Willy Shih
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Episodes
Notes
Decoder with Nilay Patel · The hidden supply chain costs of the AI boom
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Why Is the AI Boom Making RAM More Expensive?
Willy Shih says the AI boom is making RAM more expensive because demand for memory chips has run far ahead of what the factories can produce. That is a different break from a tariff or a blocked shipping lane, where the market can reroute the goods. Here the capacity is simply not there.
He used to buy memory cards on Black Friday. He is not doing that this year. He is glad he stocked up on an earlier Black Friday. The amounts of memory involved are huge, and the price jump is already something a buyer can see.
Nilay Patel's picture of the same squeeze is a game console. If Grand Theft Auto 6 comes out and people go to buy a PlayStation 5, the console can cost more late in its life than it
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Why Is China Still the World's Factory?
Willy Shih says China is still the world's factory because provinces and cities compete to make better products at lower prices, and the factories spend heavily to win. Beijing sets the objectives. The regional governments then compete with each other, and they keep raising the bar, so the technology gets better.
The contest shows up on the floor. A student told him that his father's answer to every threat at a Shanghai factory was more capital spending: buy the latest machine. In another plant Shih visited, equipment that was only two or three years old was being ripped out and replaced with the current generation, because surviving meant a more efficient process and a better product. He s
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Why Is the iPhone Still Assembled in China?
Willy Shih says the iPhone is still assembled in China because the phone needs a huge manual workforce, and China is where that many people can be put on a line. The chips are a separate problem. The iPhone uses the most advanced chips from Taiwan Semiconductor Manufacturing, and most of those chips are still made in Taiwan. A fab in Arizona exists, and its capacity is small next to Taiwan. The tools that make the chips come from ASML in the Netherlands and from companies such as Lam Research and Applied Materials in the United States.
The phone still cannot be put together entirely by a robot, so someone has to do the assembly by hand. He describes a walled production site, the kind organi
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Can Tariffs Bring Manufacturing Jobs Back?
Willy Shih says tariffs do not bring ordinary manufacturing jobs back, because the United States is a high-cost country and a returning job has to pay for itself. The work that comes back uses a lot of automation and high skill, or it is something nobody else knows how to do.
The jobs that pass that test mostly never left. He points to the high-temperature superalloys in the hot section of a jet engine. Two of the companies that can cast them are in the United States and one is in the United Kingdom, and buyers in the rest of the world, including in China, have to purchase them from the West. Jet engines are the same kind of lead. The United States, France, and the United Kingdom supply the
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How Do Manufacturers Get Around Tariffs?
Willy Shih says manufacturers get around tariffs by moving the work, usually the final assembly, to a country the tariff does not hit. When a tariff lands on goods from China, the company moves that assembly to Vietnam or to Mexico, or finds another route around the barrier.
The same cost explains paths that look odd on a map. Cashews can be sold as coming from Vietnam even when they were grown in Ivory Coast or Ghana, because processing them there is cheaper. Fish caught off Alaska go to Qingdao to be processed and then come back, because that trip costs less than processing them at home.
He treats the detour as the normal first reaction. A barrier goes up, and the supply chain looks for
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Why Is Algerian Oil Cheaper to Ship Than Texas Oil?
Willy Shih says Algerian oil is cheaper to ship to New Jersey than Texas oil because the United States does not build the supertankers the Jones Act requires for the domestic route. Refineries on the East Coast could not get Texas oil cheaply. Moving it from Texas to New Jersey takes a very large crude carrier that is owned in the United States and built in the United States. No domestic ships of that kind exist.
That missing ship is why the Jones Act was temporarily suspended. A foreign tanker can bring oil in from overseas. It cannot make the coastal trip from Texas unless it meets those tests, and the United States is not building those ships. Without a qualifying tanker, the voyage from
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What Is the Chicken Tax on Imported Trucks?
Willy Shih says the chicken tax is a tariff on imported light trucks, and it is a reason Detroit's profits sit on trucks and SUVs. The tariff came out of a trade dispute. SUVs are built on that light-truck platform, so the tax protected the vehicles that became the profit center. He says the price ended up higher than it might have been without the tariff.
Toyota and Nissan have built more light trucks in the United States, and in Mexico, over the last decade or so. Walking the Toyota factory in Georgetown, Kentucky, he heard the plant manager confirm that the site still makes sedans, uses parts mostly from nearby states, employs American workers, and buys American-made steel under a long-t
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How Does Willy Shih Size Up a Foxconn Plant?
Willy Shih says he sizes up a plant from first principles: once Foxconn was not going to build a glass plant across the street in Wisconsin, an LCD factory there was not going to exist.
A panel factory needs a stable floor, so the site has to include the structural steel and the concrete that hold it still. After an earlier Decoder conversation, residents went to the town zoning hearings, sent him the plans, and asked whether this would be a panel factory. He told them it would not. The drawings did not have enough concrete for one.
The Verge had already used him as a source on what it takes to build an LCD plant anywhere, not only in Wisconsin. The missing concrete was the tell.