The Philippines Gifted America 4,000 Acres. Pax Silica Wants to Make the AI Supply Chain a Business

Three months before this taping, Under Secretary of State for Economic Affairs Jacob Helberg used a Hudson Institute speech as the blueprint for Pax Silica. He tells No Priors hosts Sarah Guo and Elad Gil that it is now an economic security coalition of 14 countries, built around an ecosystems approach to supply chains—especially the AI supply chain. About a week and a half earlier, the State Department staged what he calls the tech equivalent of a product rollout: a forward-deployed industrial base with the Philippines, America's oldest ally in Asia.

The Philippines is granting the United States 4,000 acres for a large industrial build-out, a plot Helberg notes is a third the size of Manhattan. The bet is to combine the predictability of the American common-law system with the industrial advantages the Philippines already has, and to secure inputs that allied supply chains actually need. Guo asks whether the site is a special economic zone. Helberg prefers a different name: an "economic security zone," and a one-of-a-kind arrangement.

The plan runs in two phases. First, the State Department takes the land into custody under the same authorities used when foreign governments gift consulates and embassies; there is no statutory limit on size, so 4,000 acres can sit as diplomatic property governed like a US embassy. Phase two is a two-year window to negotiate investor protections, tax regimes, and legal safeguards with Filipino counterparts, aiming for a framework that lasts multiple decades. Helberg is in San Francisco, he says, to talk with builders about how to accelerate supply-chain security for American tech companies.

Asked what should actually be built on the land, Helberg says the first job is to test a concept that could be copied elsewhere. Most people hear "AI supply chain" and picture chips. The reality, he argues, is thousands of inputs: precision reducers, servo motors, rare-earth magnets, and actuators. America's concentration risk on essentially all of those inputs is, in his words, "incredibly high."

The search is for places that already have industrial strengths and can move a real segment of the chain. The Philippines, he says, has a deep indigenous manufacturing ecosystem and a values alignment that comes with being America's oldest Asian ally. That mix—certainty plus a local factory base—is the value proposition he wants to sell to companies.

One sector already on the table is robotics. Helberg calls it an industry poised to change manufacturing and daily life, and he says its supply chain is "completely dominated by China." His team is talking with companies in that stack and is particularly interested in making a bet there. For builders, the implication is blunt: the unglamorous parts of the robot, not the model weights, are where the geopolitical choke points sit.

When people hear economic security policy, Guo notes, they think of China's Belt and Road Initiative. Helberg says Washington has the benefit of studying 25 years of that project: what worked, and what did not. He describes it as a huge Chinese foreign-policy effort that uses state-owned enterprises—extensions of the government—to build mines, processing plants, roads, bridges, and railways overseas, with infrastructure as a tool for political outcomes.

The payoff for Beijing, he and Gil agree, was an industrial base plus locked-in natural resources. Shenzhen is "the world's factory floor," Helberg says, because Chinese factories have supplier relationships on every continent and infrastructure that makes access competitive. America wants to reindustrialize in that landscape, but not by copying the method. "We're not going to do government-operated supply chains because that's not how we shine as a country." The superpower, in his telling, is the private sector.

He reaches for an old Steve Jobs line: American products "enchant and delight users around the world by the billions." The strategy is to work in lockstep with builders on platforms that are commercially viable and can live outside government as a private service. The Philippine base is the first of those platforms. Helberg says the department is also thinking about a large logistics play with corporates, and a broader June rollout of four or five lines of effort—Guo and Gil are invited to Washington for it.

The failure mode of Belt and Road, as he reads it, is waste from central planning: vendors overcharge, and there are "roads to nowhere." Chinese firms deploy capital, write IOUs to the host country, and set the price because they are the contractor; a project budgeted at X can land at 10X, and debt converting to equity leaves the host in quicksand. The brand, he says, is political leverage—Chinese workers, Chinese companies, and often Chinese equity. Pax Silica puts American companies in the driver's seat, which Helberg calls "much more ethical" because the deal is meant to be a true joint venture optimized for commercial viability, not just politics.

The pitch to the other Pax Silica countries, Helberg says, is growth rather than a zero-sum carve-up. Despite energy-market volatility, he calls the American economy resilient, with AI already fueling over a third of US GDP growth. That boom is showing up overseas as record demand for copper, cobalt, data-center inputs, and electricians. If partners take a larger stake in layers of the chain that fit their firms, they can ride a pie that "grows really fast." He describes the Philippine partnership as both sides having skin in the game, with risk and upside shared.

Gil asks what must be done in the United States versus with partners, pointing to the unfinished effort to bring leading-edge semiconductor fabs home. Helberg starts with arithmetic: America is about 4% of world population and 20 to 30% of global consumption—"a fourth to a third"—while production sits far below that. Closing the gap would itself be a massive reindustrialization program. With unemployment already around 4%, he argues it will have to be highly autonomous, pointing to Singapore's automated ports and factories as proof the model can work.

The remaining 70% of world consumption, he says, is currently concentrated mostly in China. The idea is a more evenly distributed web of reliable, transparent suppliers, using economic security zones as hubs that lean on what a region is already good at—minerals where the rocks are, manufacturing in the Philippines. He flags Africa's population growth and fast-growing South American economies such as Brazil and Argentina as reasons a hub model is promising. America, in his telling, remains the global economic engine, and the parts reindustrialized at home will still be the biggest driving forces.

