China, Funding Cuts, & Campus Controversy: Is U.S. Tech Leadership Falling Behind?

Rafael Reif: From the point of view of research output and the quality of the papers coming from China are outstanding and, and actually they are dwarfing what we're doing in the us, not just one or two things. A lot of them, and the narrative, the pre covid narrative was in the us. Uh, let's prevent them from, from stealing from us because, you know, they're advancing rapidly, stealing from us, stealing from us.

They're ahead of us in quite a few areas. Looking at the publications, they're ahead of us. Us. It's really very bad for the nation not to be aware of what our biggest competitor is doing, not to even have a sense of it. It seems to me that there is a war between the US government and universities. There is many of us, certainly people in Washington believe that's kind of by divine nature, that we're gonna always be the strongest country in science and technology because that's the only thing we know.

Michael Marks: Hi everyone. This is the Tech Surge Deep Tech Podcast presented by Celeste Capital. Each episode we spotlight issues and voices at the intersection of emerging technologies, company building and venture investment. I'm Michael Marks founding managing partner at s.

If you enjoy TechSurge, subscribe and leave us a review on your favorite podcast platform. Visit Tech search podcast.com to sign up for our newsletter and find our video episodes on YouTube. Okay, today we have a very special guest, Dr. Raphael Rife, the MIT President Emeritus and a vocal leader for building US technology leadership.

You were quite prolific during your tenure as MIT President, bringing MIT courses online to reach tens of millions of people around the world championing an AI and climate research and helping to build up support for entrepreneurs, including overseeing the launch of MIT's own venture fund and startup incubator called the Engine.

You have been a distinguished member of the MIT faculty for more than 40 years with far too many awards and accolades to count. You've also had a big role in the semiconductor industry, serving on the board of TSMC, as well as serving as an advisor to semiconductor equipment company applied materials.

In addition, we have been friends for a long time. Rafael and I served together on the board of Schlumberger for many years, which is where we got to know each other. So Rafael, thank you for spending some time with us today. I'm really excited to talk with you.

Rafael Reif: Michael, thank you for having me with such introduction.

Michael Marks: I'd rather you keep talking and I stay quiet. All right, so here we go. To kick things off, you've talked a a lot about how university researches the engine of innovation in high tech company, in high tech economies. In your view, can you tell us what are the most important things that the universities provide to the high tech economies?

Is it talent, IP culture? What are the different things they provide?

Rafael Reif: Well, let's start with the talent. Uh, I think, uh, you know, we get terrific talent, uh, all universities do and, uh, uh, you know, we put them through the test here and, and, and they're ready to go to industry and do some good things there. Uh, that's the most important thing.

But in addition to that, universities that are lucky enough to do research, uh, they're very helpful to the economy of the us. I mean, there is ideas being produced, foundational ideas, foundational technologies. Uh, patents, startups, entrepreneurship, uh, what happens in universities is very critical to, it's a significant part of the innovation ecosystem of the country.

So those two things, educating the talent. And creating the foundational technologies that industry can take off and, and, and, and do the wonderful things they do with it. Those are the two most important things I think universities do.

Michael Marks: Okay, great. Well, so we'll dig in a little bit on this. You, you, you've argued that it's important to keep academic collaboration alive across borders, even with nations that are strategic competitors like China.

How do we strike the balance of protecting national security concerns while still having open exchange of ideas?

Rafael Reif: Well that's a real critical question. Look, for years I used to go to China, uh, almost every year. I would say every year, sometimes twice a year. Uh, this is pre pandemic. Uh, and uh, uh, you know, I would go and visit, uh, the high tech companies there and they would always.

Basically show off, show off the technology, all the things they were doing. I could have a good sense of what they were doing and how they were doing it. They wouldn't tell me the details, but they would show off the capabilities. Um, and, you know, in time those became more and more and more impressive. At the beginning it was a catch up game, uh, towards the end, pre pandemic, uh, I, there was not much catching up doing, they were just doing very advanced stuff.

