Amid the debate over how the United States can bring more semiconductor manufacturing back to the country and worry it has become a national security problem, a surprising group of well-connected billionaires have quietly gathered to influence how Washington approaches this thorny challenge.
In recent months, Eric Schmidt, the former chief executive of Google and a longtime Democratic donor, has been unnoticed in recent months, along with Peter Thiel, a PayPal co-founder and vocal Trump supporter, who unusual non-profit venture capital backed fund to invest in chip making 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.
The billionaires aren’t just funding the effort themselves: The group has met with lawmakers in Congress in hopes that US taxpayers will help pay the bill.
The question: $1 billion.
The group, called America’s Frontier Fund, describes itself as “the country’s first deep-tech fund investing for the national good.”
And its influence has already become apparent: Late last month, the White House instructed the fund to lead the Quad Investor Network, which the White House describes as “an independent consortium of investors seeking access to capital for critical and emerging technologies.” want to promote”. in the United States, Japan, India and Australia.
The fund’s director is Gilman Louie, a gaming executive turned venture capitalist and led In-Q-Tel, a venture fund backed by the CIA. mr. Louie is a familiar face in Washington; he was recently appointed 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 also raises more than a few eyebrows, asking: What do the billionaires want? Will they send government dollars to companies they have invested in or will benefit from?
Mr. Schmidt has been criticized for having too much influence in the Biden and Obama administrations; Mr. Thiel was seen as having the ear of former President Donald J. Trump.
“I’m not sure what that organization can do that the US government can’t do on its own,” said Gaurav Gupta, an emerging technology analyst at the research firm Gartner.
Mr Louie said the skepticism was not justified: “We need more Eric Schmidts to join in, not sit on the sidelines. We need more technologists who have influence.”
June 9, 2022, 10:30 a.m. ET
In a statement to DealBook, Mr. Schmidt said: “As all of our national security commissions have shown, government, industry, academia and philanthropy must work together if we want free and open societies to lead this next wave of innovation for the benefit of America’s Frontier Fund is an important bridge in that regard.”
‘A first mover advantage’
At stake is the US’s supremacy in the global innovation race it led into the 20th century, thanks in large part to US chip breakthroughs – and all the benefits that come with it. The risk of inaction, industry experts say, is that China’s recent investment in deep science and technology will put it first, with Chinese technology, and perhaps even ideology, one day dominating the world.
“In our current trajectory, the US is losing its grip,” said Edlyn Levine, a quantum physicist and one of the fund’s founders. “Whoever leads has a first mover advantage and will dominate in that sector in the same way that the United States did in early semiconductors.”
According to the Semiconductor Industry Association, the United States accounted for just “12 percent of global semiconductor manufacturing capacity” in 2020. That year, South Korean electronics giant Samsung’s revenue surpassed that of American chip pioneer Intel. In 2021, Intel did the unthinkable: the company said it would outsource more manufacturing to Asia, specifically Taiwan Semiconductor Manufacturing, an approach some have questioned amid pandemic supply chain issues and which some say led to the exit of Intel’s chief executive at the time, Bob Swan.
Swan’s replacement, Pat Gelsinger, received more than $43 billion from the company’s board of directors last year to build new chip manufacturing plants, including a $20 billion investment in two new plants in Ohio. . Mr Biden has pointed to those developments as examples of how to boost US manufacturing and revitalize local economies as he fights to reclaim the country’s title in chip manufacturing.
But progress has stalled on measures that would help fund these efforts. Last year Congress passed the Creating Nutful Incentives to Produce Semiconductors Act, known as CHIPS, but the bill remains unfunded as lawmakers debate the details of the Bipartisan Innovation Act, which would raise more than $50 billion in semiconductor manufacturing. including for the kind of tech development a venture fund like America’s Frontier Fund hopes to invest in.
In a speech last month, a frustrated Mr Biden urged lawmakers to “pass the damn bill”. One of the authors, Senator Sherrod Brown, a Democrat from Ohio, told DealBook that members of Congress were working to get it on the president’s desk, though he didn’t say when that might happen.
Michael Gwin, a White House spokesman, said: “The president has been clear that we have not a moment to lose.”
It is clear that building chip capacity is a priority for the United States, and that the people who back the fund have the expertise and deep ties to take action in Washington and on Wall Street. But whether this public-private effort can bring production back to a country that has long relied on Asian factories will require more than a small shift in broader business activities and lots of government dollars.
The founders say they are committed to the mission whether or not they get federal funding. (They’ve also started a related fund that raises money from nonprofits.) “I don’t need the government to give us permission to go and save the country,” said Mr. Louie. “It would be nice if they would help us.”