Virtual Press Briefing with Jacob Helberg, Under Secretary of State for Economic Affairs on AI Supply Chain Security

MODERATOR: Greetings from the U.S. Department of State's Asia Pacific Media Hub. It's my pleasure to welcome journalists to today's on-the-record briefing. Today we're honored to be joined by Jacob Helberg, Under Secretary of State for Economic Affairs, who will discuss the newly announced Pax Silica Initiative.

With that, let's get started. Under Secretary Helberg, I'll turn it over to you for opening remarks.

UNDER SECRETARY HELBERG: Thank you so much, Tim. So it's great to speak with everyone. I'm excited to share a little bit more about Pax Silica, which is the first time that countries are organizing around compute, silica, and minerals and energy as a shared strategic asset. It was very exciting for me to sign the joint declaration with my colleagues from six other countries. We really see this as a watershed moment when allies got together in the midst of a global economy that is quickly reorganizing and undergoing the greatest reorganization since probably the invention of electricity. And ultimately, Pax Silica is about making sure that America and its partners build the rails of the 21st century.

And ultimately, as we said, as I said during my opening remarks during the Pax Silica Summit, if the 20th century ran on oil and steel, the 21st century is going to run on compute and minerals, and so we're aligning our supply chains accordingly.

So I want to make sure that we answer a lot of questions that all of you have about the initiative. We're very excited about it. And with that, I'm happy to take as many questions as people have.

MODERATOR: All right. Thank you, Mr. Under Secretary. Our first question goes to Min Zhang Lim from The Straits Times. Please go ahead and unmute yourself and go ahead with your question. Mr. Lim, are you on the call? You'll need to unmute.

QUESTION: Hello?

MODERATOR: Yes, please go ahead.

QUESTION: Hi. Thank you, sir. Thanks for the opportunity. I'm from The Straits Times in Singapore. My question is, what does the U.S. expect of each of the allies and partners in the alliance, or the summit? What do you expect each country to contribute? And from Singapore's perspective, it seems like it is a nonbinding kind of declaration. In your view, what is the level of commitment expected of each country, including Singapore? Thank you.

UNDER SECRETARY HELBERG: Sure. So the declaration that we signed was a series of high-level principles. So in the tech industry, we have this concept called first principles, which is really supposed to be the bedrock that anchors a lot of the downstream action that teams undertake together at most technology companies.

We decided to agree on a series of first principles that would ultimately anchor a lot of the work and the strategy that we undertake together in order to confront the supply chain and economic security challenges that we all face as a group. We have - I went - soon after being sworn in, I went on a seven-country tour, including across ASEAN and APEC for both summits in Asia. And a theme that stood out that I kept hearing over and over again is economic security is national security. And all of the countries and leaders I met ranked economic security as one of their top concerns. So it was very clear that they all felt the pressure from supply chains that were increasingly buckling under new geopolitical realities.

And the countries that we got together for Pax Silica - Japan, Korea, Australia, the UK, Singapore, and Israel - are all home to some of the most advanced technology ecosystems in the world. Singapore, as you know, has a very deep and rich semiconductor manufacturing ecosystem. Israel is known as the - one of the world's startup nations, with a very, very advanced technology ecosystem. Korea and Japan are major - are major manufacturers. They actually have very unique refining capabilities, and they have very advanced robotics ecosystems.

So these countries were all essential to the conversation. We're very excited about this very creative coalition. Some people - some of the members of the press, I believe humorously, refer to this as a motley crew. And they're right, it's a very different combination of countries, but the reason is that we're facing unique challenges and the times are new, and therefore, with new challenges and new times call for new coalitions that are uniquely tailored to the era of artificial intelligence. And so that's exactly the kind of work that we undertook.

Ultimately, we're going to be in very close contact with the key founding members of the Pax Silica Declaration, including Singapore. We are now shifting our attention to the implementation stage. And part of what that will entail will be the identification of having policy discussions on issues related to economic security as well as policy-level issues related to economic security and our respective policies and making sure that we are aligned as much as we can given our national circumstances. And then a second track will be focused on projects and investments and identifying areas where - and opportunities of co-investment as well as, potentially, joint ventures.

And so we're going to have those discussions with our friends in Singapore over the weeks ahead, and I would anticipate some very exciting news in Q1 of next year.

MODERATOR: Thank you, sir. We'll go to our next questioner, Albert Lee of Korea Pro - if you wouldn't mind unmuting yourself and going ahead.

QUESTION: Hello, is this thing turned on?

MODERATOR: Yes. Go ahead, please.

UNDER SECRETARY HELBERG: Hi.

QUESTION: All right, okay. So I have a few questions. The first is, how does this relate to the rare earths access agreements signed with Australia and Malaysia in October? Are these - or rather, how do they - do these agreements relate with Pax Silica? Are they related or separate but kind of in the same neighborhood when it comes to creating secure supply chains for rare earths, semiconductors, and other technologies critical to AI?