The pandemic cames. Um, I stopped going and then after that comes that tension between the US and China and, and my travels there has been diminishing significantly as a result. Me personally do not know what's going on there. Um, and, and, and I think if that happens. Uh, with so many critical individuals in this country, it's really very bad for the nation not to be aware of what the, our biggest competitor is doing, not to even have a sense of it.

And I think that's very, very critical. Of course, collaboration is always good when it's pre-competitive. We don't touch industrial stuff, but they, uh, do amazing things. We do amazing things and working together, we can do even bigger things. But beyond that, just the awareness of what they're doing is critical.

And we just do not have much of a clue.

Michael Marks: You know, that, that, that really leads to my next question. So many people are worried about the threat from China, and we can talk about countries besides China, but that one's kind of in the news of course. So a lot of people are concerned about the threat from China around key, key areas like ai, which everybody talks about, but also drug development and some of their areas.

So. While you just said it's hard to know, do you have an assessment of the state of US science and technology in terms of competitiveness? I mean, are we, are there areas where we're falling behind? Are we at risk of, of getting worse in that situation, falling farther behind? Do you have a view of that?

Rafael Reif: Yeah, we, not a direct view of that, but I have a view from the point of view of research output on papers. And, uh, and the research, the number of papers and the quality of the papers coming from China are outstanding and, and actually they are dwarfing what we're doing in the us. So that's the sense that, boy, they're doing something exciting, uh, not just one or two things.

A lot of them. And, and you know, we don't even know exactly how they got there, but we know they're there already. And I think the narrative, the pre covid narrative was in the us. Uh, let's prevent them from, from stealing from us because, you know, they are advancing rapidly, stealing from us, stealing from us.

Uh, they're ahead of us in quite a few areas. Looking at the publications, they're ahead of us, so it is better for us to stay connected with them and to find ways to collaborate so that we can move, uh, somewhat faster as well. Well, that's

Michael Marks: a, that's a very thoughtful answer. One of our, the companies we have at celesta is a company called Prowess, which has a, a platform for developing drugs, uh, you know, faster, more efficiently than the industry and.

Anybody in that industry talks about is a Chinese, about how, you know, how fast they are, how inexpensive they are, how clever they are, as as being the real, the real competitors in the future. And that's a new thing from a drug development standpoint. So, I mean, I guess the next thing to talk about is what do we do about it?

So obviously it's in the news. Every damn day about, uh, drastic cuts from government programs to the universities with, with Doge and other things. You've written. Op-eds warning about the long-term consequences. To American technology leadership. If we cut research funding, can you talk about that? About why is the federal funding necessary?

I mean, one can make the argument that these universities have a lot of capital. They could do their, their own funding. So what is, what is important about the government funding and what impact is the lack of government funding or cutbacks, you know, gonna be in terms of, you know, innovation and, you know.

Tech innovations, US leadership, so on.

Rafael Reif: Look, there are things that the US needed to do, uh, to compete with China, uh, two months ago, up to two months ago. Now, with what's going on with the government, uh, I, I view that they are destroying some of our assets and we still have to fix. What we were not doing that well before, so let me assume that nothing happened and with federal government funding continues and what is the problem we have?

Let me summarize in, in the following way, it was maybe 10 years ago or so in one of my trips to China. I was the guest of a bunch of, uh, high tech, uh, uh, leaders in China. Uh, they, the meeting was in Beijing. Quite a few of them were some Fromen in the south of China. They flew to Beijing. Uh, there was a couple of the, from Shanghai.

And, uh, it was a very, there was a very early in the, she pre, she's presidency. Uh, and uh, we had a very pleasant conversation. Uh, but at one, at some point, uh, the, I was to them, the US. Uh, I, I was not MITI was not this fellow who speak with an accent. I was the United States. And at one point, one of them stood up and said, listen, when it comes to scale, don't compete with us.

We'll always beat you. And I remember thinking, uh, man, I mean, I, I, I'm their guest. I mean, how, how do I react to that? How do I answer to that? And then they quickly spin and said, oh, when it comes to creativity. We'll never beat you. So I said, wait a minute. Time out. Uh, why were you so arrogant on the first half?

