US Shouldn't Underestimate China: Substrate's Proud

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00:00What I really want to get your perspective on is China's domestic supply right now and how much

00:05you've long been concerned about our exposure in the US to Taiwan and the like. How much is China

00:11making strides? Yeah, well, I think when we talk about China's ability to have an advanced

00:18semiconductor sector, the question isn't can China make fabs? Can they make equipment? The

00:23question has always been, will they have access to EUV lithography tools or be able to make their

00:29own? And the reporting that came out yesterday shows that China now has a working prototype of

00:35some type, which I think to a lot of people came as a surprise. This is something that we've been

00:40tracking for a very, very long time and something that I think that the US should actually take

00:45incredibly seriously. We can't just be playing defense. There needs to be a plan of, OK, how do

00:50we regain leadership, but really by a leap ahead so that we can actually maintain that when China is

00:56able to actually make advanced semiconductors. Now, what's so interesting is that just today,

01:00we're hearing that Tencent has managed to appoint a new chief AI scientist bringing over from OpenAI

01:05from the reporting being done by outlets like Reuters that there's some new EUV or some sort of

01:11lithography equipment built in China by people who've come from ASML and gone to work back in China.

01:18How is the talent war and the brain drain something that you're keeping an eye on?

01:21Yeah, well, I think that we underestimate China to our peril, like they are some of the smartest

01:29scientists and engineers in the world. And we shouldn't be surprised that they sometimes join

01:35Western companies and then often go back and are able to compete very effectively. And so I think that

01:41betting that China will do something is always the smart strategy versus betting that they can't do

01:47something. And so we should change our approach to to account for that. Your approach is about taking

01:53on EUV lithography in a different sort of ways and means. You've been getting a billion dollar

01:58valuation already. You're looking to restore American leadership when it comes to actually

02:01the equipment needed to manufacture semiconductors. What is your relationship like with the U.S.

02:07government right now? How much are they taking this into account and how have things changed since

02:11we last spoke? Yeah, our relationship for for many years has been very close with the U.S.

02:16government. And so I wouldn't say there's barely been much change. We collaborate very, very closely

02:21with them. And and they've been some of our biggest supporters. And frankly, we wouldn't be where we are

02:27right now without a very, very close relationship with the government. You use, as you say, particle

02:33acceleration, x-ray wavelengths to really etch intricate detail, basically patterns into wafers. How

02:41all to those that are cynical and what you're building? How do you give the proof points? Give us

02:45something tangible that you've managed to make strides in to be able to ensure that maybe we don't

02:49even need ASML, let alone Taiwan Taiwanese produced chips. Yeah. So there's there's a lot that still needs

02:56to be done. But I think that we're very excited over the coming months and the next couple of years to begin

03:01actually showing some some pretty big leaps. We've been able to go from sort of zero to having our own working

03:08prototype tool in three years. And that is that is sort of similar to what was just announced from China

03:14yesterday. Actually, on my ex account this morning, we went and posted like one of the key things that was

03:19actually in that reporting yesterday is a doubt that China will be able to catch up on the advanced optics

03:25required for these systems. And we just went and publicly released some research that we did two years

03:31ago on on on how China is actually already achieving these optics domestically. And so that the efforts

03:38that are going on here are far greater than is really sort of at the public level. And yesterday's news is

03:44really only the start of this. So what does that mean for me maybe easing restrictions on H 200s? I mean, all of

03:52this we've seen a clampdown on EUV lithography from ASML going into China from the US pressure. Is it all too late,

03:59James? I don't think anything is too late. And and and I think that like when when Jensen says China's

04:07only a nanosecond behind like he's correct. And so I think that our focus at the US needs to be focused

04:13on what we're very good at, which is sprinting. Like we can play a defensive strategy, but we need to have

04:19an offensive, as I said, leap ahead strategy as well. And that's the role that we are trying to play.

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