But while Commerce Secretary Gina Raimondo said that these new curbs would help prevent “China from advancing its domestic semiconductor manufacturing system” to modernize its military, analysts and “several US officials” told The Post that they pack “far less punch” than the prior two rounds of export controls.
Analysts told The Wall Street Journal that the US took too long to launch the controls, which were composed around June. As industry insiders weighed in on the restrictions, word got out about the US plans to expand controls. In the months since, analysts said, China had plenty of time to stockpile the now-restricted tech. Applied Materials, for example, saw an eye-popping 86 percent spike in net revenue from products shipped to China “in the nine months ending July 28,” the WSJ reported.
Because of this and other alleged flaws, it’s unclear how effectively Biden’s final attempts to block China from accessing the latest US technologies will work.
Beyond concerns that China had time to stockpile tech it anticipated would be restricted, Gregory Allen, the director at the Wadhwani AI Center at the Center for Strategic and International Studies, told the WSJ that these latest controls “left loopholes that Huawei and Chinese companies could exploit.”
Loopholes include failing to blacklist companies that Huawei regularly uses—with allies and American companies allegedly lobbying to exempt factories or fabs they like, such as ChangXin Memory Technologies Inc., “one of China’s largest memory chipmakers,” The Post noted. They also include failing to restrict older versions of the HBM chips and various chipmaking equipment that China may still be able to easily access, Allen said.
“These controls are weaker than what the United States should have done,” Allen told The Post. “You can make a halfway logical argument that says, ‘Sell everything to China.’ Then you can make a reasonable argument, ‘Sell very little to China.’ But the worst thing you can do is to dramatically signal your intention to cut off China’s access to tech but then have so many loopholes and such bungled implementation that you incur almost all of the costs of the policy with only a fraction of the benefits.”
Intel awarded nearly $8B to “supercharge” US semiconductor innovation.
An aerial view from February 2024 shows construction progress at Intel’s Ohio One campus of nearly 1,000 acres in Licking County, Ohio. Credit: Intel Corporation
On Tuesday, the Biden-Harris administration finalized a CHIPS award of up to $7.865 billion to help fund the expansion of Intel’s commercial fabs in the US. By the end of the decade, these fabs are intended to decrease reliance on foreign adversaries and fill substantial gaps in America’s domestic semiconductor supply chain.
Initially, Intel was awarded $8.5 billion, but it was decreased after Intel won a $3 billion subsidy from the Pentagon to expand Department of Defense semiconductor manufacturing. In a press release, Secretary of Commerce Gina Raimondo boasted that the substantial award would set up “Intel to drive one of the most significant semiconductor manufacturing expansions in US history” and “supercharge American innovation” while making the US “more secure.”
For Intel, the CHIPS funding supports an expected investment of nearly $90 billion by 2030 to expand projects in Arizona, New Mexico, Ohio, and Oregon. Approximately 10,000 manufacturing jobs and 20,000 construction jobs will be created “across all four states,” the Commerce Department’s press release said. Additionally, Intel estimated that the funding will create “more than 50,000 indirect jobs with suppliers and supporting industries.”
According to the National Institute of Standards and Technology (NIST), which oversees CHIPS funding for manufacturing and research and development initiatives, the “funding will spur investment in leading-edge logic chip manufacturing, packaging, and R&D facilities.”
The sprawling effort includes the construction of two new fabs in Chandler, Arizona, the modernization of two fabs in Rio Rancho, New Mexico, building a new leading-edge logic fab in New Albany, Ohio, and creating a “premier hub of leading-edge research and development” in Hillsboro, Oregon. By the end, Intel expects to operate America’s largest advanced packaging facility in New Mexico and “one of only three locations in the world where leading-edge process technology is developed” in Oregon, NIST said.
Who’s enforcing worker safety commitments?
To succeed, Intel will need to build a talented workforce, so $65 million has been set aside to fund those efforts. The majority, $56 million, will “help train students and faculty at all education levels,” Intel said. Another $5 million will “help increase childcare availability near Intel’s facilities,” and the final $4 million will support efforts to recruit women and “economically disadvantaged individuals” as construction workers, Intel said.
