The Billionaires Behind a Push to Reinvigorate U.S. Chip-Making

Amid the debate over how the United States could bring more production of semiconductors back into the country and become a national security concern, a surprising group of well-connected billionaires has peacefully rallied around Washington to influence the way it faces this thorny challenge.

Over the past several months, without attracting much attention, Eric Schmidt, former chief executive of Google and longtime Democratic donor, has joined Peter Thiel, co-founder of PayPal and vocal Trump supporter, to support unusually nonprofit venture capital. Funding to invest in chip-building across the country. The group also includes a cadre of former government officials, including Ashton B. Carter, former Secretary of Defense, and HR McMaster, former National Security Adviser.

Billionaires aren’t just funding the effort themselves: the group has met with lawmakers in Congress in the hope that U.S. taxpayers will help push the bill forward.

Ask: 1 billion.

The group, called the Frontier Fund of America, describes itself as “the nation’s first deep-tech fund to invest in the national interest.”

And the implications are already clear: Late last month, the White House directed the fund to lead a quad investor network, which the White House describes as “an independent union of investors looking to capitalize on critical and emerging technologies.” Across the United States, Japan, India, and Australia.

The fund’s chief executive is Gilman Louie, a gaming executive who has become a venture capitalist, who led the venture fund In-Q-Tel, backed by Mr. CIA. Louis is a familiar face around Washington; He was recently named to President Biden’s Intelligence Advisory Board and is expected to testify before senators about strengthening the supply chain.

But the Schmidt-Thiel-backed organization is also raising more eyebrows than a few, and questions: What do billionaires want? Will they divert government dollars to companies in which they have invested or benefited?

Mr. Schmidt has been criticized for being too influential in the Biden and Obama administrations; Mr. Thiel to former President Donald J. Were seen as Trump’s ears.

Gaurav Gupta, a budding-tech analyst at industry research firm Gartner, said, “I’m not sure what the organization can accomplish that the US government cannot do.”

Mr. Louis said the suspicion was not confirmed: “If anything, we need more Eric Schmidts to get involved, not to stand on the sidelines. We need more influential technologists. “

In a statement to Dealbook, Mr. Schmidt said: “Government, industry, education and philanthropy must work together to lead this next wave of innovation for the benefit of all if we want a free and open society, as all our National Security Commissions have shown. The Frontier Fund of America is an important bridge in that endeavor. “

At stake is the US lead in the global innovation race, which it led in the 20th century, thanks to American chip breakthroughs – and all attendant benefits. Industry experts say the risk of inactivity is that China’s recent investments in science and technology will put it first, and that Chinese technology and perhaps even ideology will one day dominate the world.

“In our current way, the US is losing its grip,” said Adeline Levine, a quantum physicist and one of the fund’s founders. “Whoever takes the lead has the first mover advantage and will actually dominate the sector, just as the United States did in the early semiconductors.”

In 2020, according to the Semiconductor Industry Association, the United States is responsible for “only 12 percent of global semiconductor production capacity.” That year, South Korean electronics giant Samsung’s revenue surpassed American chip leader Intel. In 2021, Intel unimaginable: The company said it would outsource more production in Asia, especially Taiwanese semiconductor manufacturing, an approach that some have questioned amid epidemic supply chain conflicts and some believe Intel’s departure of chief executive Is. Time, Bob Swan.

But progress has stalled on measures that will help fund these efforts. Last year, Congress passed Creative Helpful Incentives for the Semiconductors Act, known as CHIPS, but the bill remains undisclosed as it discusses details of the Bilateral Innovation Act, which would provide more than $ 50 billion for semiconductor manufacturing efforts, including a variety of Is. Tech development efforts in which venture funds such as the US Frontier Fund are expected to invest.

In a speech last month, Mr. frustrated. Biden urged lawmakers to “pass the bill too.” One of its authors, Senator Sherrod Brown, a Democrat from Ohio, told Dealbook that members of Congress were working to get him to the president’s desk, although he did not say when.

“The president is clear we don’t have a single moment to waste,” said Michael Gwynn, the White House spokesman.

It is clear that building chip capacity is a priority for the United States, and those who support the fund have the skills and deep ties to conduct operations in Washington and Wall Street. But whether this public-private effort can bring back production in a country that has long relied on Asian factories would require a slight shift in broad business operations and a lot of government dollars.

The founders say they are committed to the mission, whether they receive federal funding or not. (They have also started related funds by raising money from non-profit organizations.) “I don’t need to allow the government to save the country,” Mr. Said Louis. “It would be nice if they could help us.”

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