June 25, 2022


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The billionaires behind the push to revitalize the US chip industry

The billionaires behind the push to revitalize the US chip industry

Amid controversy over how the United States can bring more semiconductor manufacturing back into the country and fears it will become a national security concern, a surprising group of quietly related billionaires has come together to influence the way Washington deals with this thorny challenge.

Over the past several months, without attracting much attention, Eric Schmidt, the former Google CEO and longtime Democratic benefactor, has joined forces with Peter Thiel, co-founder of PayPal and a Trump supporter, to support an extraordinary nonprofit capital. Fund to invest in the chip industry across the country. The group also includes a cadre of former government officials, including Ashton B. Carter, the former Secretary of Defense, and HR McMaster, the former National Security Adviser.

The billionaires aren’t just funding the effort themselves: The group has met with lawmakers in Congress in the hope that American taxpayers will help foot the bill.

Question: $1 billion.

group, called America’s Frontier Funddescribes itself as “the country’s first deep tech fund investing in the national interest”.

And its impact has already become clear: Late last month, the White House directed Fund to lead the Quadruple Investor Networkwhich the White House describes as “an independent consortium of investors that seeks to advance access to capital for critical and emerging technologies” across the United States, Japan, India and Australia.

The CEO of the fund is Gilman Lowe, a gaming executive turned venture capitalist who led In-Q-Tel, a CIA-backed investment fund. Mr. Lowe is a familiar face all over Washington. Recently named President Biden’s Intelligence Advisory Board He is expected to testify before senators regarding strengthening Suppliers.

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But the Schmidt-Tel-backed organization also raises more than a few eyebrows, and questions: What do billionaires want? Will they direct government dollars toward the companies they invest in or benefit from?

Mr. Schmidt has been criticized For excessive influence on the Biden and Obama administrations. Mr. Thiel was seen as having the ear of former President Donald J. Trump.

“I’m not sure what this organization can accomplish that the US government cannot accomplish on its own,” said Gaurav Gupta, an emerging technology analyst at industrial research firm Gartner.

Mr. Lowe said the skepticism was unwarranted: “If anything, we need more Eric Schmidts to participate, not stand on the sidelines. We need more techs with an impact.”

In a statement to DealBook, Mr. Schmidt said: “As all of our National Security Committees have made clear, government, industry, academia, and philanthropy must work together if we want free and open societies to lead the next wave of innovation for the benefit of all. The US Border Fund is an important bridge in this Effort “.

At stake is the US’s supremacy in the global innovation race it led in the 20th century, thanks in large part to US chip breakthroughs — and all the attendant benefits. Industry experts say the risk of inaction is that China’s recent investment in deep science and technology will put it first, with Chinese technology, and perhaps even ideology, taking over the world one day.

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Edline Levine, a quantum physicist and co-founder of box. “Everyone who drives has a first-mover advantage and will actually dominate in this sector in the same way that the United States did in early semiconductors.”

In 2020, according to the Semiconductor Industry Association, the United States accounted for “only 12 percent of global semiconductor manufacturing capacity.” That year, the South Korean electronics giant Samsung’s revenue exceeded those of the US chip leader Intel. In 2021, Intel did the unthinkable: The company said it would outsource more production to Asia, most notably to manufacturing Taiwanese semiconductors, an approach some have questioned amid pandemic supply chain struggles and which some believe led to the departure of the company’s CEO. Intel’s Time, Bob Swan.

Mr. Swann’s replacement, Pat Gelsinger, has more than 43 billion dollars from the company’s board of directors Last year to build new chip-making plants, including a $20 billion investment in two New factories in Ohio. Mr. Biden pointed to these developments as examples of how to boost American manufacturing and revitalizing local economies While fighting to regain the title of chip industry in the country.

But progress has been halted by actions that would help fund these efforts. Last year, Congress passed Law to Create Beneficial Incentives for Semiconductor Productionknown as CHIPS, but the bill remains unfunded as lawmakers debate details of the bipartisan innovation law, which would save more than $50 billion for semiconductor production efforts, including the kind of technology development that a venture fund like America’s Frontier Fund hopes to invest in.

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In a speech last month, a frustrated Biden urged lawmakers to “pass the damn bill.” One of its authors, Senator Sherrod Brown, a Democrat from Ohio, told DealBook that members of Congress were working to get it to the president’s office, though he didn’t say when that might happen.

“The president has been clear that we don’t have a moment to lose,” said Michael Gowen, a White House spokesman.

Building chip capacity is clearly a priority for the United States, and the people who support the fund have the experience and deep connections to drive work on Washington and Wall Street. But whether this public-private effort can restore manufacturing in a country that has long relied on Asian factories will require more than a slight shift in broader business operations and lots of government dollars.

The founders say they are committed to the mission, whether they receive federal funding or not. (They also started a related fund, and raised money from nonprofits.) “You don’t need the government to give us permission to go save the country,” Mr. Lowe said. “It would be great if they helped us.”