UNDER SECRETARY HELBERG: Yeah, so it - Australia is an essential part of the supply chain, because it is a minerals superpower. And ultimately, we want to look at the silicon supply chain holistically, including in energy, minerals, manufacturing, as well as semiconductors. And that's why we included Australia, because Australia is essential to the mineral refining process needed in order to do silicon fabrication. They contribute - they were essential; we had a whole session entirely devoted to critical minerals that Australia was essential to.

And so ultimately, the work that's being done on critical minerals is directly feeding Pax Silica efforts. So our critical mineral bilateral agreement opens the door to a lot of bilateral investments, which ultimately, through Pax Silica, will help secure a broader ecosystem of aligned economies. And so - and which is in our interest and it's also in the interest of Australia. And so that's exactly how we're coordinating with them.

MODERATOR: Thank you, sir. Our next question goes to Chris Gorin of TaiwanPlus. Please unmute yourself and go ahead. Mr. Gorin, please go ahead.

QUESTION: Hello, can you hear me?

MODERATOR: Yes.

UNDER SECRETARY HELBERG: Yeah.

QUESTION: Okay. Under Secretary Helberg, thank you for taking my question. Last time you spoke with us, I believe it was the big earthquake in Taiwan, so I hope that this time is a little bit safer.

UNDER SECRETARY HELBERG: Thank you.

QUESTION: So I think a lot of people in Taiwan, when the press release about Pax Silica was released, were quite surprised that a group, which is ostensibly about AI and silicon supply chains, didn't include Taiwan, which of course is the world's major supplier of advanced AI chips; and not only that, but in the list of partner companies, TSMC was not listed, which not only makes most of those chips but also is the source of the largest foreign direct investment in U.S. history for its facilities in Arizona.

So I wanted to ask you, what are the criteria for being an official partner of Pax Silica, and is there a pathway for Taiwan to be brought in as a full participant? And then a second part to that question is that the - it did list Taiwan as giving guest contributions. So I wanted to ask what exactly were Taiwan's contributions to the summit, and how does that differ from what full members might be contributing to the initiative? Thank you.

UNDER SECRETARY HELBERG: Sure. So let me just start by correcting misperceptions. Taiwan was at the table and was absolutely present in all of the sessions in which one would expect Taiwan to play an important role, including in the manufacturing session as well as the semiconductor session. Taiwan was there and made essential contributions.

We have a bilateral dialogue with Taiwan called the Economic and Prosperity Bilateral Dialogue that we are hosting early next year with our Taiwanese counterparts. We just had the first round - I think it was the day before - and so we didn't see the need to replicate another process on top of a dialogue that was already in flight, where we're already having a lot of very deep discussions. And ultimately, it's because Taiwan is so essential to the supply chain that we viewed it critical to first be able to have this space and have a lot of the most important conversations on a bilateral basis before broadening a lot of the issue sets that we're talking about in a bilateral - in a multilateral format.

But ultimately, for all of the reasons that you mentioned, Taiwan does have invaluable expertise to contribute. So we did extend an invitation, which they accepted. They attended and ultimately they contributed a great deal to the meeting.

What I would - what I would say is the other point that I would add about the meeting is we're not - this - the declaration, one of the reasons why it's so meaningful is it's really not just a piece of paper, and we're not just writing code, so to speak. We're - the goal is to pour concrete, smelt steel, and rack servers, and ultimately build the physical backbone of the 21st century. And the goal is not to write a whitepaper. And so that's why we - all of the work we do is entirely anchored around infrastructure projects. And so we want to ultimately maximize the platforms that we use towards the most likely outcomes of delivering infrastructure projects. And so that's the basis for our entire approach.

The last point that I would add is this was a first meeting, and it is likely - there will likely be many more. The appetite and the reception of the meeting was just - had an enormous amount of enthusiasm and support. And so we're still in the process of determining membership of new members. There are - we expect to announce several new additions to the declaration in Q1 of next year that are based on conversations that we're already having. So I would just take a deep breath, give us a little bit of room to let sensitive conversations unfold on a bilateral basis, and in Q1 of next year we're expecting to roll out several new members of the Pax Silica Declaration.

MODERATOR: Thank you, sir. And next question goes to James Mayger of Bloomberg News. Please unmute yourself and go ahead.

QUESTION: Sorry. Thank you for taking my question today. So one question I have is how you plan to balance each nation's own national security industrial needs and necessities with the other members.' How will you coordinate spending and development so that Japan and the U.S. aren't competing against each other to get investment from TSMC, for example?

And specifically on rare earths, the U.S. announced a massive support package for MP Materials earlier this year, and it didn't seem like there was much discussion with Australia before that even though Australia is doing a very similar thing, trying to support the domestic rare earth industry. Would you plan to coordinate better on those kind of industrial policy measures going forward as part of this broader effort? Thank you.

UNDER SECRETARY HELBERG: So I think a lot of investments will ultimately be tethered to offtake agreements in order to avoid these types of zero-sum issues. With that being said - so just to expound a little bit on that thought, part of the idea is ultimately if investments are made in a smelter, it's those investments that are deployed in conjunction with offtake agreements of the refined minerals or metals coming out of that smelter, which will ultimately make it easier for the private sector to decide which providers or vendors make the most sense for their business.