And so humble on the second half. And he said to me, well, because, uh, in scale we have, we're much bigger. We, we, we know how to do one manufacture at scale and in big volume. We, we we're expert at that. You'll never catch up to us. But when in creativity, he said to me. You are heterogeneous and we're homogeneous.

You bring the best brains from the world to work together and what you create is amazing. We'll never do that. That was 10 years ago. They, me actually thinking about it differently now, but that's their perception of us. The punchline of his comment was, look what we do. Great. You don't, and what you do, great.

We don't. Why don't we work together? And, and my answer to that is, well, you know, there is this minor issue about IP protection and so forth and so on. I said, okay, we can, we can, we can work on that. But the point of that, of that, what I'm saying is not that, is that their perception of us is because we bring the best brains for the whole world to come here.

We attract them through our universities and our research. We create amazing stuff that's our asset. So what do we do? Great foundational technologies, that's our asset. Most of them come from universities and then either startups come out of universities and create amazing things or establish companies license the, the patents, whatever.

But that ecosystem works extremely well. The part that does not work as well, the economic model in China is they decide what they want to dominate. In the next five years and they put tremendous resources on those technologies to dominate them. They do not care whether during that, in that process they invest too much money and lose money.

It's not about a market concept, it's about dominating a technology concept. And they always get there 'cause they are smart, they're good and they invest. In our society. We have a different economic model. We invest to produce returns. It's a market oriented model. The market dictates what we do and where we do it.

Okay? In this market model, there are many ideas that may take a little longer than the risk capital is willing to absorb that just don't get invested. That's not their problem. They want to dominate technologies and every one after the other, they have dominated them. Even technologies that were invented that created by us, in fact most of them have been the most recent one, is Ev.

Ev batteries, a startup company coming out of MIT. It was too, too well ahead of its time. The, the market was not well developed. It's the lithium ion batteries. They was well developed. Eventually they filed for bankruptcy. Uh, a company in China bought them and now they dominate the lithium ion batteries is, I can give you example one after the other.

So what is a, we don't do well. How do we compete with that model? I mean, we have to understand what the competitor is doing and we have to figure out how to pick them. I'm not suggesting we copy them, uh, but I'm suggesting we have to recognize what they're better at us and figure out how to do it better.

So that's a broader answer to your question, but I think what we do well, why is university researcher important? Because we create the foundational technologies. Even they acknowledge that now, as I said, that's 10 years ago, and they are. Trying to beef up everything they're doing. And right now, um, I'll tell you in AI research output, uh, Beijing, uh, uh, beta Beijing University and ing hu I, first and second in, in research output in ai.

Something created by, by, by these, uh, uh, universities in this country. So they recognize our asset. We seem to take it for granted, and they are catching up even in our asset. What they do better if, assuming that they can copy or, or, or just, uh, start the technology from us, they still move them faster to the marketplace.

They find ways because they dominate without the market oriented model they have until they dominate the technology. And then of course, they recoup all the investment. So it's, it is a, i I, you, you touched a point that I think is critical in terms of how we understand what we should do better and what they do better Now, in our society.

Not only, we are not even paying attention about how to compete with them, we're destroying our own asset right now. That's a different story that, that we, we cannot assume that we're gonna come up with the foundational models of the future because we're destroying the, the, the, the basic infrastructure of, of that, of that generation of ideas and technologies.

Michael Marks: And we're destroying that by, by, you know, doge and the government cutbacks on, on funding. Is that how we're destroying it?

Rafael Reif: Yes. Well, we have right now. I mean, I think I can call it that way. I mean, it seems to me that there is a war between the US government and universities. There is, I understand the problems that come when, uh, where the US government may be bothered and affected by antisemitism on campus.

There are many different ways to having conversations to address that. I understand the concern that, uh, in the cor current government people have that universities are too liberal, they're not conservative enough. Uh, we can talk about that as well, but to force universities to do God knows what they want us to do with antisemitism and, and making conservative institutions, other liberal institutions to force them.

