Welcome to tech stuff. I'm os Voloshen here with Cara Price. Hi Cara, hi os So. I recently talked with a fellow, Britt who reminded me of something that I think you Americans often take for granted.
The center of gravity for the tech industry is so much on the West coast of the United States. It's you know, you could imagine the whole thing just tipping over into the Pacific Ocean. It's so it's so heavy. And that's great for California, it's great for Seattle at Washington State. But it's worrying and it should be of a great concern to the rest of the world. What is our future? Are we just going to be takers not makers?
You know, it's really interesting because as an American like I rarely imagine what it's like to be a taker rather than a maker, because so much innovation comes from our tech sector.
You know, that's right. Nick McEwan has seen the story play out from both sides of the Atlantic. He built rather an impressive roster of credits, Professor of computer science and electrical Engineering at Stanford, Unicorn founder, and a meaningful claim to having built the Internet. His work formed the basis of Cisco System's GSR router, which at one time made up seventy five percent of the backbone of the Internet.
But Nick recently returned to the UK and he's become particularly concerned about the fate of Britain's technology sector because he in fact sits on the Prime Minister's Council on Science and Technology, which.
Is like an incredibly powerful position to have. But I'm also biased because of how much power this US administration handed over to Elon Musk and Doge briefly, very briefly.
But I'm glad you brought Doze up because I couldn't resist asking Nick when we first met on the phone whether he was Britain's Doge. He laughed in that classic English way, which I think was his way of deflecting and saying I think you just did it, his way of saying get lost. But of course when I got him into the recording studio, I had to ask him what he thought about Doge and how Elon ran it.
Immense respect for him as an entrepreneur and as a technologist. I think that he's brought about some of the most incredible technology, brought it to market. I think it turned out that he wasn't so good in the political sphere. I think the sort of the slash and burn approach to trying to streamline government just showed that he didn't have the experience didn't work, and I think it was a pretty much in a visible failure. I think the
real sad thing about that is the wasted opportunity. I think everyone who looks at the US government the British government can say, of course it can be streamlined, of course it can be improved, and by the abysmal way that he handled it, it set us back a long way because it's going to be very hard for someone else to step in with the same role and say that they'll give it a go. I don't think anyone's going to trust that someone could do that.
Well. I'm curious, like how exactly is Nick helping the UK government be more efficient and like, how does he see you know, this role being something that could actually be effective as opposed to dismal.
Yeah, unlike Dough, she doesn't have executive function. He's literally an advisor, right, and one of the things he's most interested in is how Britain best positions itself for the future. We spoke a lot about AI chips, and interestingly, Nick's great ambition for the UK is to take second place behind the US in chip manufacturing. He wants, he wants to bet, but lifts on the rise right now.
Some people would argue it's better to be left.
Nick also sits on the border of this government agency called ARIA, the Advanced Research and Invention Agency. For me, it was just cool to get an inside view on how my own country's government is positioning itself for this new technological age, especially the time when something else I'm fascinated in, which is how many nation states are starting to get deeply involved in the private sector, starting to kind of be market participants themselves, like you know, the
US investment in Intel under Trump. And actually Nick, funny enough was a senior figure at Intel for many years. But without further ado, here's the rest of our conversation. So on Earth persuaded you to depart from sunny California to rainy Britain to advise the British government to move from the future to a place that often looks like the past.
You know, I left the UK in nineteen eighty nine as a somewhat angry twenty six year old feeling there was no future for someone that was interested in technology and the UK. It was the time of the Thatcher government, where all of the emphasis and focus was on the city and growing the financial institutions. You could look at and say that that paid off, but they came at the cost for technology, and it just seemed that engineer was still a dirty word. Back in nineteen eighty nine,
I left saying Okay, I'm done here. My tribe is in California. But in the meantime, you know, it would be easy to say, oh, the UK just languished. You know, we had our ups and downs, and there was certainly some big missed opportunities we had over the years. But I really felt as though something was changing. There was a much more of an optimism about our opportunity, both
in AI and in technology more generally. I'd seen that firsthand through interactions with UK companies, UK universities, so I felt sort of felt the ingredients seemed to be coming together. And I'd started to read about ARIA, you know, a whole new bold way of funding research from government. Thought okay,
you know there's there's something that's changing there. And you know, I'd been it fairly involved in a number of government funded research projects Stanford, from NSF, from Darper, and various other sources, and so it was very familiar with how that worked in the US, and you know, as a consequence, I then got more involved with ARIA and joined their board.