With that being said, I think I would be really hard-pressed - this - we should - I think we all understand that now is not the time for zero-sum thinking because right now 90 percent of the world's rare earth minerals are controlled by a single player, which we all view as not being sustainable over the long term. And therefore any business activity that we - that we get currently, will ultimately not be - this isn't about competing against each other. It's about competing against the incumbent that actually occupies 90 percent of the market. And so it's - there's a lot, a lot of room for all of us to expand our own productive capacities before we actually get to a point where we're competitive with each other. The only player with which we're competing, with which we're all competing with right now, is not Singapore, Korea, Japan, the UK, or Australia, or Israel. It's someone else, and I think everyone understands who that is.

MODERATOR: Thank you. Our next question goes to Kenneth Basilio of BusinessWorld in the Philippines. Please unmute yourself and go ahead.

QUESTION: Hello, Mr. Under Secretary. I'm joining the briefing from Manila, and there are a few questions that interest the Philippines. Firstly, the Philippines is not part of the Pax Silica Initiative. Why is this and are there any pathways for one to join the initiative, given its deep ties with the U.S. as well as its critical minerals and lower-end semiconductor position in the value chain?

Also, what investment opportunities might the U.S. and partners see for the Philippines in advancing the initiative? Thank you.

UNDER SECRETARY HELBERG: Sorry, do you mind repeating that last question? I couldn't hear you.

QUESTION: What investment opportunities might the U.S. and its partners see for the Philippines in advancing the initiative?

UNDER SECRETARY HELBERG: Yeah, absolutely. So I actually - I met with my Filipino counterpart - I think it was twice - and we view the Philippines as an essential and valued partner. We are very eager and look forward to engaging the Philippines on Pax Silica specifically. I have had several conversations with my Filipino counterparts on the issue of supply chain security and am incredibly excited by the enthusiasm that my counterpart showed at the idea of deepening supply chain security collaboration with the U.S.

So again, this first meeting is the starting point. It's not an end point. We do plan to add more players and partners to this effort. Ultimately, there are a lot of partners that are needed around this discussion. Especially when it comes to manufacturing in minerals, the universe of partners is larger than this initial set of seven or eight countries, and so we do plan to reach out to the Philippines on this. I have already spoken with them around supply chain security issues and have had very positive exchanges with them and am very optimistic that we - through discussions with my counterparts we will find a path for them to join in an expeditious way. Ultimately, I plan to extend an invitation to my counterpart to Washington in the first half of next year in order to be able to resume these discussions face to face, and we are very confident that they're going to be very fruitful exchanges.

MODERATOR: Thank you. We have time for one more question, and it will go to Stu Woo of The Wall Street Journal. Please unmute yourself and go ahead.

QUESTION: Hey, Under Secretary. Thanks for doing this. I wanted to get your sense of where the U.S. stood with China in the AI rivalry, but I wanted to decode it in a way that an American audience could understand. So I wanted to ask you: If this rivalry were an NFL game and this is halftime, what do you think the score is and why?

UNDER SECRETARY HELBERG: So I'm not going to build off of the football analogy, but I will say this, that our strategy is to create a competitive edge so steep, so insurmountable that no adversary or competitor can scale it. That's why our goal is to make America the arsenal of AI in this century. We are adopting a strategy to - that has attracted hundreds of billions of dollars in investment in the United States. As a country we're experiencing the largest industrial buildout in over 150 years, since the first Industrial Revolution. We are moving at lightning speed to forge trade deals, which is leading to a historic decrease in our overall trade deficit, which matters a lot for reindustrialization.

And we're now creating the kind of coalition that we need in order to meaningfully make progress on supply chains with countries that have true technology ecosystems, unique capabilities to bring to bear, and we've been able to forge a new consensus. I'm sure you'll remember, since you're with The Wall Street Journal, back in the day 25 years ago people used to talk about the Washington Consensus. Today we are seeing a new - a true new consensus that is being born out of Washington and has spread throughout the world that is embraced, which is that economic policy flows from national security. We need to have an economic policy that is tethered to the - to national security realities, and ultimately, everyone understands that the countries that lead in AI and in technology will have the larger economy and the stronger military. And that's why we are totally committed as the U.S. and as a group, as a Pax Silica group, in order to make sure that we build the rails of the 21st century.

MODERATOR: Thank you, Mr. Under Secretary. Now I'll turn it back to you if you have any closing remarks before we wrap up.

UNDER SECRETARY HELBERG: I want to express my appreciation for everyone's time. I want to say that for us, Pax Silica and economic security is not a line item, it's a prerequisite for national survival. And ultimately, the era of free trade surrender is over. The era of American industrial revival is now underway, and the efforts being undertaken by this administration demonstrates that every single week.

MODERATOR: Thank you so much, Mr. Under Secretary. Thank you all for joining us. We'll provide a transcript of today's briefing to journalists as soon as it is available. If you have any feedback or further questions, please feel free to contact us at [email protected]. Thank you again, and we hope you can join us for another briefing soon. Take care.

UNDER SECRETARY HELBERG: Thank you.

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