By cutting or killing research funding, he's shooting ourself in our feet. I, I don't, I just don't understand that notion. And that's what's going on right now. And I said, China is catching up with us. Even with our system working as best as we can, we have to improve what we have, what he's, what these guys are doing is killing it.

Is there an opportunity either for the private sector to step in where the government funding gets cut off or an opportunity for the universities to spend more of their own capital in this way or, or does that not work well?

Rafael Reif: I think the private sector is investing in r and d quite well. I. Uh, but it's typical for them and it's logical for them to invest in r and d that improves their, uh, market position.

I mean, they have a, a roadmap of ideas and products, and they're working in developing those ideas further, and that's what they're supposed to do. What universities are supposed to do is come up with a new foundational thing as the new, the, the paradigm shifts, the, the things that industry is not doing because they're on a roadmap.

And we create opportunities for new kinds of roadmap. And that kind of research can only be really paid by public funding. I mean, the private, the private money is not gonna support that. Philanthropy may do some of it, but, but think of it, I mean, the dollar figure of, of what the government funds cannot be replaced by, by private capital, I mean, there's not enough wealth to do that.

So I don't think that's, that's the solution. Uh, a different take on that, which is critical. I. To me, I think all of us, you, me, most of the people we know were born after World War ii. Uh, after World War II came the Vande Baush social contract between government funding and universities and that together with other things and made the US in the US universities a superpower in science and technology that has existed for all these years.

We, since we were born in that system, we, many of us, certainly people in Washington, believe that it's kind of by divine nature that we're gonna always be the strongest country in science and technology, because that's the only thing we know. We have not seen as, we have not had any idea of what it is.

Were the most exciting gauges, the most exciting, uh, medical treatments. We come from China. We're we, we are not used to that. In fact, when we see them coming from there, it's only because they stole from us. We just don't have a sense that we may not be at the top anymore. And, and as a result, the center of gravity of the world is not so gradually moving from US-centric where everybody.

Watches our movies and speak Spanish and all that. I speaks very English, I'm sorry, Spanish. I wish it's English. Uh, this is what we're used to. It's really moving east. Just look at the top, the largest economies in the world now in, in, uh, projected to be the next 10 years is US and China, but it's in the India, Japan, uh, this is, this is all moving east.

We need to understand that change and figure out how to accommodate. Either to that change or, or try to maintain us to be the strongest. And that, that requires a lot of thinking on those issues we're talking about here.

Michael Marks: Alright, well I have a follow up to a certain part that which is immigration policy.

But before I go there, if you were having that conversation today that you had 10 years ago, what do you think they would say? Would they still say that, that we're more creative than them? Or do you think they would say that those days are over?

Rafael Reif: Well, that they would say. They still would say that that that, uh, the heterogeneous model of creativity is very homogeneous.

But, but I, I think they would say, uh, or they should say, is that they have managed to overcome the lack of heterogeneity because now they are successfully recruiting thanks to Trump, number one, and now Trump. Number two, administration successfully recruiting quite a few Chinese scientists. Going back to China, that's their way to solve, not necessarily coming from the best brains of the world.

They send us the best brains and they just have, are having enough of this country. These are terrific people that are here excited to living in a country they love Also. But doing research, you cut off the reason they're here, they're gonna go, researchers go where they can do research. So back they go, well, it's a little bit depressing and this

Michael Marks: isn't gonna make it any easier.

Let's talk about what's happening with immigration policy. So a big part of the fuel for America's tech leadership comes from international students and researchers. You just talked about that. Over half of us PhDs in technical fields like engineering and computer science. Earned by international students.

Now we're canceling student visas, making it much harder to immigrate here. The question is, are we put in our leadership in jeopardy with these immigration policies and rhetoric? And I know what your answer's gonna be, but can you flesh this out a little bit? 'cause this is not good news for this country.

Rafael Reif: As I said a moment ago, uh, Americans are not smartest because we're Americans, right? I mean, there is a distribution, a ga distribution of smart people or talented people in all societies, and we have our share of those. And China has a share of those, but by share there are many more people. So they have many more.

