How to turn $100 million into $52 billion

Chipping in for $52 billion in federal subsidies

Chip companies have spent $100 million in lobbying expenditures over the last several years in hopes of getting 500 times that back from the federal government in the form of subsidies.

The chip industry’s spending on lobbying has risen sharply in recent years, as lawmakers have been debating $52 billion in federal subsidies aimed at bolstering American chip production and innovation.

• To help convince lawmakers to set aside federal dollars for the industry, lobbying expenditures have increased roughly 50% since 2018, jumping to $46.4 million in 2021.
• Four years ago, chip companies spent $31.7 million in D.C., according to data from the Center for Responsive Politics.
• By comparison, the internet industry increased its spending by 18% to $90.2 million during the same period, according to the CRP data.

As the semiconductor industry has grown in recent years, in part spurred by surging demand amid the pandemic, executives have begun to realize that their businesses are increasingly subject to lawmaker whims.

• The change in thinking has resulted in an overall increase in lobbying efforts over the past four years, including the battle for subsidies.
• But it is clear that spending began to ramp up in 2020, reaching $37.7 million as the first subsidy bill was introduced in Congress.
• At that point, big chip manufacturers such as GlobalFoundries and TSMC, the latter of which had not previously spent money on lobbyists in the U.S., ramped up their efforts.
• GlobalFoundries increased its lobbying outlays to $1.7 million in 2021 from $1.4 million in 2020. GlobalFoundries did not respond to a request for comment.
• Taiwan’s TSMC spent $2.2 million on lobbying in 2021, up from $2 million the year earlier — the first lobbying outlay from TSMC since 1998, according to CRP data.

While the vast majority of the largest chipmakers spent at least some money on federal lobbying, Nvidia did not.

• The biggest lobbying spender in the chip industry was Qualcomm, which spent $9.1 million on lobbying last year, up by roughly $1 million from its $8 million yearly expenditures between 2018 and 2020, according to CRP data.
• Intel and rival AMD spent about half of Qualcomm’s total last year. AMD doesn’t manufacture chips, but Intel has announced more than $40 billion in new factory construction in Arizona and Ohio.

But many smaller amounts of new lobbying dollars also made a significant contribution to the sharp rise in lobbying expenditures.

• Chip factory tool-maker KLA spent roughly $700,000 in 2021, and about $500,000 the year before, when its recent lobbying outlays were less than $200,000.
• ASML, which is based in the Netherlands and declined to comment, spent $820,000 in 2021; Taiwan-based chip designer MediaTek spent $650,000, though it doesn’t manufacture chips.
• Even China’s SMIC doled out $180,000 in lobbying expenditures last year, down from $310,000 in 2020.
• At least some of SMIC’s paid lobbying activity was around “[e]ligibility of [the] company to import U.S.-origin semiconductor-related goods under U.S. export control laws.”

A MESSAGE FROM DUCKDUCKGO

DuckDuckGo has an all-in-one privacy solution aimed at simplifying online privacy protection. DuckDuckGo’s app can be used as an everyday browser with private search, tracker blocking, encryption, and now email protection built-in. It’s the free, easy button for online privacy.

Learn more

Ampere arms Microsoft Azure virtual machines

Microsoft unveiled Monday a preview of Azure virtual machines powered by the Arm-based Ampere server chips, putting additional pressure on Intel's server teams to stay competitive.

The Ampere Altra chips powering the virtual machines will deliver a 50% price-performance improvement over x86 chips, Microsoft said. Last year Ampere said that it had inked a deal with Microsoft to provide chips for use in Azure.

Ampere’s Altra chips and other Arm-based processors like AWS' Graviton have become more important to server buyers after years of promises, as companies seek chips that deliver higher performance with less power use. To date, Arm designs are far off from unseating AMD or Intel chips that dominate data center processing but continue to make gains, according to Jefferies data.

Microsoft announced its intention to offer Arm-based computing in Azure with chips made by Qualcomm and Cavium. Marvell acquired Cavium, and shut down the project; Qualcomm too killed the effort.

— Max A. Cherney (email | twitter)

Financial corner

ConcertAI hit a $1.9 billion valuation after raising $150 million to provide data and AI services for the health care industry.

LinkSquare was valued at $800 million after raising $100 million for its contract management software.

Yokoy is worth more than $500 million after raising $80 million to help companies manage their expenses.

HackerRank hit a valuation of $500 millionafter raising $60 million to help recruiters test coders.

Builder.ai raised $100 million for its AI-powered low-code development platform.

Around the enterprise

AMD announced plans to acquire Pensando for $1.9 billion, hoping to add networking-tech expertise to its data-center strategy.

The U.S. State Department launched a new cybersecurity bureau that aims to help coordinate international responses to ransomware hacking groups, among other cyberthreats.

GitHub unveiled a new feature that lets users scan code for sensitive information before accepting a new branch of code, in hopes of avoiding accidental leaks of secret information.

A MESSAGE FROM DUCKDUCKGO

Tracking is a comprehensive problem — over 80% of websites, apps and emails contain third-party trackers. Because of that, people need a multi-pronged privacy solution. DuckDuckGo’s all-in-one privacy app can be used as an everyday browser with multiple features built-in, including private search, tracker blocking, encryption, and email protection.

Learn more