On semiconductors, the fab-return effort is "already well underway" and will continue. Helberg says it would not make sense to replicate that work elsewhere before it is finished in the United States: the work is highly technical, global talent is finite, and the capital intensity is extreme. The "good news," he adds, is that the supply chain is vast and still full of things that need to be built. Opportunity, in that sense, is not scarce even if leading-edge wafers should stay onshore.

Gil offers a thesis: rare earths are not actually rare, the market is only a few billion dollars a year, and China heavily subsidizes it as political leverage. Helberg agrees they are "not that rare," though not quite "everywhere" either. What drives the economics, he says, is how much energy you must pump into the ground to extract a mineral at a given grade. What is actually scarce is refining: processing capacity outside China exists, but in very limited quantities. China, he adds, "subsidizes the hell out of them."

He says mineral security has been a focus since day one of the Trump administration. On February 4, the State Department held what he calls its largest-ever critical minerals summit, with more than 55 countries, and signed memoranda of understanding with dozens of mineral-rich governments. Across the administration, capital is being allocated so specific projects can expand production. That is the supply side of the ledger.

Demand is the harder half. The administration is negotiating deals to address pricing, because a company is viable only at a price it can actually charge. "The pricing mechanism is really, really central to unlocking long-term commercial viability." Helberg says he is "incredibly confident" the minerals-market pricing issue will be resolved before the end of this administration. Investors can fund a startup, he notes; they cannot fund a business that has no price at which it can live.

Guo asks, "for a friend," what role private capital plays when the government is investing to trigger supply. Helberg says whether a project happens hinges on execution, and venture capital is "hardwired" to read founder and operator traits that do not show up in a deck or spreadsheet—execution risk, scientific risk, and the rest. He wants the VC ecosystem to help identify the best players in each space, and to treat that judgment as a signal for government capital allocation. The point, he says, is to be a better steward of taxpayer money.

Beyond picking operators, he is watching Bay Area companies working on new materials and rare-earth-free magnets. There is room, he says, for a "rabbit out of a hat" in which innovation solves the minerals problem in a way no one in government anticipated. That solution, if it comes, "will really be born out of the tech industry, not the government." The State's job, in that framing, is to stay attuned and supportive rather than to invent the bypass itself.

On near-term versus five-year bets—next-gen lithography, robotics, new chip designs, nuclear versus software that ships this year—Helberg says the administration is trying to shape a macro environment that makes iterating and deploying innovation cheaper and easier. Expanding domestic energy, especially nuclear, is part of that: he recalls one of the president's first executive orders calling for a quadrupling of domestic nuclear supply, plus deregulation and tax incentives in the One Big Beautiful Bill. The State Department's piece is "evergreen" systems such as the forward-deployed industrial base, a replicable long-term platform meant to let tech companies get to market faster.

Gil asks how any of this survives a change of administration, given how often executive orders are reversed. Helberg says some things are hard to undo—"tax reform is very sticky"—then notes a statutory limit: his State Department role does not allow comment on electoral politics. For entrepreneurs, he wants Pax Silica used as a platform to expand market access, because even in allied markets such as Japan, South Korea, and India, US firms still hit export hurdles. He is already hearing about joint ventures and supply-chain partnerships in India, Japan, South Korea, and Singapore, as executives try not to be overexposed to China. He also flags model distillation as an unresolved policy area needed to protect "hundreds of billions of dollars" of AI investment, and wants input from the builders closest to the technology.

Asked for the biggest surprise since he was last on the show, Helberg says it is how entrepreneurial the Trump administration has been. Outsiders stereotype government as bureaucratic, and he does not deny it is a massive enterprise full of process. What is extraordinary, he says, is a president who spent most of his life in the private sector and likes speed. The running joke with overseas counterparts is that they move on "Trump time": when the president likes something, he wants it yesterday.

That appetite for new things, risk, and speed is "highly unusual by government standards," and Helberg ties it to the philosophy Trump brings to the Oval Office. He also credits cabinet-level leadership from Secretaries Bessent, Lutnick, Rubio, and Burgum. The team, he says, is collegial and professional in a way that has been "incredibly inspiring" for people in the sub-cabinet, and that makes it easier to work constructively with the department's bureaus.

Gil is surprised by Helberg's phrasing that America is a "global underdog." Helberg argues the United States often thinks of itself as the navy versus a pirate. He takes aim at Graham Allison's book on the Thucydides Trap, which casts America as the established power and China as the rising one. The flaw, Helberg says, is the established-power premise: from the founding, America has been a nation of underdogs—13 unruly colonies rebelling against an empire of "polite society" and an expert class that said the republic would never succeed.

The through line of American history, as he tells it, is experts predicting decline after the financial crash, Iraq, the oil crises, and Vietnam. "Americans perform really, really well when we feel like our backs are against the wall." During COVID, he recalls dramatic Atlantic covers about "the great unraveling of America"; the US produced a vaccine in under a year that outperformed alternatives and came out of the pandemic earlier, while China was bogged down in zero-COVID, "the effects of which it's still feeling today." That underdog culture, he says, is the quintessence of Silicon Valley: founders with heretical ideas, some of them dropouts, who hear no 45 times and keep going. That is the spirit he wants in partners, and the ethos others should expect from Americans—positive-sum, tenacious, and creatively stubborn.