Recruitment could be challenging if worker safety concerns are continually raised, though. Chips Communities United (CCU), a coalition of “labor, environmental, social justice, civil rights, and community organizations representing millions of workers and community members nationwide,” has been monitoring worker concerns at facilities receiving CHIPS funding. While the coalition fully supports Intel’s US expansion, they recently requested a full environmental impact statement at one of Intel’s Arizona fabs, detailing potential environmental and worker hazards, as well as mitigation plans.
As of August, CCU said that Ocotillo workers and communities had been given “insufficient detail on the use, storage, and release of hazardous substances, as well as other environmental impacts, to conclude that there are no significant environmental impacts.”
Workers have a bunch of questions. But perhaps most urgently, they need more information on how environmental safety commitments will be enforced, CCU suggested, because no one wants to work in constant fear of chemical exposure. Especially when Intel’s facilities in Oregon were revealed last year to have “accidentally turned off its air pollution control equipment for two months and underreported its CO2 emissions.”
NIST noted that Intel is required to protect workers to receive CHIPS funding and has promised to meet regularly with workers and managers at each project facility to discuss worker safety concerns.
Intel could not immediately be reached for comment on whether it’s currently in discussions with workers impacted by CCU’s recent claims.
Weighing in on the Intel Community Impact Report that NIST released today, CCU applauded Intel’s commitments to bring workers to the table, adopt the “most protective health and safety standards for chemical exposure,” “segregate PFAS-containing waste for treatment and disposal,” and “make environmental compliance public when it comes to energy and water use,” CCU coalition director Judith Barish told Ars. But the enforceability of the promised workplace safety conditions remains a concern at Intel’s facilities.
“Protective workplace health and safety regulation” has “historically been missing in semiconductor production,” Barish told Ars. And it’s a big problem Intel’s current plan is to regulate the management of toxic chemicals following guidelines developed by industry—not government.
“Unlike government regulations, this standard is not easily available for public inspection since it is proprietary, copyrighted, and can only be inspected by purchasing it,” Barish told Ars. “Allowing a regulated entity to write the regulations that will be applied to it violates basic principles of good government.”
While segregating PFAS-containing waste sounds good, Barish said that workers need more transparency to understand how it “will be separated, stored, and treated and what the environmental impacts will be for nearby communities.”
It’s also unclear to workers what might happen if Intel fails to follow through on its commitments. The Commerce Department has emphasized that Intel’s funding will be disbursed “based on Intel’s completion of project milestones,” but workers “aren’t clear on the penalties or clawbacks the Commerce Dept. would impose if Intel failed to meet workforce, health and safety, or environmental milestones and metrics,” Barish said.
Intel only approved unionized workers at one site
For top talent to be attracted to Intel’s facilities, establishing the most protective safety protocols will be critical. But just as critical for workers—especially “economically disadvantaged” workers Intel is targeting for construction jobs—will be worker benefits.
Barish noted that Intel has only committed to employing unionized construction workers at one of four sites. The company may struggle to recruit workers, Barish suggested, without being clear about their rights to “join a union free from intimidation, captive audience meetings, exposure to anti-union consultants, threats of retaliation, and other obstacles to achieve bargaining.”
CCU plans to continue monitoring concerns at Intel’s fabs and others receiving CHIPS funding as the presidential administration potentially introduces CHIPS Act changes next year.
On the campaign trail, President-elect Donald Trump attacked the CHIPS Act, saying he was “not thrilled” with the price tag, CNBC reported. However, analysts told CNBC that any changes under Trump would likely be smaller rather than something drastic like repealing the law.
The Commerce Department continues to tout the CHIPS Act as a firmly bipartisan initiative. Intel CEO Pat Gelsinger, whose company’s large investment depends on bipartisan support for the CHIPS Act continuing for years to come, echoed that sentiment after the award was finalized.