Well, how do we in the US statistically tinker with that? Well, we tinker with that by bringing the best talent from all over the world to come to us. They were born here. They don't come from the Gaja distribution. They are ex imported. That has, as you said earlier, that has been the secret of our success, and that's the part that we just cannot.

Kill too. So I think there are two issues that you just identify with your questions that I strongly believe we need to do. Number one is just not only stop harassing universities on research funding, harass them on antisemitism, harass them on cultural liberal, but not on research funding. This is the heart of what we are here for, uh, as a country too.

So maintain the research funding and in fact increase it. Talking about increasing, let me just keep a group emphasis. There was a, a bill that was passed in Congress called the Chips and Science Act. Chips is about bringing manufacturing to America. Science was about advancing all the technologies that were not advancing today.

Advancing them faster and creating the new technologies of the future is basically creating a new kind of semiconductor transistor that was invented at BE labs back in 48. Come up with that kind of thinking. Um. China, by the way, recently announced a similar uh, uh, program to the Science Party Chiefs and Science Act.

They just announced it, uh, uh, like two, three weeks ago. In our beloved country, our bipartisan congress supported the bill, approved the bill, and appropriate the money for the chips part, not for the science part. Very little of you working in the science part. So basically. We are not realizing we are in a competition.

When, when Sputnik happened, all of our America just became crazy. This is not possible. So the Russians or Soviets are catching up with us. We can invest heavily on size, and we did. This seems to be happening somewhere else. It's not. It's not. And and, and we cannot believe it because Americas are supposed to run everything in technology.

This Chinese might be, might be stealing. So we are not responding. So number one, not only we have to maintain what we have and maintain it well and support it and respect it and recognize it, but infuse much more money. This is not enough. And, and, and the science part of the Chips and Science Act had that, I know that because I was heavily involved with that.

There was, there was, there is enough money there for us to take off. One thing when you do is to start this fund that you are approved it, you is a bill, it's a law in congress. Fund. The, the, the act. But the second, the second thing is to worry about the immigration, immigration situation. Most of the students who come here from abroad, most of them want to stay including those from China.

We make it very hard for them to stay. Why? Why? We need them. So I think that's the second part that is critical. Our recognition of that. And, and there is quite a few people in Washington who don't see that. And those two things together are part of what we have to recognize and emphasize if we really want to stay as the country we have been for the last 80 years or so.

Michael Marks: Well, I, I'm. I'm pretty sure I know what your answer is coming on this, but you yourself are an immigrant. You, you, you immigrated from Venezuela. So two questions there. Why and how are you feeling about the deportations that are happening now?

Rafael Reif: Let me just answer the second question first. The whole situation of, uh, the migrants, many of the migrants, uh, in the last few years, uh, are coming from my home country, from Venezuela.

Uh, many of the migrants for quite a while actually were, um, uh, were given a place to sleep at the airport right here at Logan Airport, so I could see them when I travel. It just broke my heart. I mean, what they go through to make it here. It just broke my heart. There was a period in which I couldn't even read the news anymore because I just couldn't take the pain.

And that's just all the migrants coming here. Now, these are Venezuela or for many countries, south America, uh, uh, they are leaving, uh, a very tough situation back home and they go through. Incredible pain to make it here. That's another, another set of immigration that we don't recognize that helps the country.

These are people who are driven, who are ambitious, who are looking for a better life and are going through everything to try to make it. These are not people who are comfortably here in this country. Just making it here through horrible situations, so it's very painful. And now to see them being shipped back and stuff, I understand all the reasons for all that.

But at the same time, I've talked to enough people in the commercial sector who need them. They're, they're, they're, there are people who are doing a good job here and they're trying their best to do a good job because they went through hell to be here, and I don't wanna jeopardize it. So, of course it breaks my heart on, on why I came here.

