Friday Bites: Semicon + CHIPS Act, NEPA, and China’s Smart Homes
Could Intel be left high and dry?
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Jordan—Reflections on Semicon West, America’s Largest Semis Conference
1: There’s something beautiful about how international the exhibition floor was. It’s one thing to read report after report with charts like the one below; it’s quite another to walk the floor and see firms from across the world, most of whom play irreplaceable roles in fabrication and packaging. In the early decades, the United States was a completely “self-reliant indigenous innovator.” The progress we’ve seen since the 1980s, however, would not have been possible without the rest of the world’s work on advancing microelectronics.
While acknowledging that not all of this globalization has been for the good, at this conference it really felt as though “team humanity” had come together — global capitalism, returns to specialization, and lifetimes of hard engineering have together conjured magic. However deep US-China decoupling ends up cutting, policymakers should not forget that the United States cannot do this alone.
2: CHIPS Program Office Director Mike Schmidt in his keynote address laid the groundwork for disappointing wide swaths of the 400 companies who have so far applied for CHIPS Act funding (“this is the last year I’ll be popular at Semicon”).
The highest-profile decisions the Office will announce in the coming months are choosing which and how to fund advanced logic fabs. The CHIPS Act’s commercial fabrication vision for success document aims to coax into existence “at least two new large-scale clusters of leading-edge logic fabs” by 2030. With TSMC in Arizona, Samsung in Texas, and Intel in Ohio, one player may be left behind. Intel is the closest thing America has to a “national champion” — but given the underwhelming technical progress the firm has shown in recent years, it’s not safe to assume it could deliver leading-edge logic anytime soon. Jay Goldberg of Digits to Dollars writes,
The first problem the company needs to solve is its manufacturing process. The company is built around its IDM model, with internally controlled fabs. And as much as they have moved some of their products to TSMC, 70% or so of their revenue still comes from their own fabs. The company fell off the Moore’s Law path several years ago, and is now racing to catch up. Advancing 5 nodes in 4 years is the official slogan. This question is existential to the company and if they cannot right the cart, it faces a very difficult future.
Intel will have a hard case to make arguing either that CHIPS Act money will be critical to getting its process groove back or that all is well (after all, if public market investors aren’t totally convinced, why should Commerce be?). And if Intel can’t break back into the front of the logic pack, its manufacturing capacity won’t be contributing to the vision for success. But does Intel, by dint of being American, give its bid any extra “national security” points? And when it comes down to it, could Commerce really leave Intel out to dry?
3: When searching for my registration, I typed in “China” to find my “ChinaTalk” badge, and some representatives of “China Germanium Co” popped up in attendance. I have to imagine they were doing good business this week!
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Aidan Mackenzie—Good Bill of the Week: Building Chips in America Act
The CHIPS Act has a building problem: although the Act’s $52 billion in appropriations have created strong financial incentives for investment, the actual facilities still need to be built — and if present conditions persist, they’ll be slowed down by lengthy permitting approval processes.
The Building Chips in America Act proposes limited carve-outs that exempt certain CHIPS-funded projects from the environmental review process under the National Environmental Policy Act (NEPA), a lengthy process that can average 4.5 years for large projects.
NEPA is a purely procedural law — it does not create concrete standards for environmental protection — and it imposes far more economic cost for marginal environmental benefit. So while maintaining environmental standards is important, the case for streamlining NEPA is nonetheless strong.
The bill proposes exempting CHIPS projects from NEPA if they meet any of the following criteria:
Their federal funding is less than 15% of total funding;
Their federal funding comes from loans or loan guarantees;
They expand existing facilities (up to double the existing development);
Construction began before they received CHIPS funding;
They’re subject to a state-level review more burdensome than NEPA (e.g. California’s CEQA review).
To streamline state and federal reviews, the bill authorizes states to take over NEPA responsibilities from the Department of Commerce. It also directs Commerce to be the lead agency on NEPA reviews for CHIPS projects, which should reduce inter-agency disputes. And it lowers to 150 days the statute of limitations for claims against CHIPS-funded projects, which should reduce lawsuits against projects.
Kit Zauhar—The Rise of Smart Homes
In a TikTok video viewed by millions, a young pajama-clad Chinese woman is hunched over a bowl of noodles, slurping away — when suddenly, she gets a text from her husband: he’s bringing home a colleague. The woman springs to action, cleaning up various messes with a never-ending supply of scrubbing, washing, and drying tools, and tidying with a great menagerie of organizing apparatuses. Most of her actions — scrubbing pots, doing laundry, putting shoes away — are routine. But others may strike the average viewer as bizarre or “extra.” Among them are vacuum-sealing fruit, putting masks in a size-specific tissue box, or washing her hands with soap that comes out of a motion-sensing dispenser that resembles a giraffe. Her home’s level of convenience is uncanny, as if its contents were made to anticipate needs.