“With Intel 3 already in high-volume production and Intel 18A set to follow next year, leading-edge semiconductors are once again being made on American soil,” Gelsinger said. “Strong bipartisan support for restoring American technology and manufacturing leadership is driving historic investments that are critical to the country’s long-term economic growth and national security. Intel is deeply committed to advancing these shared priorities as we further expand our US operations over the next several years.”
Ashley is a senior policy reporter for Ars Technica, dedicated to tracking social impacts of emerging policies and new technologies. She is a Chicago-based journalist with 20 years of experience.
In April, TSMC was provided with $6.6 billion in direct CHIPS Act funding to “support TSMC’s investment of more than $65 billion in three greenfield leading-edge fabs in Phoenix, Arizona, which will manufacture the world’s most advanced semiconductors,” the Department of Commerce said.
These investments are key to the Biden-Harris administration’s mission of strengthening “economic and national security by providing a reliable domestic supply of the chips that will underpin the future economy, powering the AI boom and other fast-growing industries like consumer electronics, automotive, Internet of Things, and high-performance computing,” the department noted. And in particular, the funding will help America “maintain our competitive edge” in artificial intelligence, the department said.
It likely wouldn’t make sense to prop TSMC up to help the US “onshore the critical hardware manufacturing capabilities that underpin AI’s deep language learning algorithms and inferencing techniques,” to then limit access to US-made tech. TSMC’s Arizona fabs are supposed to support companies like Apple, Nvidia, and Qualcomm and enable them to “compete effectively,” the Department of Commerce said.
Currently, it’s unclear where the US probe into TSMC will go or whether a damaging finding could potentially impact TSMC’s CHIPS funding.
Last fall, the Department of Commerce published a final rule, though, designed to “prevent CHIPS funds from being used to directly or indirectly benefit foreign countries of concern,” such as China.
If the US suspected that TSMC was aiding Huawei’s AI chip manufacturing, the company could be perceived as avoiding CHIPS guardrails prohibiting TSMC from “knowingly engaging in any joint research or technology licensing effort with a foreign entity of concern that relates to a technology or product that raises national security concerns.”
Violating this “technology clawback” provision of the final rule risks “the full amount” of CHIPS Act funding being “recovered” by the Department of Commerce. That outcome seems unlikely, though, given that TSMC has been awarded more funding than any other recipient apart from Intel.
The Department of Commerce declined Ars’ request to comment on whether TSMC’s CHIPS Act funding could be impacted by their reported probe.
The Department of Justice is reportedly deepening its probe into Nvidia. Officials have moved on from merely questioning competitors to subpoenaing Nvidia and other tech companies for evidence that could substantiate allegations that Nvidia is abusing its “dominant position in AI computing,” Bloomberg reported.
When news of the DOJ’s probe into the trillion-dollar company was first reported in June, Fast Company reported that scrutiny was intensifying merely because Nvidia was estimated to control “as much as 90 percent of the market for chips” capable of powering AI models. Experts told Fast Company that the DOJ probe might even be good for Nvidia’s business, noting that the market barely moved when the probe was first announced.
But the market’s confidence seemed to be shaken a little more on Tuesday, when Nvidia lost a “record-setting $279 billion” in market value following Bloomberg’s report. Nvidia’s losses became “the biggest single-day market-cap decline on record,” TheStreet reported.
People close to the DOJ’s investigation told Bloomberg that the DOJ’s “legally binding requests” require competitors “to provide information” on Nvidia’s suspected anticompetitive behaviors as a “dominant provider of AI processors.”
One concern is that Nvidia may be giving “preferential supply and pricing to customers who use its technology exclusively or buy its complete systems,” sources told Bloomberg. The DOJ is also reportedly probing Nvidia’s acquisition of RunAI—suspecting the deal may lock RunAI customers into using Nvidia chips.
Bloomberg’s report builds on a report last month from The Information that said that Advanced Micro Devices Inc. (AMD) and other Nvidia rivals were questioned by the DOJ—as well as third parties who could shed light on whether Nvidia potentially abused its market dominance in AI chips to pressure customers into buying more products.
