You can say everything will be digital and that's fine, but until we have nano machines replicating material goods, who's going to make the things we use every day, or the things that store all those digital bits?
Moreover, unilateral hegemony is something that no country will be able to maintain in this system. Earlier the British were "outsourcing" their work to the colonies and getting raw materials from them at substantially cheaper costs. Today, we have moved beyond that and instead you have entities existing in different pieces of land to get the optimal yield.
So, in this interconnected world those realities are harder to maintain. What lies ahead is anyones guess, but something fascinating is happening around us and we are witnessing the start of a huge shift that no one can predict right now. The times they are a-changin'.
Innovations in design and manufacturing tend to dovetail and drive each other. Doing both under one roof reaps more of a benefit from that dynamic.
There is also a historical argument. The most prosperous, successful countries have had a large industrial base. That doesn't necessarily mean one requires the other, but it does suggest a strong linkage.
That's Andy Grove's current argument too. I would have thought it to be obvious, self-evident even, but apparently not.