Well, I didn't come, I didn't come here to immigrate actually, my, my, uh, my goal in life. Uh, in Venezuela was, as a young man, was to have a job, uh, as a professor at University of Venezuela. That's what I wanted. That's what I wanna do, do in life, be a professor in a Venezuela University. I. Um, but to be a professor there, uh, is hard.

Uh, you have to know somebody who knows somebody. Uh, so I thought that since I didn't know anybody, maybe the way to do it is to get a PhD and to then come back. So I came to America to get a PhD and then to go back home. Uh, one thing led to another. I postponed the trip and I ended up staying here. Once I came to MIT.

Uh, uh, I, I was not exactly enamored the winters and snow and stuff like that. Eventually, I learned how to love it, but I was enamored with a place. I mean, this was the perfect place for nurse like me. I enjoyed being here, and then I stayed.

Michael Marks: Well, I'm certainly glad that you did. Just one more question before we get onto a little bit more commercial aspects.

A little bit less political, but, but clearly the major universities in the country are under attack. I mean, you know that you've been writing a lot about it and you know, having the universities be an enemy is not a recipe for great technological innovation. Are there things the universities can do to fight back here?

I see just recently, I think Harvard, you know, said they're gonna. They're gonna continue to do the things that they've done and so on. Is there a new role for universities or a different way to think about this, or is, is the hope just to wait it out, hope it gets better?

Rafael Reif: I don't think we can wait it out.

I mean, I think, to me that's a, a much easier question to answer, Michael, because I'm not on the job anymore, so, right. I'm not suffering making that decision. Uh, but personally, I, I applaud Harvard to what they did. Uh, I was thrilled. And extremely joyful when I learned that they wanna fight. Uh, universities are obviously afraid.

Uh, they cannot lose federal funding because then basically they're gonna go out of business and this is just basically destroying what we have to construct a new university system with conservative way of thinking. I mean that the whole thing is bizarre and it's crazy, but that's what's going on right now.

Yeah. I think the only hope there is is just to. Fight back to Sue, uh, uh, to go to the courts. Uh, these things will take a while, but I cannot believe that the courts in this country are going to say that the president can decide on his own or her own. That because I don't like the way this university thinks.

I wanna just decide that they don't get any research fund. That logic, I don't see which part of the constitution approves that. So I think we, I think, I think we have to fight now. It's an easy thing for me to say and I was pushing and thinking about that from the very beginning. But another president anymore, I don't have a board and uh, and I don't have a university that may go bankrupt as a result of a decision like that, but that's what I think we have to do.

Michael Marks: I applaud the fact that you write about this stuff and you speak out about it. It's certainly a very difficult problem. Alright, let's switch. Talk a little bit about a little bit more, uh, commercial aspects. So, you know, kick things off. You've talked a lot about university research, the engine of innovation, high tech, uh, economies.

Now we've got, we have all this discussion about. Chips and semiconductors and, you know, the, the, uh, obviously universities have played a role in that, but Sure. On the board of TSMC, which many people argue is one of the most important companies in the world today. Um, and, and I just wanna ask your view about some of these things, understanding that I'm not asking for any inside information, it's public company obviously, but, but, uh, but, but you have an insight to this and so the question is.

You and I once personally talked about this, that, that the TSMC is building fabs in other countries in, in Arizona, as we know. I think you said Japan and Germany and so on. Um, and there's been some discussion about, you know, potential, uh, alignment with Intel and so on. How, how do you see this whole geopolitical thing playing out in terms of, is it possible for.

DSMC, Intel Global Foundries to create, you know, competitive fabs in other countries where it may be difficult to get to train people and, and you know, it's like a lot of capital and so on. How are you thinking about that issue?

Rafael Reif: The cheap manufacturing business is a different kind of manufacturing in the sense that if, if you are gonna manufacture nails, uh, the nails look the same now as 50 years ago and a hundred years from now, there's are nails.

You establish a way to manufacture, you always try to worry about how to do it cheaper. So you can stay competitive, but you don't change much besides the manufacturing approach to make it cheaper. And technology is very different. I mean, every two years or so, you come up with something new. So heading a factory is not enough.