According to Bloomberg’s sources, the DOJ is worried that “Nvidia is making it harder to switch to other suppliers and penalizes buyers that don’t exclusively use its artificial intelligence chips.”
In a statement to Bloomberg, Nvidia insisted that “Nvidia wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them.” Additionally, Bloomberg noted that following a chip shortage in 2022, Nvidia CEO Jensen Huang has said that his company strives to prevent stockpiling of Nvidia’s coveted AI chips by prioritizing customers “who can make use of his products in ready-to-go data centers.”
Potential threats to Nvidia’s dominance
Despite the slump in shares, Nvidia’s market dominance seems unlikely to wane any time soon after its stock more than doubled this year. In an SEC filing this year, Nvidia bragged that its “accelerated computing ecosystem is bringing AI to every enterprise” with an “ecosystem” spanning “nearly 5 million developers and 40,000 companies.” Nvidia specifically highlighted that “more than 1,600 generative AI companies are building on Nvidia,” and according to Bloomberg, Nvidia will close out 2024 with more profits than the total sales of its closest competitor, AMD.
According to Kanter, the DOJ is scrutinizing all aspects of the AI industry—”everything from computing power and the data used to train large language models, to cloud service providers, engineering talent and access to essential hardware such as graphics processing unit chips.” But in particular, the DOJ appears concerned that GPUs like Nvidia’s advanced AI chips remain a “scarce resource.” Kanter told the Financial Times that an “intervention” in “real time” to block a potential monopoly could be “the most meaningful intervention” and the least “invasive” as the AI industry grows.
Sen. Elizabeth Warren (D-Mass.) has joined progressive groups—including Demand Progress, Open Markets Institute, and the Tech Oversight Project—pressuring the US Department of Justice to investigate Nvidia’s dominance in the AI chip market due to alleged antitrust concerns, Reuters reported.
In a letter to the DOJ’s chief antitrust enforcer, Jonathan Kanter, groups demanding more Big Tech oversight raised alarms that Nvidia’s top rivals apparently “are struggling to gain traction” because “Nvidia’s near-absolute dominance of the market is difficult to counter” and “funders are wary of backing its rivals.”
Nvidia is currently “the world’s most valuable public company,” their letter said, worth more than $3 trillion after taking near-total control of the high-performance AI chip market. Particularly “astonishing,” the letter said, was Nvidia’s dominance in the market for GPU accelerator chips, which are at the heart of today’s leading AI. Groups urged Kanter to probe Nvidia’s business practices to ensure that rivals aren’t permanently blocked from competing.
According to the advocacy groups that strongly oppose Big Tech monopolies, Nvidia “now holds an 80 percent overall global market share in GPU chips and a 98 percent share in the data center market.” This “puts it in a position to crowd out competitors and set global pricing and the terms of trade,” the letter warned.
Earlier this year, inside sources reported that the DOJ and the Federal Trade Commission reached a deal where the DOJ would probe Nvidia’s alleged anti-competitive behavior in the booming AI industry, and the FTC would probe OpenAI and Microsoft. But there has been no official Nvidia probe announced, prompting progressive groups to push harder for the DOJ to recognize what they view as a “dire danger to the open market” that “well deserves DOJ scrutiny.”
Ultimately, the advocacy groups told Kanter that they fear Nvidia wielding “control over the world’s computing destiny,” noting that Nvidia’s cloud computing data centers don’t just power “Big Tech’s consumer products” but also “underpin every aspect of contemporary society, including the financial system, logistics, healthcare, and defense.”
They claimed that Nvidia is “leveraging” its “scarce chips” to force customers to buy its “chips, networking, and programming software as a package.” Such bundling and “price-fixing,” their letter warned, appear to be “the same kinds of anti-competitive tactics that the courts, in response to actions brought by the Department of Justice against other companies, have found to be illegal” and could perhaps “stifle innovation.”
Although data from TechInsights suggested that Nvidia’s chip shortage and cost actually helped companies like AMD and Intel sell chips in 2023, both Nvidia rivals reported losses in market share earlier this year, Yahoo Finance reported.