The paradigm established by Elon and Doge was basically, technologists are better than bureaucrats at deploying technology and creating opportunities for technological growth, which should be kind of national strategic priority.
I mean, it's interesting because the mission of DOSE was really around slashing and cutting, whereas you know, the lesson you might take from Silicon Valley and the extent to which it was built on the foundation of government investment from the United States government over the last decades and the extraordinary concentration of wealth and power that investment created, both the Silicon Valley, but you know, more widely for
the United States. As you think about what you're trying to do in the UK, it sounds like it's much more in that latter camp.
Yeah. Absolutely, I'm an enormous fan of careful, thoughtful, bold investment by government in order to be able to get things started and wherever possible, for government then get out of the way, because the free market and startups and entrepreneurship are a wonderful way to create economic growth. But you can kick start them with investment in university's investment in small companies in order to be able to get this going. And Silicon Valley is a fantastic example of
this all across silicon value. We've seen how that model works. So you know, I think what we can do in the UK is several fold. First of all, we have to look at strategically important areas that we can invest in. One that I've been focused on in particular over the last year is the AI chips, so chips for the AI market. Nearly everybody that's making money, serious money and serious economic growth out of the AI market are the
people building the chips. In Vidia being the bright shining example as the most valuable company in the world, just top five trillion dollars in terms of its market cap. So you know, where is our role in all of this. What is the opportunity for the UK. We have a strong history in the semiconductor industry. We have a strong history in computer architecture. You know the stories we built the first commercial computer we built the first electronic memory.
We have ARM designs ninety percent of the world CPUs, so we've got a strong history in this in this area. How do we rebuild that in order to be able to take a sort of a chunk of this opportunity. To put it into perspective, the market value of Nvidia
is ten x that of open Ai. Yet when we think of AI, we tend to think of companies like open Ai and chat GPT obviously fantastic growth, but those who are producing the infrastructure upon which it runs, they're the ones that are bringing significant value and lasting value. It takes a huge investment in order to build a business like that, but this is where a lot of opportunity is and it's growing currently at about thirty percent per year. There are very very few markets that grow
at thirty percent per year. By twenty thirty three and the current growth rate, the AI chip market worldwide will be seven hundred billion dollars. That is staggering. Imagine if the UK could reach up and grab five percent market share of that seven hundred billion dollars global revenue, there will be thirty five billion profitable, high margin dollars of
revenue into the UK. I think that is the opportunity before us, and I think if we can be ambitious and go after it and invest, train our workforce get ready for it, it is an enormous opportunity for economic growth for the UK.
So it's working back from a premise of where you need to be in ten years in terms of having the best chip talent outside of the US.
That's right, yes, and I happen to think that we're in a very very strong position now. We need to double our workforce in order to be able to do it. We currently have about twelve thousand chip designers in the UK and it's a slightly aging workforce, so we actually need to move quite fast just to stay at the status quo. But with an industry that's growing at thirty percent per year, we probably need to double our workforce within the next ten years. So we need to be
training a lot more people within the country. That's getting
more people into electrical engineering and computer science degrees. Those are mostly people who are doing a level physics right now in the UK, so you know they're the seventeen eighteen year olds right now, and so you know, I've been recommending to the government that they increase their bursary scheme to incentivize and encourage more A level students to go into electrical engineering so that they can be rare to be chip designers in four or five years time.
And this sends a message, right, It sends a message that this is important. We won't get there by training our own A level students alone. We need to bring in experience chip designers from overseas, So figuring out with our visas and encouraging and incentives to entrepreneurs and chip designers from overseas, encouraging outposts from chip design companies to move to the UK. So we just increase that talent base,
we increase the concentration. And frankly, the US is not so appealing for many people who are in science and technology right now, and they'll say, actually, that's not somewhere I want to go. I was just talking to someone the other day, very experienced technologist who had recently moved to the UK and who decided, I don't actually want to move to the US right now. This is not an environment that feels welcoming where I want to build
my career, where I want to move my family. I'd actually much rather stay here.
