Chip Craze: Framing Industrial Policy for the AI Era

The AI-driven capex cycle might be the biggest investment story of the past century. The five largest hyperscalers were on track to spend around $800 billion on AI infrastructure in 2025, and as a share of U.S. GDP, AI capex has already eclipsed the dot-com boom of the 1990s. Chips are at the center of the AI frenzy – the same chips that also guide precision munitions and power satellite communications. In pursuit of a strategic advantage, nations are racing to shore up critical supply chains and achieve dominance in the economic arena. How will industrial policy's reemergence influence investment opportunities and global capital flows? For a closer examination of industrial policy's risks and rewards, PGIM's Daleep Singh talks to Mike Schmidt, Distinguished Visitor at Princeton University's Griswold Center for Economic Policy and former Director of the CHIPS Program Office (CPO) at the U.S. Department of Commerce. The discussion covers topics including: A framework for employing industrial policy effectively Economic resilience and strategic dominance Opportunities and challenges in ramping up U.S. chip production Recent industrial policy actions and their market impact How to prepare supply chains to withstand geopolitical weaponization or unexpected shocks