Pax Silica: Inside the Trump Administration’s Tech Strategy with Jacob Helberg
In a Nutshell
**Pax Silica** is a 14-country coalition led by the Trump administration's Under Secretary Jacob Helberg to secure the AI supply chain through private-sector partnerships, launching with a 4,000-acre **economic security zone** in the Philippines—initially U.S. State Department diplomatic property—for manufacturing critical inputs like precision reducers, rare earth magnets, and robotics components, contrasting China's state-driven Belt and Road by emphasizing commercial viability, investor protections, and win-win alliances. This replicable "forward-deployed industrial base" leverages allies' strengths (e.g., Philippines' manufacturing ecosystem) to diversify from China, supported by critical minerals MOUs, nuclear deregulation, and venture capital for execution. Helberg highlights America's entrepreneurial edge, urging Silicon Valley to prioritize high-impact investments in semis, robotics, and energy while fostering regional hubs for global reindustrialization.
These notes were generated by AI and may contain inaccuracies.
We're not going to do government-operated supply chains because that's not how we shine as a country. Our superpower is really our private sector and our companies. The old Steve Jobs quote that American products enchant and delight users around the world by the billions. That really is our edge as a country. The answer has been trying to work in lockstep with our private companies and our builders to build platforms that are commercially viable and that can ultimately live outside of the government as a private service.
General Purpose are joined by Jacob Helberg, the Under Secretary of State for Economic Affairs. Spoke with Jacob before he was confirmed in this role and excited to have him back to discuss Pax Silica, a multi-nation effort to secure the AI supply chain for the United States and its allies.
Three months ago announced Pax Silica, super ambitious coalition. Pax Silica is an economic security coalition that now has 14 countries and the idea is really to have an ecosystems-based approach to our supply chains and specifically the AI supply chain. Gave a speech at the Hudson Institute that was really meant to be our blueprint for Pax Silica. Outlined different lines of efforts including policy road maps and projects. About a week and a half ago did the first big tech equivalent of a product rollout where announced a forward deployed industrial base with our oldest ally in Asia, the Philippines. Made this arrangement with them where they are granting us 4,000 acres which is obviously very substantial. It's a third of the size of Manhattan to do a very large industrial build-out. That's one-of-a-kind that helps combine the predictability and certainty of the American common law system with the industrial comparative advantages that the Philippines offers. The goal is really to secure inputs that are vital for our supply chains. Super excited to be here in San Francisco talk to builders and see ways that we can actually accelerate supply chain security for our tech companies.
Is this set up as a special economic zone in the Philippines? Right now there are two phases to the plan. The first phase is the State Department taking into custody the zone. Referring to it as an economic security zone because it is a very unique type of arrangement. The State Department has authorities to take land and property into custody sort of how foreign governments gift the State Department counselors and consulates and embassies. It's very unique to do a gift of 4,000 acres, but fortunately there's no statutory limits on how big or small property can be. So right now it's actually diplomatic property that is effectively governed by the same laws as our embassies are. Phase two will be the long-term development and build-out of the land. Going to spend a two-year window to negotiate the details with our Filipino counterparts on the investor protections that will apply to the land, the taxation regimes, and all of the different legal safeguards that investors will be able to benefit from for the long term. The goal is within that two-year window to actually have a long-term framework that will be multiple decades.
The goal is really to actually test a concept that could potentially be replicable. When we think about the AI supply chain, a lot of people just think of chips, but the reality is that the AI supply chain actually includes thousands of inputs like precision reducers, server motors, rare earth magnets, and actuators. Our concentration risk as a country is incredibly high for basically all of those inputs. The goal is to identify key geographies that actually have industrial strengths and bring unique capabilities to the table that could actually help us move the needle meaningfully in different segments of the supply chain. The Philippines already has a native indigenous manufacturing ecosystem that's already quite deep. It's our oldest ally in Asia. So, we have a very deep values alignment with the Philippines and the nexus between the values alignment combined with their industrial advantages actually makes for a very compelling value proposition for a lot of companies. Talking with a number of companies focused on the robotics supply chain. Robotics is an incredibly promising industry that really is poised to change a lot of things in manufacturing as well as in people's daily lives and the supply chain is right now completely dominated by China.
