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Folks, one of the major stories on the geopolitical front, didn't I want to see the markets front as well, is semiconductors. It's chips. It has everything to do with President Biden's kind of plan to bring back a lot of the production state side. So we decided we would speak to an industry expert who could shed a little bit more light on that very story. We are joined by Jonathan Clampkins, CEO of Aluma from Santa Barbara, California.
First off, Santa Barbara, California. Oh my gosh, so jealous, it sounds amazing. We're gonna get his travel tips in just a second. But let's give a little bit of information on what Aluma actually is. Almu is the stock symbole, It's a semiconductor company. But I'm gonna let him get into the nitty gritty in a second. To me, what really stands out, Jonathan about your company is when you talk about production, your exposure to China is zero. You
are making it right here in the United States. Talk to us a little bit about how that affects your pricing.
Yeah, that's sort of been our strategy from the onset, and Aluma is a unique company. We have a very disruptive technology. We do a piece of the manufacturing process in house in Santa Barbara, California, and then we also work with external foundries that currently are all US based. We're an early stage company. We're at that point where we're transitioning from R and D to production, so we're not in mass production. But I do think there's a
benefit to building your semiconductor chips on shore. For one, we can protect our technology to a greater degree, and I think this puts US in a good position moving forward, given all the incentives to do manufacturing on shore via the Chips and Science Act.
Okay, but not to be the debbie downer here, Jonathan. As you know, a lot of production has taken overseas in order to scale and of course keep cost down. So what is your solution to that, particularly on the labor side for keeping costs down.
So what's interesting about our technology is we're not building the advanced node semiconductors that you hear about in the news quite a bit. So now there are incentives to bring some of that manufacturing back on shore, some of the incentives to build advanced node semiconductor large semi fabs in the US, we focused on what are known as
mature node technologies, high performance compound semiconductors. Today, they're extremely expensive regardless of where you manufacture them, and what Aluma has is the ability to mass manufacture those high performance technologies. So we're already showing our customers that we have the potential to reduce costs by a factor of ten x regardless of where our chips are manufactured.
Are you concerned at all about tariffs, whether that's in terms of importing materials or exporting your final product.
No, I don't think so. I mean we do worry, of course about export laws. That's very critical, and I think we're going to see export laws become more and more strict as we forward, for fear of losing some of our technologies to our adversary. So it's something that we invest resources in understandingstanding export law, ensuring that if we were to send technologies to other countries, to customers and other countries, that we have the proper export licenses.
For now, all of our manufacturing is done in the US. All of our customers are in the US or at least have US offices that we're directly selling to, So not a major concern for us today.
Yeah, I wonder to what extent I guess what you are worried about when it comes to not just I know you're in the semiconductor space, and that's a key indicator of big tech overall. Are you concerning yourself with some of the macro headwinds that we talk about all the time here at Bloomberg that are impacting some of those megacap tech companies. For sure.
I mean we're a small, early stage company, but we of course worry about what's happening in the broader economy, in the broader industry, Like, for example, we hear about all the issues in the banking industry. We weren't doing any direct banking with the banks that were impacted, but we do worry about what that does to investor confidence. We rely heavily on our investor to keep our company afloat. We want our customers to be doing well, otherwise they'll
retract and sort of the global economy. We do worry about security. We've heard a lot in the context of chips about security, about national security, about economic security, about apply chain security, which are all very important, but we also wonder and worry about what I referred to as innovation security. If we offshore our manufacturing, we're handing technologies off, we're handing manufacturing, we're also handing over the intellectual property
and that doesn't come back. That's an issue. I also worry, for example, about our country and the fact that we're so inventive. But if we're not doing as much manufacturing, if we're not doing things, if we're not building hardware, we won't invent or innovate as much, and that's critical, especially for high tech, and we're part of that ecosystem.
Well, I know that you're a company. Part of the reason that you are part of the major team responding to the Chips Act initiatives is everything that you just mentioned. I wonder if I can get your take on the Chips ACT. If you had to give it a letter grade in terms of potential impact, what would you give it?
Can I give it a plus? At least in context? I think it's great. There's so much more interest in semiconductors. There was a lull there for a few years where investors weren't looking at hardware, weren't looking at semiconductors as much. They were looking more at software companies. But semiconductors are so important. They fuel essentially everything that we do. We're relying on semiconductors to speak right now, So I think
fundamentally the Chips and science that's is great. We're starting to see roll out of some of the solicitations that teams are responding to. We've already responded the one of the solicitations that's come out through the Department of Defense, and there's many more to come. So we're very excited
about what the Chips Act is going to do. And in terms of public funding and support for research and development for semiconductor manufacturing, this is bigger than anything I've seen in my career, and it's really once in maybe fifty year opportunity for the semiconductive industry. So I think this is a great thing that's happening.
Jonathan, of course you'd give it an A plus. That's like if I could give ward myself a grade, I would also give myself an A plus. But Jonathan, talk to me a little bit about kind of how becomes a bell weather to some extent. Maddie was talking a lot about how chips are, at the end of the day, extremely exposed to the macro atmosphere and the macro environment. In my eyes, they are a bigger bell weather for recession than Caterpillar or Exon or some of these other
kind of more value specific companies. Talk to us about your recessionary call here, when do you expect it?
Yeah, I think, well, we saw this in this specific industry that we work in. We build very advanced sensor chips that can be used, for example, in the automotive industry, in cell phones, in ARVR and others. But in particular in the automotive industry, there was some retraction. For the last couple of years. There was a supply chain shortage.
Car manufacturers were worried about getting sort of the conventional chips that they needed to put on board in their vehicles so they could get the cars off the manufacturing line. And the technology that we're building is sort of a next generation technology that's going to go on cars, advanced sensors to enable more driving safety, to enable autonomish driving.
So if some of these macro issues are at play, our customers are not going to invest as readily in sort of the next generation technology and adding technology to cars. They're going to worry about the technology that's already there. But I think things are looking up in our industry. The automotive OEMs, the car manufacturers are all very dedicated and committed to deploying this technology, and we're seeing increases in the number of chips and sensors that are being
demanded by those automotive oms. So we're very excited for what's to come.
Yeah, a lot of pieces to digest. Jonathan Clampkin, the CEO of Aluma. ALMU is a ticker on the New York Stock Exchange. I believe we thank you as always for your time and insight on a chip sector. Matty. That is I still think driving the conversation. I mean, this was the entire story of twenty twenty one, right that there are no chips, How are we going to make washing machines and cars and phones? And what will Tesla do? And right, what happened to that?
I mean, it's exactly what Jonathan said. It's part of everything that we touch, including how we're having this conversation, and it's also a really key component of what we're going to see from these big tech companies. We keep having the conversation about how Apple is looking to diversify, going into Ireland, India, even here in the US. So as those geopolitical tensions continue with the US and China, it's a very tenuous situation.
And how some of the big tech companies, to your point, Apple were making their own chips certainly something that's going to be a hot topic this week. Folks were still not done stick with us. This is Bloomberg