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Siemens USA CEO: U.S. chip manufacturing is 'essential' for next era

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Siemens USA President and CEO Barbara Humpton joins Yahoo Finance Live to discuss the CHIPS Act, U.S. chip manufacturing, advancing U.S. tech, and the outlook for recession.

Video Transcript

BRAD SMITH: --much. Let's continue this conversation now with Barbara Humpton, who is the President and CEO of Siemens USA. This obviously a massive effort in order to move forward the broader chips and semiconductor industry. What are your expectations in terms of not just what we'll see next, but what kind of capacity and production may be unlocked if this fully goes through?

BARBARA HUMPTON: Yeah, Brad. First of all, we're thrilled to see the Chips Act moving. This is something we've been supporting for quite some time now, with the recognition that this technology is key to America's future leadership in the world economy. You see, we're entering a new era for manufacturing.

And it's taking shape right here in America, where manufacturing is more digital than ever, and where advanced manufacturing technology makes everything possible. We think about digital twins, automation, virtual reality, augmented reality. All of these technologies go into the electric vehicles, the smart buildings.

And even as we heard from Chipotle, the chip machines that we'll be using in our everyday life. So truly, global innovation is essential. But making things locally is now key to our overall security and our productivity. The disrupted supply chains we've seen really show the need to establish local production and be resilient against future disruptions.

So the Chip Act-- Chips Act, both in its-- the investment it will make in new manufacturing capacity, as well as the investment it will make in research and development are both going to be essential to establishing America's leadership position for this next decade.

BRAD SMITH: Barbara, fortunately, there has been no shortage in Chipotle salad bowls, because I just want to be in a good mood. So I'm glad that has not happened. But look, over the past year, looking back on the chip-- the chip shortage, how has that impacted your business and what is it prevented you from doing?

BARBARA HUMPTON: Well I think all businesses have been really struggling with the semiconductor supply because, as we say, it's in everything. An EV uses some 2000 chips, and in order to build an Electric Vehicle, manufacturers are looking to automation that Siemens provides.

They're looking to the electric vehicle charging stations that Siemens provide, both of which use semiconductors. And so what we've done-- our heroes in supply chain management here in the corporation have been using analytical tools, market tools to look out and use intelligence to understand where there may be pinch points in the supply chain.

One of the key tools they've been using is transparency into our own operations, aggregating our need across businesses, making sure that when we communicate with semiconductor providers, they can trust us. That we have a real need and that we will be using all of the supplies they make available to us.

What we're moving into now is the ability to actually use predictive tools to be able to look into the future. So with all that, I mean, I guess the underlying message, Brian, is the ability to use technology that is readily available to us today. Get into that digital realm itself and use that to help us manage the flow of product to where it can be best used.

BRAD SMITH: What are you hearing from your customers, in terms of how they're going to be navigating, even in the absence of a Chips Act in this interim period where it's looking to go through fully, and where there is more capacity that's looking to come online. How are they navigating just this interim period, and what are they asking more from Siemens?

BARBARA HUMPTON: Yeah. In this interim period, what we've known is that we need to be in very close contact with our customers. Because what a lot of people don't understand is that we at Siemens are in all parts of the semiconductor supply chain. When Intel chooses to build a new location, then we could well be the providers of the electricity that will make their production possible.

We provide automation that's used within the production factory itself. We also provide the design tools, the software, that helps their engineers envision and then ultimately design and ready for production the semiconductors themselves. And as I say, ultimately, we are end users of the product.

So the most important thing for all of us in this moment of disruption is clear communication. And as you know, this has been a very competitive field where people have been reluctant to share too much about what their requirements are and what their plans are for the future.

The disruption, and particularly with the leadership of the Department of Commerce, we've seen unprecedented communication about where the needs are and how we drive through the bottlenecks today.

BRAD SMITH: Barbara, a lot of manufacturing executives have told us recently that they have dusted off their recession playbook. Do you have one of those, and how are you preparing for the slowdown?

BARBARA HUMPTON: Yeah, I think we're all recognizing that what we're entering right now is a very difficult period, especially with the disruption due to war in Europe, the effects that's having on global energy supply. People are characterizing what we're entering as a global energy crisis.

I will tell you that here in the US, my perspective is that we have relative energy security. We have relative health, while many parts of the world are still dealing with pandemic shutdowns, et cetera. So we actually have an obligation to outperform. I was just on a call this morning with Siemens global leaders, regions from around the world gathered.

And this message of, let's overdrive right now in order to be sure we'll be well prepared for this coming Winter. And then one piece of good news is that backlogs are strong at Siemens. And so the number one thing we have to be focused on is relieving those delivery cycle times so that other customers of ours who are going to be critical throughout a long tough Winter are going to be able to perform well.

BRAD SMITH: Some good news, we'll take it. Barbara Humpton, president and CEO of Siemens USA. Always good to see you. We'll talk to you soon.