When most people hear economic security policy, one of the first things they think of is the Belt and Road Initiative. The Belt and Road Initiative is a very large foreign policy project of the Chinese government that basically involved using state-owned enterprises that are essentially extensions of the government to carry out massive infrastructure projects overseas. The idea is using infrastructure projects as a tool of foreign policy to achieve foreign policy outcomes. Big build-outs, for example, in Africa that did it in a variety of countries. Whether it's creating mines or processing facilities, a lot of the times it involved building out very big roads, sometimes bridges, a lot of the times it included railways. Fundamentally what it was was state-owned enterprises building government-operated railways, government-built roads and bridges. The Chinese government, by virtue of its system, really built all of this in-house. Which for us, when we think about how should we secure supply chains, we need to make a lot of investments that touch upon these kinds of industrial capabilities, but as Americans, we're not going to do this in-house inside of the government. Effects of this for China was basically both building out their industrial base, but then also securing natural resources in some of these countries. They were able to build a network that ensured that their factories in China had all the inputs in order to actually thrive. Shenzhen today is really the world's factory floor because they have deep relationships with suppliers and vendors on every continent, basically. The infrastructure that they leverage allows them to get access in a way that's very competitive.
The question for us is how do we compete in that landscape at a time when we want to re-industrialize? The answer is we're not going to do government-operated supply chains because that's not how we shine as a country. Our superpower is really our private sector and our companies. > American products enchant and delight users around the world by the billions, and that is really our edge as a country. Adopt a product-based, product-centric approach to our foreign policy where we can actually use that kind of approach to achieve foreign policy outcomes. The answer has been trying to work in lockstep with our private and our builders to build platforms that are commercially viable and that can ultimately live outside of the government as a private service. The forward-deployed industrial base is meant to be a platform for private investment that will be viable for the long term. It's the first of its kind. Thinking about making a big play in the logistics space in partnership with large corporates and in June looking at potentially doing a broader rollout where going to roll out four or five different big lines of effort.
As somebody who's done a deep study of the pros and cons of Belt and Road, there's obviously access to infrastructure and inputs as some dimension of success here. What's been the failure point for Belt and Road? Some of the projects have been useful for China. There is a lot of waste in the Belt and Road initiative and mainly it's because whenever you have central planning and really government bureaucrats effectively allocating large pools of capital. There's a lot of waste because vendors massively overcharge things. There's a lot of waste because there's a lot of roads to nowhere. China will basically deploy capital to its own companies that then basically write IOUs to the host country. The host country realizes they've gained a reputation for these projects have gained a reputation for being debt trap because China will say we'll build a road as a loan except the company building the road is Chinese and so China can basically decide what the price is and when a host country thinks it's taking on X million dollars in liabilities and it actually ends up being 10X that's when they kind of end up in quicksand. The Belt and Road Initiative has really garnered a reputation for being a tool of political leverage that a lot of countries are still digging themselves out of. Versus one of partnership. A lot of countries don't feel like they have enough upside in it. It is Chinese workers, Chinese companies, and a lot of the times it's Chinese equity because the debt converts to equity if the host country defaults. Approaching it totally differently. Because we're approaching it by putting our companies in the driver's seat, it's actually in a lot of ways much more ethical because the deal is structured in a way that's really meant to be a true joint venture. And one that will be optimized for commercial viability, not just for political purposes.
When you think about the 14 countries that are already part of Pax Silica or this as a potential blueprint for others to be involved in American foreign deployed industrial bases, what's the value prop for them? The AI revolution is leading to huge growth. Despite the volatility in the energy markets, the American economy has been proven incredibly resilient. A big part of that is AI being this incredibly strong economic force that is already fueling over a third of our economic GDP growth right here in the US. Overseas, seeing that growth translate to record demands for copper, record demands for cobalt, record demands for lots of different inputs that go into data centers and record demand for electricians and all the rest. The takeaway for a lot of these countries is if they find ways of actually having a bigger part and a bigger stake in that supply chain at different layers, layers that make sense for their companies and their economy, they can actually derive a lot of economic growth from that revolution because the amazing thing about the tech industry, especially when we go through these inflection points, is the pie grows really fast. It's really not zero-sum, which actually makes it incredibly conducive to forge very mutually beneficial partnerships because we're not approaching it as what I gain, someone else loses. It's actually because the pie is growing, we're partnering together. This is very much part of the ethos of how we're partnering with the Philippines. Developing a partnership where we both have skin in the game and we both share in the upside of success. Risk is evenly allocated and so is upside. Ultimately, it's very much a win-win proposition.