Since then, the European Union and the United Kingdom, as well as the US, have heightened scrutiny, but their seeming lag to follow through with an official investigation may only embolden Nvidia, as the company allegedly “believes its market behavior is above the law,” the progressive groups wrote. Suspicious behavior includes allegations that “Nvidia has continued to sell chips to Chinese customers and provide them computing access” despite a “Department of Commerce ban on trading with Chinese companies due to national security and human rights concerns.”
“Its chips have been confirmed to be reaching blacklisted Chinese entities,” their letter warned, citing a Wall Street Journal report.
Nvidia’s dominance apparently impacts everyone involved with AI. According to the letter, Nvidia seemingly “determining who receives inventory from a limited supply, setting premium pricing, and contractually blocking customers from doing business with competitors” is “alarming” the entire AI industry. That includes “both small companies (who find their supply choked off) and the Big Tech AI giants.”
Kanter will likely be receptive to the letter. In June, Fast Company reported that Kanter told an audience at an AI conference that there are “structures and trends in AI that should give us pause.” He further suggested that any technology that “relies on massive amounts of data and computing power” can “give already dominant firms a substantial advantage,” according to Fast Company’s summary of his remarks.
Enlarge/ An Intel handout photo of the Gaudi 3 AI accelerator.
On Tuesday, Intel revealed a new AI accelerator chip called Gaudi 3 at its Vision 2024 event in Phoenix. With strong claimed performance while running large language models (like those that power ChatGPT), the company has positioned Gaudi 3 as an alternative to Nvidia’s H100, a popular data center GPU that has been subject to shortages, though apparently that is easing somewhat.
Compared to Nvidia’s H100 chip, Intel projects a 50 percent faster training time on Gaudi 3 for both OpenAI’s GPT-3 175B LLM and the 7-billion parameter version of Meta’s Llama 2. In terms of inference (running the trained model to get outputs), Intel claims that its new AI chip delivers 50 percent faster performance than H100 for Llama 2 and Falcon 180B, which are both relatively popular open-weights models.
Intel is targeting the H100 because of its high market share, but the chip isn’t Nvidia’s most powerful AI accelerator chip in the pipeline. Announcements of the H200 and the Blackwell B200 have since surpassed the H100 on paper, but neither of those chips is out yet (the H200 is expected in the second quarter of 2024—basically any day now).
Meanwhile, the aforementioned H100 supply issues have been a major headache for tech companies and AI researchers who have to fight for access to any chips that can train AI models. This has led several tech companies like Microsoft, Meta, and OpenAI (rumor has it) to seek their own AI-accelerator chip designs, although that custom silicon is typically manufactured by either Intel or TSMC. Google has its own line of tensor processing units (TPUs) that it has been using internally since 2015.
Given those issues, Intel’s Gaudi 3 may be a potentially attractive alternative to the H100 if Intel can hit an ideal price (which Intel has not provided, but an H100 reportedly costs around $30,000–$40,000) and maintain adequate production. AMD also manufactures a competitive range of AI chips, such as the AMD Instinct MI300 Series, that sell for around $10,000–$15,000.
Gaudi 3 performance
Enlarge/ An Intel handout featuring specifications of the Gaudi 3 AI accelerator.
Intel says the new chip builds upon the architecture of its predecessor, Gaudi 2, by featuring two identical silicon dies connected by a high-bandwidth connection. Each die contains a central cache memory of 48 megabytes, surrounded by four matrix multiplication engines and 32 programmable tensor processor cores, bringing the total cores to 64.
The chipmaking giant claims that Gaudi 3 delivers double the AI compute performance of Gaudi 2 using 8-bit floating-point infrastructure, which has become crucial for training transformer models. The chip also offers a fourfold boost for computations using the BFloat 16-number format. Gaudi 3 also features 128GB of the less expensive HBMe2 memory capacity (which may contribute to price competitiveness) and features 3.7TB of memory bandwidth.