You have to have them. The, the, the, the, the. The machinery, the technology, the tools behind to do research, to advance that technology. So building factories abroad, that's not a big deal. Uh, well, um, uh, for in the scheme of things, you not a big deal. You, you need the, you need the machines, you need the tools, you need the people.

But my point is that you can transport our technology. Using the jargon terminology and the technology node to another country. But, but that's all. What that country can do is, is building those kinds of nails, that technology node for many years, but in two, three years there is a new node. So if you wanna stay in, in the cutting edge, that particular fab that you built is not gonna cut anymore.

It becomes now more and more a legacy fab. So building. Uh, uh, uh, products with all their technology that is still very valid, is still very useful. And those are still the kinds of technologies that we use in cars and in, in all sorts of machineries. I mean, we're surrounded by chips and anything we touch, but those, most of them are legacy node chips.

So those kinds of factories can be built in other countries. Build one that is on the cutting edge. And stays there, that's a little more complicated because you need to keep advancing it and it's easier to do if you have an infrastructure or support to advance the research in that same country. So in terms of, of, uh, of companies building factories in America, I think that's great.

It solves a lot of the supply chain issues that, that that exactly. CHIPS Act wanted to fix. Mm. But it's gonna, unless we have an infrastructure or support to keep advancing the technology in our country, that factory will come and we're gonna, it gonna stay on that node and in 10 years will be a legacy node.

Michael Marks: So how does, how does TSMC stay ahead of everybody? I mean, what, what's the secret? 'cause you know, you've talked about. Appropriately that it takes tremendous innovation to advance these nodes in semiconductor. How does CSMC pull this off?

Rafael Reif: Look, they really work hard at it. Um, there is, there is no, uh, secret sauce other than the ingenuity of the engineers there.

They really, I. They really go at it and, and they know how to do it. I mean, there is a lot of, there is a lot of quote unquote secret of the, of the trade. Sure. Uh, but all those factories that are the d foundries, they all know the secrets of the trade. The SMC just, just knows how to do it better. Is is simply ingenuity.

I mean, the kind of solutions they come up with. Um. It's just, it's just remarkable. But it, it is just that it's ingenuity. It's, it's, it's the brain power at its best.

Michael Marks: I mean, clearly they've done an unbelievable job. Is, is there value to a relationship between TSMC and Intel, which is not at the same level of innovation?

Are there, are there geopolitical opportunities that make sense there? I mean, how do you think about that stuff?

Rafael Reif: Well, that's a little more complex because that, that, that, that enters into comments into areas that I, that I don't feel comfortable commenting. Sure I understand. Uh, but the US needs to think about having, um, a, a foundry that does.

Advanced technology here in this country. Ideally, that's, that's what the US probably should think about. And ideally that place, uh, could have been Intel. It's not gonna be Intel and perhaps Intel with some help can, can become that, that that place. But the US does need something like that just simply for national security reasons.

Uh, the relationship the US is with Taiwan and with the T SMC is excellent. And I think from that standpoint, one would argue why do we need that in this country? But for all the right reasons, it's a good idea to try to have that here. And is that place could be intel. I think it's worth exploring that I.

Michael Marks: I really appreciate that. Um, one last I, uh, thing we wanted to talk about it, it plays a little bit into the, into the political situation, but you know, when one of the initiatives you started at MIT was the creation of a venture fund and a startup incubator, I. What you said were tough tech ideas similar to what we now call deep tech.

Can you tell us what gap you were trying to fill by doing that? Was it meant to address underserved areas of technology? Uh, was there insufficient capital? We talked about capital formation. What happens if the government cuts back and can the universities do more stuff like you did at this, uh, at this engine, at MIT.

Rafael Reif: Remember that earlier I said that, that there are some things we do very well and some things we just, we have a gap there that we have to do better. Uh, and, and this was my attempt at the time that I created the engine to address that gap. And the issue is very simple. And in fact, by the way, I went to, I think when I did that, Michael, I had not met you because I would've gone to you.