How do you think about the areas where you want to partner with other countries versus have things happen in the US? There's been a long-standing effort to bring back fabs and the ability to manufacture semiconductors at state-of-the-art linewidths. America consumes accounts for somewhere in the neighborhood between 20 and 30% of global consumption on any given quarter. We're 4% of the world's population, but we're basically a fourth to a third of the world's total consumption. Our production levels are not 20 or 30%. We produce a lot less than that. If we narrow the gap between what we consume and what we produce, we will reindustrialize America because that will be a massive reindustrialization plan that will inevitably include a lot of semi-autonomy or full autonomy. Because if we industrialize an economy where unemployment's already at 4%, it will have to be very autonomous, which is possible. Singapore has proven that that's possible. They have highly autonomous ports, factories.
The question of what happens with the other 70% of the world's consumption that is currently mostly concentrated in China. If we want to have a supply chain system where America and its allies in the global economy has access to suppliers that are more evenly distributed, that are reliable, trustworthy, transparent. A lot of countries actually really see that as a business opportunity for them to also be able to have more production in their respective regions. Part of the idea for the forward-deployed industrial base and these economic security zones is actually to have a hub-based approach where we can leverage the industrial attributes. For example, if regions have a lot of rare earth minerals, or in the case of the Philippines, a very deep indigenous manufacturing ecosystem, things that they're really good at, or have unique advantages in, we can leverage that to really help capitalize on that and make sure that they can actually contribute to the supply chains for areas where they're that they're really good in. Ultimately, help foster regional hubs because the population of Africa, for example, is growing massively. South America is also growing very quickly, places like Brazil, Argentina. America remains the economic engine of the global economy. The parts that we re-industrialize here will definitely be the biggest driving forces. The effort to bring back semiconductor fab production here is already well underway. It will continue. It's already in flight, and there's a whole host of reasons why it wouldn't necessarily make sense to try to replicate that elsewhere, because it's highly technical. The global talent supply of talent available in that area is very finite and limited. It's also extremely capital intensive. The supply chain is vast, and there's a lot of things that still need to be built. The world is actually really ripe with opportunity in that sense.
How do you think about other inputs? Rare earth magnets. Rare earths are not actually rare. The total market size is in the few billion dollars a year. That market is heavily subsidized by China in order to basically control supply. It's sort of a lever from like a political basis. Rare earths are not that rare. They're in lots of different places. The key thing is how much energy do you need to pump into the ground in order to extract a given mineral at a given quality grade. What's actually really rare is the refining process because the number of processing facilities for these minerals is very limited outside of China. China obviously subsidizes the hell out of them.
The Trump administration has actually really had a very comprehensive approach. Been really focused on the mineral security issue pretty much since day one of the administration. Did the largest critical minerals summit in the history of the State Department on February 4th with over 55 countries that participated, signed critical mineral MOU deals with dozens of countries who have lots of different kinds of minerals. Now one of the things that we're doing and have been aggressively pursued across the administration is allocating capital and investments into a lot of these projects to make sure that they have access to the resources to expand production. That's on the supply side. On the demand side, the administration is hard at work at negotiating deals with countries to address the pricing issue. Because the pricing mechanism is really central to unlocking long-term commercial viability. Incredibly confident that we actually will resolve the pricing issue for the minerals market before the end of this administration.
