Decoder with Nilay Patel
00:17:59 · S0, Nilay Patel
[00:17:59] S0: Support for the show comes from granola. Think about how much time you spend in meetings trying to listen, contribute, and take notes all at once. Somewhere in all the multitasking, it's easy to lose things that make a conversation valuable in the first place, being fully present. [00:18:15] S2: That's where Granola comes in. [00:18:16] S0: Granola is an AI powered notepad that makes your meeting notes useful. It captures what happens in your meetings and turns it into clean, structured notes with decisions and action items pulled out and made easy to find. And it gives space to do things that matter most, like paying attention to the person sitting across from us. Granola integrates seamlessly with how you already work. No setup, no configuration, no friction. It transforms messy meeting calls into organized notes you can actually reference weeks later. Once you use Granola in your first meeting, you'll never want to take manual notes again. You can try it totally free. Head to granola.ai/decoder. That's granola.ai/decoder to get your time back. Go to granola.ai/decoder and try it on your next call.
00:19:02 · S1, S4
[00:19:02] S1: Support for the show comes from CrowdStrike. AI is already fundamentally changing how companies build products and run their businesses. If you listen to the show, you probably already know this. But while AI drives innovation, every new model and agent also creates new cybersecurity vulnerabilities. That's why CrowdStrike built AI Detection and Response, or AIDR. AIDR helps organizations discover where AI is being used, monitors AI activity at runtime, and helps teams detect, investigate, and respond to threats involving AI systems. As companies adopt AI, security has to be built in from the start. More than 70% of the Fortune one hundred trust CrowdStrike to protect their businesses. Now CrowdStrike is helping secure the AI era. You can learn more about AI detection and response at crowdstrike.com/decoder. [00:20:02] S4: This holiday, switch to the Simplicity plan from Verizon. It's one plan, one price. Just $30 a line per month for you or the whole family and on their best five g network. Switching to Verizon and shopping their best deals makes the holidays simple. Head to verizon.com or your nearest Verizon store today.
00:20:02 · S4, Nilay Patel
[00:20:02] S4: This holiday, switch to the Simplicity plan from Verizon. It's one plan, one price. Just $30 a line per month for you or the whole family and on their best five g network. Switching to Verizon and shopping their best deals makes the holidays simple. Head to verizon.com or your nearest Verizon store today. [00:20:28] S2: It's funny. The first Friday book, which I highly recommend the audience reads, it's a it's a fun read, is just setting up the first principles of why we trade it all in the very concept of labor arbitrage, which seems like we're having a a national policy conversation that is 500 steps removed away from these basic ideas of why we would trade. And it is entirely centered around, can you bring manufacturing back to America because we let all the manufacturing jobs go to Mexico and then go to China, and particularly in high-tech, and we're behind. And there might be some extraordinarily bad event like a war where it's exposed how little manufacturing capability we have in United States. And that sort of has nothing to do with the basics of specialization in various countries around the world. Right? It... It's it's another problem, and the blunt instrument is, boy, it's bad that all of our drones are made are made in China. We're gonna we're gonna prevent the drones from being sold here. And, of course, our industry will set up drone manufacturing in The United States. I don't see that connection. Do you see that working?
00:21:28 · Willy Shih
[00:21:28] S3: No. I I think that's, kind of a transactional view where you look at one piece at a time as opposed to looking at the bigger picture, right? I think we have to start with a core principle that The US is a high cost country, okay? And therefore, if you want manufacturing jobs coming to The US, then you've got to have high labor productivity, okay. And in fact, if you look at the types of jobs that are coming back to The US, they tend to be using a lot of automation, using a lot of sophisticated manufacturing processes and stuff that is high skill that you can justify the high, high labor cost. Either that or they are... They are things where we have a technological lead that nobody else knows how to do in the world, right? I was looking at like, the high temperature super alloys that are used in the hot section of jet engines. Right? There are only three companies in the world who know how to cast those, and two of them are in The US and one of them is in The UK. And there's things like that the rest of the world has to buy from us. Okay. So, you know, if you have high labor productivity or, you know, highly differentiated products, those we can make in The US, we can make them successfully. And by the way, most of them never left the country, right? Jet engines, you know, The US and France and UK are major suppliers of those to the entire world market. Even the Chinese buy those from the West, okay. And so, it's like, if we have these things that we do better than anybody else, we should invest in those and make it, make sure that we're always in the lead and then everybody else will buy from us and then nobody will hold, you know, then you'll have some balance where you can't be held up, right? There's a lot of this thinking is like, I wish I could turn the clock back to the 1980s or the 1970s when manufacturing was the path to the middle class in The US. It's like, no, manufacturing has changed worldwide. Okay. And those jobs that you want to have manufacturing in The US, you've got to have the high labor productivity or the high differentiation that'll go with it.
00:23:52 · Nilay Patel
[00:23:52] S2: I want to stay on the iPhone for for one more second. Apple just inked a new deal where they're gonna source a bunch of titanium from a Pennsylvania based company called Pyramin for the iPhone 18 Pro and the new iPhone Duo. They're gonna source that titanium here, they're gonna ship it to China, they're gonna assemble the phone in China, they're gonna ship the phones back to us. They do that with Corning and Glass as well. I've always looked at that at at Tim Cook's job in particular is he's a statesman. Right? He... He's got to negotiate with Donald Trump and Xi Jinping about iPhone production and tariffs in these supply chains, and the iPhone kind of holds the global economy together. Like if the price of the iPhone gets too high because of tariffs, like, maybe there's an electoral impact in The United States. How do you see products like that? Are they as as load bearing as it feels to me? Or are they just examples of the larger system?
00:24:42 · Willy Shih
[00:24:42] S3: I think the iPhone is a terrific example of how difficult this problem is. Okay. Because right now, you have components that have high technological complexity, right? I mean, iPhone uses the most advanced chips produced by Taiwan Semiconductor Manufacturing, right? And by the way, most of those chips are still going to be made in Taiwan. TSMC has a fab in Arizona, but its capacity is piddling compared to what they have in Taiwan. Okay. So those chips come from one place and those chips require the most sophisticated processing tools that come from ASML in The Netherlands, but also companies like Lam Research and Applied Materials in The US, right? And so it's kind of that global thing. But the key thing is iPhones also require assembly labor. Okay, they require manual assembly because we're not to the point yet where you can assemble the whole thing with a robot. There's actually a chapter in my book where I talk about it's like, what do Henry Ford and Lifestyles of the Chinese Communist Party have to do with assembling iPhones? And it turns out it's a lot, right? The lifestyles of the Chinese Communist Party have to do with how they mobilize workers in what I... What's called this Danwei model, which was, you know, established after the communist revolution where I have a production site, kind of a walled city where I have housing for workers, I have a means of production and warehouses and ways to feed them and stuff like that. If you ever go to a phone factory in China, the real question is how do I mobilize a 100,000, 200,000 workers to do this kind of manual assembly on a scale that an Apple needs, right? They're trying to do it in India. They're having some success with India, but that was really hard. But once again, is how do I mobilize manual labor at that level of scale, right? So, the iPhone, as you point out, is a great example of a global product because it needs the highest of tech and it also needs the, you know, the the huge workforce to do the manual assembly. And it's a challenge, and that's why it's a global product, as you say.