Since data centers are well-known to be power hungry, Intel emphasizes the power efficiency of Gaudi 3, claiming 40 percent greater inference power-efficiency across Llama 7B and 70B parameters, and Falcon 180B parameter models compared to Nvidia’s H100. Eitan Medina, chief operating officer of Intel’s Habana Labs, attributes this advantage to Gaudi’s large-matrix math engines, which he claims require significantly less memory bandwidth compared to other architectures.
Gaudi vs. Blackwell
Enlarge/ An Intel handout photo of the Gaudi 3 AI accelerator.
Last month, we covered the splashy launch of Nvidia’s Blackwell architecture, including the B200 GPU, which Nvidia claims will be the world’s most powerful AI chip. It seems natural, then, to compare what we know about Nvidia’s highest-performing AI chip to the best of what Intel can currently produce.
For starters, Gaudi 3 is being manufactured using TSMC’s N5 process technology, according to IEEE Spectrum, narrowing the gap between Intel and Nvidia in terms of semiconductor fabrication technology. The upcoming Nvidia Blackwell chip will use a custom N4P process, which reportedly offers modest performance and efficiency improvements over N5.
Gaudi 3’s use of HBM2e memory (as we mentioned above) is notable compared to the more expensive HBM3 or HBM3e used in competing chips, offering a balance of performance and cost-efficiency. This choice seems to emphasize Intel’s strategy to compete not only on performance but also on price.
As far as raw performance comparisons between Gaudi 3 and the B200, that can’t be known until the chips have been released and benchmarked by a third party.
As the race to power the tech industry’s thirst for AI computation heats up, IEEE Spectrum notes that the next generation of Intel’s Gaudi chip, code-named Falcon Shores, remains a point of interest. It also remains to be seen whether Intel will continue to rely on TSMC’s technology or leverage its own foundry business and upcoming nanosheet transistor technology to gain a competitive edge in the AI accelerator market.
India’s plan to let a moratorium on imposing customs duties on cross-border digital e-commerce transactions expire may end up hurting India’s more ambitious plans to become a global chip leader in the next five years, Reuters reported.
It could also worsen the global chip shortage by spiking semiconductor industry costs at a time when many governments worldwide are investing heavily in expanding domestic chip supplies in efforts to keep up with rapidly advancing technologies.
Early next week, world leaders will convene at a World Trade Organization (WTO) meeting, just before the deadline to extend the moratorium hits in March. In place since 1998, the moratorium has been renewed every two years since—but India has grown concerned that it’s losing significant revenues from not imposing taxes as demand rises for its digital goods, like movies, e-books, or games.
Hoping to change India’s mind, a global consortium of semiconductor industry associations known as the World Semiconductor Council (WSC) sent a letter to Indian Prime Minister Narendra Modi on Thursday.
Reuters reviewed the letter, reporting that the WSC warned Modi that ending the moratorium “would mean tariffs on digital e-commerce and an innumerable number of transfers of chip design data across countries, raising costs and worsening chip shortages.”
Pointing to Modi’s $10 billion semiconductor incentive package—which Modi has said is designed to advance India’s industry through “giant leaps” in its mission to become a technology superpower—the WSC cautioned Modi that pushing for customs duties may dash those global chip leader dreams.
Studies suggest that India should be offering tax incentives, not potentially threatening to impose duties on chip design data. That includes a study from earlier this year, released after the Semiconductor Industry Association and the India Electronics and Semiconductor Association commissioned a report from the Information Technology and Innovation Foundation (ITIF).
ITIF’s goal was to evaluate “India’s existing semiconductor ecosystem and policy frameworks” and offer “recommendations to facilitate longer-term strategic development of complementary semiconductor ecosystems in the US and India,” a press release said, partly in order to “deepen commercial ties” between the countries. The Prime Minister’s Office (PMO) has also reported a similar goal to deepen commercial ties with the European Union.
Among recommendations to “strengthen India’s semiconductor competitiveness,” ITIF’s report encouraged India to advance cooperation with the US and introduce policy reforms that “lower the cost of doing business for semiconductor companies in India”—by “offering tax breaks to chip companies” and “expediting clearance times for goods entering the country.”