What do you say to people who are that we're in a bubble right now? Obviously you were on the inside at Cisco, which was briefly the most valuable company in the world before the dot com crash. How durable and sustainable is this compute build out?
It will for sure have peaks and troughs, just as we saw and the build out of the Internet. I think it would be reasonable to expect that we're in some kind of hype cycle at the moment. I have no idea when that will plateau or when that might have a sort of a correction, just as we saw with the Internet in the nineteen nineties. It may be a little bit like a small version of the bubble that may happen in the future. But just think what
happened afterwards. The Internet didn't stop. It just took a setback for a little while, and then it came back with a vengeance. Yeah, we got rid of a lot of the fluff that was being invested in at that time, but the good companies survived. They continue to grow, and all the social media companies that came along, all the other Internet companies that came along, and then it made AI possible because of the interconnection of compute the amount of data that was available, and so I expect we'll
see the same thing happen with AI. It'll go through cycles and plateaus, but long term, it's not a technology that we'll forget. It's not a technology we'll say, oh, well, we don't need this anymore.
I mean, it's an interesting position for you because you've got to observe and participate in the proliferation of the Internet, and now the proliferation of AI is starting in your view, and you get to actually advise the government on how to think about it and how to prepare for a future where the UK actually gets to capture part of the value. But you also have to think about downside risk.
I think you have to be prepared to make old bets knowing that some of them won't work out, and this is hard for government to do. Whether you're a short term elected official or you're a longer term civil servant. No one feels that they get rewarded for taking a
big bet that doesn't work out. So the most important thing I think is to help government get comfortable with the necessity of taking risk, and therefore the best thing to do is to rather than thinly spread what will always be a limited budget, particularly in fiscally tight times like now, is actually to make a reasonable number of bets and to go along with experts who have some skin in the game investors usually or entrepreneurs, and work with them or invest along with them in order to
be able to use their expertise. And I had said before, I think the biggest growth potential that we have in this country is in aichips, the design of aichips. I don't think we should be manufacturing in them in the UK. That's a nation state activity which is well beyond our budget. Actually, the opportunity is to do what AMD and Invidio and Broadcom do, three of the most successful companies in the world. They design them. They create the intellectual property for the designs.
After the break the race for second place in AI chip design, stay with us. Welcome back. I'm as Velocian and you've been listening to my conversation with Nick McEwen, who sits on the Prime Minister's Council on Science and Technology. Before the break, Nick mentioned that he believes the UK government should help Britain be a power player in AI chip design. But what surprised me is that Nick is vying for second place.
What I'm looking to do is to see how can the UK be not first in the world. I think we have to concede that the US has as pretty much licked at this point, with a vast majority of the AI chips being designed there and the products are sold from the US. But who's going to be second?
Which country in the world is going to be second in most areas of technology, that's China, We always say China, and in fact often they come in, they commoditize, they invest, like they did with solar panels and photovoltaics right, and then anyone else that was trying to be in that space basically was shut out and gave up. They can't
do it here. And the reason they can't do it here is because AI chips use the most advanced processing nodes, which in the semiconductor industry right now is three nanometers or two nanimeter nodes. China can't use nodes below seven nanometers at the moment because of export restrictions that don't give them access to the technology that they need, so
held at Bay. So beyond the US, who are the countries that are in the best position with the most experience of doing chip design, that have an understanding of AI. We are, after all the only country outside the US and China that has a foundational model company deep mind. We have a long experience of being architects and designers of chips. If we can put those together, couple with our universities, then we can be the second best in
the world. So we should be able to get much more than that five percent that I talked about earlier. We should be able to get more than that, So it's a pretty conservative ambition.
You mentioned ARM, which is one of the top chip design companies in the world, founded in Britain, I believe, but majority owned by the Japanese company soft Bank. Is that a win for the UK chip industry and would you be happy if creating the next ARM is part of your legacy.
I'd love to see ARM continue expand it's foot in the UK. Has a significant number of R and D engineers in the UK and to a large extent, it's still very much a British company because of its large footprint in Cambridge and other parts of the country, so you know it is a true British success. Would we have preferred that it's stayed as a UK company, of course, but it's still bringing significant revenue and tax base into
the country. It's still training. They have a very big training and internship program, so they are training the next generation of chip designers, whether they work for ARM or whether they go off and start their own companies. And that's how these things work.