You mentioned that you are directly investing in domains of importance where you're trying to trigger better supply capability with us and allies. How do you think of the role of private capital in these initiatives? You guys have such an important role to play mainly because so much of whether a project materializes or not hinges on execution capacity. Can a company really execute on a very aggressive ambitious plan? One of the amazing superpowers of the venture capital business is you guys are hardwired to be able to assess a lot of the personality attributes of founders and operators to tell some of the things that are harder to read from a deck or spreadsheet on does this person really have what it takes to be able to execute and address execution risk underlying scientific risk all the different risks that inevitably exist in any company. Would really love for the venture capital ecosystem to help be part of the solution because you guys are better positioned to assess who are the best players in the space and we can take that as an important signal to help inform capital allocations that we make on the government side to make sure that we allocate money in the right places and in the most efficient way possible especially as good stewards of taxpayer money.
The other thing is beyond assessing who the best players are I think on the innovation side. There's a number of really great companies especially out here in the Bay Area who are working on new materials and rare earth free magnets and lots of other kinds of innovations and that's where there's a lot of room and potential for potentially coming out with a rabbit out of a hat situation where we somehow end up solving this issue in a way that was completely unanticipated through innovation and so that will ultimately be a solution that will really be born out of the tech industry not the government and those are things that we obviously want to be attuned to and help be supportive in any way we can.
When you think about limited bandwidth of course and economic security in the AI supply chain being an enormous topic. How do you think about prioritizing 27, 28 versus five years out?
Approaches balance views on capital-intensive long-term plays like next-gen lithography, robotics, chip semis designs, and nuclear with software shipping this year. One approach is shaping the macro environment to make innovation, iteration, and deployment easier and less expensive. Administration's approach includes expanding domestic energy supply, particularly nuclear, by cutting red tape and accelerating deployment. President signed one of first executive orders to quadruple domestic nuclear supply, plus deregulation actions. One big beautiful bill included tax incentives. Through State Department, creating evergreen systems like forward deployed industrial base as long-term, replicable platform in other geographies for tech companies to build quickly and get to market faster.
Transitioning through administrations: executive orders often undone when administrations shift. Key is legislation or other approaches to make changes stick. Tax reform is very sticky and hard to undo. Role at State Department prohibits commenting on electoral politics due to statutory limitation.
Pax Silicon goal is to expand market access for companies, as they face hurdles exporting even to allies. Seeking feedback on what's working and not in Japan, South Korea, India to improve policymaking support for competitiveness. Feedback on partnerships in flight and supply chain security opportunities with companies in India, Japan, South Korea, Singapore. Executives deliberately factor in avoiding overexposure to China due to political dynamics. Understanding opportunities helps grow segments quickly at scale.
- Expanded market access
- Strategic partnership opportunities on supply chain side
- Space for intellectual property conversations, e.g., model distillation debate to protect economic value of hundreds of billions in AI investments. Input from builders closest to technology development is crucial.
Biggest surprise: how entrepreneurial the Trump administration is, counter to stereotype of bureaucratic government. President spent most of life in private sector, likes speed—moves in Trump time, wants things yesterday. Appetite to try new things, take risks, move fast is unusual for government. Great leadership from cabinet: Secretary Besson, Secretary Lutnick, Secretary Rubio, Secretary Burgum—collegial team operating with high professionalism, inspiring for sub-cabinet and bureaus.
America as global underdog: US thinks of itself as established navy vs. pirate, but Allison Graham's Thucydides Trap framing US as established power and China as rising is flawed. America has always been nation of underdogs—from 13 disorganized colonies rebelling against empire of polite society and educated expert class who said republic would fail. Through history, experts predict decline after crises like great financial crash, Iraq war, oil crises, Vietnam war. Americans perform well when backs against wall, crunch time.
During COVID, dramatic Atlantic magazine covers about great unraveling of America, but US developed vaccine in under a year that outperformed others, exited COVID earlier than China bogged down in zero COVID policy.
Culturally unique underdog mentality embodied in Silicon Valley: every founder starts with contrarian, heretical idea dismissed by expert class like polished Harvard professors. Dropouts question old orthodoxies, hear no 45 times before yes, keep going. New frontier mentality allows bouncing back from setbacks. Optimistic about US future. Message to founders, executives in Silicon Valley, partners overseas: that's spirit we seek in partners. Expect tenacity and creative thinking from Americans—positive sum partnerships worldwide.
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