Uh, but I went to some other people in West Coast that I knew and I told them the problem that I saw. They basically just said, ah, that's, that's not real. Uh, you know, we're not interested. What I saw was the following. I saw tremendous science-based ideas. I, I don't know exactly how else to call them.

Coming out from MIT people doing their work, their research come up with fabulous ideas that not only could be commercially successful, there were. The would benefit society, benefit humankind. I mean, just the good things we need them to do. Um, and, and, you know, we, we can talk examples in a moment, but, but, but basically, you know, things that would make a big difference.

Um, but the, the, the cap, the risk capital was not willing to invest in those because it would take about 10 years to see where they would work. It's much easier to fund a, a, a, um, a, a digital company. In which you have some milestones and if you don't make the milestone, you pull the plaque and you know you lost some money, but not a big deal when you're doing something in which things take a while.

People are very afraid to put money into that. And what I wanted is, um, to create a way. For, to, uh, to make, uh, patient capital available for these young companies to get going and get to a point in which they are within the quote unquote five year range of, of risk capital, and then get the big money. Um, and I, I tested the idea.

I said I went to the West coast to test the idea. I, I, I was just run out of how, how office is, I mean, nobody cared to, we, we don't care about that. Um, you know, I, ideas that, that are good for humanity and stuff like that, forget about it. Uh, but I went locally to some people and they were interested. They say, you know, I'm gonna get a return on my investment.

Uh, but I doesn't have to be right away. I, I, I'm willing to wait. I have, I'm just willing to put a small fraction of my money into this fund. Just, just to see what goodie can do. And that's how I raised the money for, for that. And that was the purpose. So all of the, all of the companies are that kind of company.

The best example is Commonwealth Fusion System. I mean, that's, uh, uh, the, the company that is doing, um, uh, fusion for, for energy. The key idea for investors in, in, in the area around MIT is that they wanted to see, they were more welcoming of the idea than putting a very small fraction. Right. All their funds into a fund.

That, that is, is, uh, is, is not only high risk. The the risk is, is, is is more or less like everything else, but it's, you have to wait some, some, sometime longer. It's just a more patient capital and they were willing to do it. And the reason they were willing to do it is because they wanted to see. Those companies in the, in New England creating jobs here.

I mean, it was just a job production for the economy, for local economy. E eventually attracted funds from many other countries as well, not just, not just the us. So that, that was the purpose of, of the engine address that gap. And, and going back to what I said earlier, uh, when, when China wants to dominate a technology.

They don't care about how much money they're losing, they want to get to dominate it. Uh, we have to care. We have a different model. We have to care, we want to return. And this is the part that I was trying to figure out. How do I unlock, unlock this thing? Can we do something like this and prove that it works?

Michael Marks: So how, how did it turn out? Can you give us an example of something that was really cool that came out of that?

Rafael Reif: The most exciting one that grew big because not only got money from us, but got money from now Real, uh, uh, real investors is, uh, Commonwealth Fusion systems. Uh, now there are a number of fusion companies here, and not only that, if you go to China, I.

They have more companies than we do more, uh, people working on that, more graduate infusion and more research papers in Fusion. And this thing started not so long ago in only quite a few President America, but we, we have our model of doing things and, and well, it takes a while, but they see the future and, and that's where, that's where partly is.

Michael Marks: Well look, fantastic that you did that. This has been a wide ranging conversation. I really appreciate your taking the time for this. I also wanna say personally that I admire your standing up for these issues. You write articles about them, you know you have an important voice in the community. That's.

That, that is very important with the, with the geopolitical issues and the politicizing of, of our institutions. So thank you for doing that and thank you so much for doing this. It's been very illuminating. I really appreciate it. My friend

Rafael Reif: Michael. Thank, thank you for your kind words and for having me. I appreciate it.

Thank you very much. Okay, thanks.

Michael Marks: Thanks for tuning into the Tech Surge podcast from Celesta Capital. If you enjoyed this episode, feel free to share it, subscribe or leave a review on your favorite podcast platform. We'll be back every two weeks with more insights and discussions of all things deep tech.