You know, when you think about what it might look like to own five percent of the market, what does that look like practically in terms of the product people will buy. Will it be I can't get access to Nvidia and therefore are by British chips? Or I have something which is less complicated and therefore I don't need the top of the line in video chips, so are
by British chips? Or is that more ambitious? Is there more specialized in applications that you think will be geospace or whatever it may be that the Britain can win in.
So I think it's good to make an analogy here. We talked about Cisco earlier in the early days of the Internet. They were clearly a very dominant company very early on and became for a while the most valuable company in the world. And what happened to them was what happens to many companies at that scale, and then they start to look at markets in terms of are they big enough, and so what happened is there would
be new markets. Frankly, they weren't big enough, so they didn't develop them, and so you had this whole ecosystem of other companies that popped up producing them and lowerhol those markets became a lot bigger over time, and so it suddenly diversified the market and there were many opportunities for other players in the AI space. The same thing will happen. It's sort of inevitable that Nvidia will start to look at some adjacent markets or smaller parts of
the market. Sooner or later, there'll be markets for which they say, these aren't really big enough for us to go after. They could be in parts of robotics, they could be parts of factory automation, they could be in autonomous drones, they could be in medical equipment. And someone will come up with an innovation that fits that need. And we have a number of promising startups, most of them in stealth mode in the UK, who are doing
exactly that they're going after. Particular areas or different sort of different techniques that they think will be more efficient, that will go after specific portions of that market where we can best serve the needs that will be unmet by other parts of the market.
Do you worry about the future of the UK if we don't take advantage of this on stony generation opportunity.
I think it's once in a generation because if we don't step up and do it, others will and they won't be room left for us. So it's one of those things where we have to go and grab a stake of the market because you have to be there for the long term. You have to be there for multiple generations to build the trust and the understanding for
the customers. Who are those customers. They're big hyperscalers, they're people that make cars, they're people that make robots, and their system integrators generally people who are building systems out of those chips. If we stay in the market for a while, we'll have more of those system companies in the UK. Today we don't really have a large system integrator, someone that takes the chips and builds them up into systems in the UK. If we're building the chips, those
companies will come along. We'll build that expertise.
You mean cars factory like high tech manufacturing back on British shaws.
Yeah, robots, autonomous vehicles, drones. If we're building the chips and we have the ambition they will come. We'll then develop packaging technology for putting more of these chips into one package, will gain a broader expertise and that's then sustainable. It's very difficult for that to then fail once you've got that broad expertise across the market as a whole.
So if we don't do that, we won't have that, we won't get that revenue, and we will eventually be crowded out and it'll be very very hard for us to make in roads.
Let's talk about manufacturing versus design. You are pushing the UK to rush towards second place in terms of the second leading chip designer in the world after the US. The US is thinking about sovereignty and chips very differently, which is thinking about how can we ensure the actual manufacturing of the chips. Right, and you have a background and work at Intel, I think a still of senior
advisor there. The US government took a direct stake in Intel Recently, Intel is spending tens of billions of dollars on its new chip fabrication plants here in the US. What's happening in the US in terms of thinking in political terms about sovereignty of chip manufacturing and how's it different from the considerations in Britain.
You know, I think that it's very important to think of the distinction between the design of a chip and manufacturing. I'm sure you know this already, but I think it's it's good to be very crystal clear about it. Think about when you're designing a building a house. You have an architect who draws up the plans, and then you have a contractor or a builder who will building. They are two very different skills, three different skill sets that involve a very different group of people. The design is
like the architect, it's where the creativity. It's the understanding of what's possible, the understanding of what you're trying to accomplish. And then there's the building, which is sort of the execution of that design of turning it into the into the building or into the chair. Today, it costs about twenty five billion dollars to build a manufacturing plant for semiconductors. You need to be all in, you need to have a huge economy, you need to have a very big
determination to be a part of that industry. And the US has been part of that for a long time through multiple companies IBM, Intel and now Global found But there's a lot of expertise in the US, so it provided a good base to be doing that from including the US economy is much bigger and can off forward that kind of investment. It also has a strategic imperative,
which is as a strong global presence. The US felt that it was strategically important not only for itself, but for all its allies, for the rest of NATO, and for its friendly nations, which includes US. So to some extent, we get to ride on the coattails of that American investment, that American expertise, and that American ambition as the US rebuilds and on shores that manufacturing through its investment in Intel, Anti, SMC and others in order to make sure that there's
lots of manufacturing. And as you know, there are multiple manufacturing plants being built across the United States in Arizona, in Oregon, in many parts of the US and We'll see more of that happen over the next few years because of the approach that the US government is taking, and the great thing for US is that means we don't have to.
