President Joe Biden, wearing a suit and sunglasses, giving high fives to a group of workers and officials wearing hard hats and high-visibility vests.
Photo: Saul Loeb/AFP via Getty Images

The Chips Act is prompting dazzling commitments — but the rubber only just met the road

Protocol Policy

Hello and welcome to Protocol Policy! Today we look at the early success of the Chips Act, and what challenges will inevitably come next. Also, President Biden struck a deal with the EU on data flows and the judge for Twitter v. Musk granted a delayed start.

The work has only just begun

Don’t look now, but everything is going according to plan: Chipmakers are just about lining up to announce plans for U.S. facilities with investment packages in the tens of billions of dollars. It’s to the point where politicians might have to pick and choose which groundbreaking ceremonies to attend; as you read this, corporate comms departments are frantically searching eBay for used pairs of giant scissors. The Chips Plus Act, it seems, is on track to be the American manufacturing success story we were promised.

Micron and IBM announced giant chip-related investments in New York state this week. Micron’s fabrication facility will add to the slew of existing plans by Samsung, Intel, and TSMC to make use of the $76 billion in subsidies contained within the Chips Act.

  • On Tuesday, Micron said it plans to spend up to $100 billion on a chipmaking facility over the coming 20 years in Clay, New York, where it intends to manufacture advanced memory chips. New York contributed $5.5 billion in incentives for the project, which is supposed to create 50,000 jobs in the state.
  • In an interview earlier this year, Micron CEO Sanjay Mehrotra said subsidies would be needed to close the 35%-45% cost gap between U.S. and overseas production. Micron hopes it will produce 40% of its overall chips in the U.S. in 10 years’ time, up from around 10% now. The company already broke ground on an Idaho memory chip manufacturing facility in September.
  • Then on Thursday, with President Joe Biden on site, IBM announced a $20 billion research investment plan for the next 10 years. The funding will go towards research for semiconductors, AI, and quantum computing.

IBM emphasized the importance of the semiconductor ecosystem. During President Biden’s visit, IBM executives showed him the Osprey quantum processor, which contains Micron chips. “It really is true that this ecosystem matters,” Christopher Padilla, vice president of government and regulatory affairs at IBM, told Protocol. “It’s us investing, but not just us — it’s also Micron, it’s also the state of New York, which is putting money behind these products, [and it’s] the university ecosystem.”

The next big question is labor. Chipmakers will face all sorts of labor challenges in the coming years. In the more immediate term, there’s the question of building the actual facilities. Intel, for instance, faces the daunting challenge of finding 7,000 workers to build its facility in central Ohio, even as there’s a national shortage in construction labor.

  • Once the facilities are up and running, there’s the question of getting enough technical workers to fill roles. The chip industry has struggled to draw young engineering talent away from software companies in recent years, as Protocol pointed out a few months ago.
  • Expanding immigration opportunities for high-skill workers could help address some of that shortage, but it’s also become a hot button issue. William Hunt, who recently joined the National Institute of Standards and Technology as a special advisor, told Protocol earlier this year that he expects chip companies will need at least 3,500 foreign-born students to staff the new fabrication facilities. Hunt also said many engineers will come from China. But with U.S.-China tensions escalating — especially around chip access — I can’t help but think that window is closing.

The early success of the Chips Act has reinforced the bill’s original bipartisan support. Both Republican and Democratic politicians are practically jostling to get in groundbreaking photo ops. That’s a good thing for the chips industry, especially given the uncertainty surrounding midterms — subsidizing the semiconductor supply chain has become one of the few issues that transcends Washington partisanship (though that doesn’t mean everyone is supportive).

If you’re wondering why, think about it this way: Military funding is one of the few other issues that transcends Washington partisanship, and semiconductor funding has become perhaps themost important front for competition between the military industrial bases of the U.S. and China. IBM’s Padilla told Protocol: “I’m very confident no matter what happens down the road, people will continue to support this because it’s important for national security as well as economic benefit.”

— Hirsh Chitkara (email | twitter)

In Washington

President Biden signed an order implementing details of an agreement with the EU that officials hope will regularize data flows. The crucial component is two layers of appeals for Europeans who think their data was improperly monitored by U.S. intelligence agencies. Even with the appeals process in place, EU privacy campaigners are still almost guaranteed to go to court to stop this third approach to trans-Atlantic digital commerce.

The White House is also finally unveiling extensive and long-expected rules aiming to choke off China’s access to advanced chips as well as the tools needed to manufacture older designs and the support necessary to maintain chip-fabrication systems.

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In the courts

The judge in the Twitter v. Musk trial, which was due to start Oct. 17, has delayed it while the two sides try to finalize a deal over Musk’s new “offer” to fulfill his binding contract and buy the company at the price he had originally proposed (assuming he can get the money together).

A judge has ruled Meta intentionally violated Washington state political ad transparency laws more than 800 times, The Seattle Times reports. The company had said it would pull political ads out of the state rather than offer mandatory insight into who the ads targeted and how often people viewed them, but then the Facebook parent continued to sell ads anyway.

On Protocol

The conviction of Uber’s former security chief, Joe Sullivan, for covering up a breach is likely to be good for transparency about incidents, although CISOs are worried it continues the trend of putting too much blame on them relative to whole organizations.

When Amanda Renteria decided her nonprofit would start work on an app to help families claim an expanded child tax credit, her group had limited resources and no guarantee their product would be picked. But the gamble by the CEO of Code for America paid off and helped 115,000 families.

The CFTC is aiming to decide by the end of the month if a fintech company can offer futures contracts of up to $25,000 tied to U.S. election outcomes. Gambling on elections is generally forbidden here, but big names have lined up to insist the contracts are not a way for the wealthy to try to make a few bucks whenever a new poll comes out and are actually some kind of important financial vehicle.

In the media, culture, and metaverse

Apple’s price hikes in the App Store for much of the world outside the U.S. went into effect. It’s unclear what combination of currency market fluctuations, energy costs, and government pressure on the fees that the company charges led to the increase. However unhappy people are, though, they’re stuck with it for now.

You may get an alert from Meta that a malicious mobile app tried to steal your login info. The company said it detected over 350 skeevy Android apps trying to get their hands on the sweet, sweet credentials of more than a million Facebook users. In a result that must have bugged the Apple haters over at Meta, only 47 of the apps were on iOS.

A handful of robotics companies including Boston Dynamics “are pledging not to support the weaponization of their products,” according to an Axios report. The firms seemed to focus on “makeshift” weapons, but did call on the rest of the industry — which has often been so preoccupied with whether or not they could mount guns on dog robots, they didn't stop to think if they should — to do better.

A $75 tasting menu for dogs

San Francisco has become a parody of itself. This time, the city produced Bone Appetit Cafe, a dog cafe that serves a $75, three-course tasting menu that includes an appetizer of chicken and chaga mushroom soup, a second course of chicken skin waffle and charcoal flan, and an entree of hand-cut, pasture-raised filet mignon. Online reactions included: “how you know you’ve overshot the market peak,” “my dog would be just as happy eating cat poop out of a litter box,” and “hmmm…are we really this desperate for a proletariat uprising in SF?” Also, former FCC Commissioner Ajit Pai was not having it.

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Thanks for reading, see you Wednesday.

Update: This article was updated on Oct. 7, 2022 to reflect William Hunt's current role at NIST.

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