and ballistic missiles. Should that supply chain be disrupted—say, by a PRC invasion—the results would be devastating. “We’re 110 miles away from going two generations ahead to maybe two generations behind,” former Deputy Defense Secretary Robert Work told the Wall Street Journal.

Several months ago, I wrote about how the US semiconductor industry is doing its best to catch up, but since then, little has changed. Congress passed the CHIPS Act—a proposal that would pledge $52 billion for companies to invest in the domestic semiconductor industry—over a year ago, but it has yet to allocate any funds.

This inaction resulted in Intel announcing this week that it would not be breaking ground on the $20 billion Ohio chip production site it unveiled plans for in January. “Unfortunately, CHIPS Act funding has moved more slowly than we expected, and we still don’t know when it will get done,” Intel spokesperson Will Moss told the WSJ. 

Fortune recently reported that a failure to fund the initiative might also bungle a deal with GlobalWafers, a Taiwanese company that wants to build a $5 billion microchip factory in Texas. “I don’t know how to say it more plainly,” US Commerce Secretary Gina Raimondo told CNBC. “The [GlobalWafers] deal…will go away, I think, if Congress doesn’t act.”

Even if Congress did manage to approve the funding, some think it would make a difference. In an April interview with the Brookings Institution, TSMC founder Morris Chang said CHIPS Act subsidies were “a very expensive exercise in futility.” Though to be honest, you might want to consider the source there.

The fact remains that everyone has acknowledged the danger of this reliance on China—yet no one seems to be taking action. As Washington Post column David Ignatius recently pointed out, investing money in the tech industry shouldn’t be a heated debate. “It’s a ‘makeable putt,’” Ignatius writes. “Come on, Mr. President: Get it done. Crack some heads.”

The Future of Work: Graduation Day

When the Covid pandemic shuttered all public school buildings in March 2020, educational experts knew there would be significant learning gaps students would have to bridge in order to make up for lost time. Two years later, many of those deficits still exist—especially in reading and math, a recent McKinsey report found—but schools are on the road to recovery.

What fewer could anticipate is how those education gaps would affect the world of work.

Entering the “real world” from school has always been a jarring transition for many graduates, but college students who spent the majority of their last two years in virtual classes and internships—experiences that had previously been in-person affairs—will now have the added challenge of navigating a whole new landscape.

“Working from home makes it more difficult to engage in organic conversations in the lobby and around the office,” Bob Orndorff, Penn State’s Career Services senior director, told CNBC. “[These are the] interactions that contribute to early professional growth.”

Adding to the challenge is the fact that many companies, in an effort to recover from pandemic deficits of their own, slashed training budgets. A recent Statista study found that 76% of companies surveyed reduced their training spending in 2021. This means companies must find new ways to acclimate green employees.

One potential solution? Offering training in a format these previously-quarantined students are intimately familiar with: hybrid learning.

According to a report by the Chartered Institute of Personnel and Development, a UK HR organization, just 36% of organizations used webinars or virtual classrooms to deliver training prior to 2020. Now, it’s over half—and expected to rise.

And it’s not just for technical and analytical skills. Companies are also experimenting with how to deliver soft-skill acquisition virtually. Dominic Putt, a learning and development expert at accounting firm PwC, told the Financial Times that online platforms can draw on cognitive science and machine learning to help ingrain necessary soft skills like communication and client relationships. Used well, the platforms could supplement—or even replace—curricula previously delivered in person.

“Companies that don’t update their training models are going to become less competitive, Coursera CEO Jeff Maaggioncalda said in the same FT article.

It’s unlikely the bumpy transition from student to employee will ever smooth out completely, but with a little tech love, companies might at least return to pre-pandemic competency.

The Supply Aside: What I’m Reading, Watching, Listening to, and Thinking About

RE: Supply Chain, Work, and Beyond

• 📕 Read: A couple of years ago, I took a course from Tiago Forte called “Building a Second Brain.” It helped me with productivity and offered strategies on sifting through all of the information at our fingertips as a result of the internet. So I was delighted to see the book version of his course is now available. The concepts are incredible for anyone looking to unlock your creative potential.

• 📺 Watch: It’s hard not to roll your eyes at the deluge of reboots and sequels coming out of Hollywood the last few years. I’m a huge Michael Crichton fan, but I just can't get behind Jurassic Park 16. That said, I absolutely enjoyed scratching my nostalgia itch with the new Top Gun movie, Maverick. The first installment came out when I was 12, and I loved watching this new one through my 12-year-old son’s eyes. I’m not one for hot takes, but it’s better than the original.

• 👂 Listen: Political commentator Michael Smerconish recently interviewed author James Patterson on his Sirius/XM podcast “Book Club,” and I’d recommend checking it out, as it was a wonderful conversation with one of the great storytellers of our time. After reading Patterson’s fiction for so many years, to hear about his journey to becoming a successful author in his 40s is nothing less than spectacular. I particularly enjoy the fact that Patterson so gracefully explains how he can be close friends with both President Bill Clinton and President George W. Bush in such a polarized political climate. (Spoiler alert: Clinton and Bush are actually friends).

• 💡 Think: With all the brouhaha on companies freezing hiring and even laying off workers, I believe it’s a tad bit overblown. Unemployment is still at 3.6% with millions of job openings that companies are still trying to fill. According to Gartner’s research, many companies are already operating at the bone. In a typical recession, companies might lay off 2% of staff. Currently, many companies sit 5% below their ideal headcount. If additional employees are cut, companies would be severely understaffed. Considering how hard it’s been to staff post-pandemic, it would be an unwise knee-jerk reaction to start chopping. Instead, companies should take advantage of the pendulum swinging back in terms of leverage and fill those open roles.

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