The US has those same challenges you outline for Britain though, in terms of is the workforce prepared enough for this type of advanced manufacturing and is the immigration system flexible enough to allow the people who can do a great job of that to come in. I mean the images of the Hundai plant are unforgettable.
Yeah, yes, I mean I answer where your question is coming from. I don't believe this applies to the semiconductor industry. We have been producing leading edge chips in the US for generations. You have to go and visit Arizona and you see the long line of plants that Intel has their multiple generations, huge numbers of people that have been employed, very skilled operators that are expertise in manufacturing. You go down the road, you see the same thing at TSMC,
so that is already there. It's already present. Yes. Sure, the US may have more stringent requirements on environmental regulations on where you place those plants. It may not have the same sort of openness to immigration that it once did. But there are plenty of people in the US. There are plenty of high paid jobs, and it's the sort of jobs that many many people are trained for in the US way more than they are here in the UK.
So actually very confident that the US is in a very good position to be able to rebuild its manufacturing strength. I think it's a long long way down that path already.
Just to close. I mean, it sometimes seems like there's this kind of new statism emerging where you know, in the past, people in the US or the UK would look at China and say, there are these state and enterprises and the private companies are very subject to the demands of the Communist party, and that's one approach to
technological buildout. We in the West have a completely different one, which is all to do with private markets, and it seems to the market and the role of government, you know, should not really interfere in the technological innovation and build out process. It seems like of the course of a very short period of time that's completely changed. So how would you describe this new paradigm that's emerging in What are the risks and what are the benefits?
Of it. So I actually want to push back on the premise. I think the posters that say that that's how the US operates and not really telling the truth. The US has been a major investor in R and
D manufacturing over a very long period. Yes, of course, not the same way as China, very different approach, but in terms of investing heavily, this has been the history of the success of the United States, whether it's through funding into research from the National Science Foundation, National Institute of Health, from DAPER, etc. All the way through to
government investment. So yes, sure, free market capitalism and capital investment is a very important part of the process, but generally that comes along later when you started to see the success. We should always be looking to see whether we should make an investment in order to be able to get that edge. The whole world economy today runs on chips, not just AI. Just to remember what happened during the pandemic when there was a shortage of chips.
The automotive industry, worried about the economic downturn during the pandemic, said we don't need to buy the chips, okay, So the chip companies turned around and sold the ball to the data center companies that were growing. The automotive companies came back a few months later and said, oh, turns out there's an uptick in the economy and people are buying cars again. Chip companies said, sorry, we've just sold all those chips to others. You're out of luck, and
there was a catastrophic effect on the world market. I joined Intel as an executive running the network and communications business in twenty twenty one in the middle of the pandemic, and I saw this firsthand as companies were duking it out for access to chips. It was a very stressful time, so we could see how important it is to the underpinnings of the world economy, which is why everybody should be worried about China's ambitions for retaking Taiwan and reintegrating Taiwan.
The risk there of it disrupting the foundation of the world economy are very real, are very palpable, and so it makes sense for the US to be leading the charge and trying to rebuild that semiconductor manufacturing capability on its own territory. It's not specific to this particular administration. Is the need that will live throughout multiple administrations. I believe.
Thank you so much, Nick every appreciding the time.
Oh thank You've been really enjoyable.
That's it for this week for tech Stuff.
I'm Kara Price and I'm os Valanschan. This episode was produced by Eliza Dennis, Tyler Hill and Melissa Slaughter. It was executive produced by me, Kara Price, Julian Nutter, and Kate Osborne for Kaleidoscope and Katria Norvel for iHeart Podcasts. Jack Insley mixed this episode and Kyle Murdoch wrote.
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