As you can imagine, this is not a normal woman’s “day in the life,” nor is this a normal house. The woman is an actress. The house is a showroom. And everything in the frame is for sale.
These sets are known as “smart homes,” and their accessories as smart-home gadgets. These devices are not essential for a functional household, but instead are neat little things that elevate the experience of completing a task. Much like a selfie stick, they offer a small but substantial “hack” to a task you could complete on your own. Smart homes have experienced a meteoric rise in popularity in the last few years, with device sales increasing over 90% year-on-year.
The life of a smart-home owner, surrounded by their smart little gadgets, could seem like a paradise, an escape from the chaos of a crowded and cramped metropolis. While the pandemonium of city life may be unconquerable, one can still be the ruler over her or his small kingdom of robots, some of which are AI-integrated and will evolve to more diligently serve their human master.
These smart-home videos are seen as aspirational, streamlining even the task of cleaning a toilet. Because of the specificity of each gadget’s task, there is a certain personalization to an individual’s toolkit. A single woman living alone might, for example, prioritize a smart lock on her door or a cooking system for one — whereas a family might buy a large toothbrush organizer or a silent blender to avoid waking up the kids while making breakfast or a late-night snack.
This all might seem like a dramatic shift for a country whose people have a predilection to air dry laundry, shirk ice cubes even in summertime, and use dishwashers as drying racks. Indeed, the proliferation of these gadgets seems to signal a change in how many in China want to be seen by the public — that a once-poor country that could do with little is now “living in the future.” As China’s middle class grows, so too does the demand for goods that signify comfort and order. Within a historical context, smart homes actually make a lot of sense. Many Chinese people have hoarding tendencies, especially those traumatized by widespread hunger and scarcity during the Great Leap Forward and Cultural Revolution. For many, abundance is the ultimate luxury.
The smart home scratches that cultural itch while giving the consumer the facsimile of true purpose. These items each do something; they are not just for decoration, even if they are shaped like a French bulldog or a bunny. To have a home with an abundance of purposes could be the dream of someone previously scarred by a time when they had so much to do and so few tools to work with.
Though the idea of a smart home might seem sleek and futuristic, its system has the potential for rampant maximalism. Smart homes are designed to operate all machinery under one system — buying a new device, however large or small, will immediately feel integral to the functionality of a home. Some customers have brought hundreds of home products to create the perfect smart ecosystem. The ease with which a product can be integrated into an existing structure means that even larger purchases (such as a washing machine or a microwave) can feel intuitive or necessary. It can be hard to know when to stop, when one’s smart home is truly complete. There’s the sense that these companies want you to feel as though the smart home is an ever-expanding, ever-evolving space capable of accommodating endless additions.
If these smart homes have the staying power forecasters predict they will, these technological advances will be pivotal in shaping China’s collective value system and identity. This year, we’ve seen China experience an economic comeback. Post-covid, the country has started to make a return as a bigwig in the luxury goods market. The home appliance industry has also seen an uptick. With their undeniable appeal and growing demand, smart homes and their many accouterments are destined directly threaten the burgeoning minimalist revolution.
To be sure, the rise of smart homes hasn’t been without its myriad of critics. Xiaomi — the Chinese phone-seller-turned-IKEA of smart homes known for cheap, stylish, durable products (all of which are controlled from a single app) — has been under heavy scrutiny for what has been termed its “digital asbestos.” When its British flagship store opened, consumers were warned of the possibility that the China-made devices were monitoring them — an easy assumption to make considering China’s reputation for surveillance, coupled with the fact that these products can go in every square inch of a common household.
Data privacy in smart homes is still largely unchartered territory, and any mention of it was absent in the country’s latest draft of its Personal Information Protection Law. This absence will become an issue in the near future, once smart homes streamline, devices proliferate, and AI becomes more sophisticated and integrated into the smart-home systems. A security breach feels imminent. For the time being, though, the population as a whole seems largely unconcerned. Indeed, given the widespread popularity of the smart-home videos, the Western viewers who flood the comments wanting the various gizmos, and the aptly named American dupes for sale, it seems likely that many will take the comfort of a silent smoothie over the possible cost of their privacy. At least for now.