Because the duties could spike chip industry costs at a time when global cross-border data transmissions are expected to reach $11 trillion by 2025, WSC wrote, the duties may “impede India’s efforts to advance its semiconductor industry and attract semiconductor investment,” which could negatively impact “more than 20 percent of the world’s semiconductor design workforce,” which is based in India.
The prime minister’s office did not immediately respond to Ars’ request to comment.
Enlarge/ US President Joe Biden speaks before signing the CHIPS and Science Act of 2022.
The Biden administration announced investments Friday totaling more than $5 billion in semiconductor research and development intended to re-establish the US as a global leader manufacturing the “next generation of semiconductor technologies.”
Through sizeable investments, the US will “advance US leadership in semiconductor R&D, cut down on the time and cost of commercializing new technologies, bolster US national security, and connect and support workers in securing good semiconductor jobs,” a White House press release said.
Currently, the US produces “less than 10 percent” of the global chips supply and “none of the most advanced chips,” the White House said. But investing in programs like the National Semiconductor Technology Center (NSTC)—considered the “centerpiece” of the CHIPS and Science Act’s four R&D programs—and training a talented workforce could significantly increase US production of semiconductors that the Biden administration described as the “backbone of the modern economy.”
The White House projected that the NSTC’s workforce activities would launch in the summer of 2024. The Center’s prime directive will be developing new semiconductor technologies by “supporting design, prototyping, and piloting and through ensuring innovators have access to critical capabilities.”
Moving forward, the NSTC will operate as a public-private consortium, involving both government and private sector institutions, the White House confirmed. It will be run by a recently established nonprofit called the National Center for the Advancement of Semiconductor Technology (Natcast), which will coordinate with the secretaries of Commerce, Defense, and Energy, as well as the National Science Foundation’s director. Any additional stakeholders can provide input on the NSTC’s goals by joining the NSTC Community of Interest at no cost.
The National Institute of Standards and Technology (NIST) has explained why achieving the NSTC’s mission to develop cutting-edge semiconductor technology in the US will not be easy:
The smallest dimensions of leading-edge semiconductor devices have reached the atomic scale and the complexity of the circuit architecture is increasing exponentially with the use of three-dimensional structures, the incorporation of new materials, and improvements in the thousands of process steps needed to make advanced chips. Into the future, as new applications demand higher-performance semiconductors, their design and production will become even more complex. This complexity makes it increasingly difficult and costly to implement innovations because of the dependencies between design and manufacturing, between manufacturing steps, and between front-end and back-end processes.
The complexity of keeping up with semiconductor tech is why it’s critical for the US to create clear pathways for skilled workers to break into this burgeoning industry. The Biden administration said it plans to invest “at least hundreds of millions of dollars in the NSTC’s workforce efforts,” creating a Workforce Center of Excellence with locations throughout the US and piloting new training programs, including initiatives engaging underserved communities. The Workforce Center will start by surveying best practices in semiconductor education programs, then establish a baseline program to attract workers seeking dependable paths to break into the industry.
Last year, the Semiconductor Industry Association (SIA) released a study showing that the US was not adequately preparing a highly skilled workforce. Between “67,000, or 58 percent, of projected new jobs, may remain unfulfilled at the current trajectory,” SIA estimated.
A skilled workforce is just part of the equation, though. The US also needs facilities where workers can experiment with new technologies without breaking the bank. To that end, the Department of Commerce announced it would be investing “at least $200 million” in a first-of-its-kind CHIPS Manufacturing USA Institute. That institute will “allow innovators to replicate and experiment with physical manufacturing processes at low cost.”
Other Commerce Department investments announced include “up to $300 million” for advanced packaging R&D necessary for discovering new applications for semiconductor technologies and over $100 million in funding for dozens of projects to help inventors “more easily scale innovations into commercial products.”
A Commerce Department spokesperson told Ars that “the location of the NSTC headquarters has not yet been determined” but will “directly support the NSTC research strategy and give engineers, academics, researchers, engineers at startups, small and large companies, and workforce developers the capabilities they need to innovate.” In 2024, NSTC’s efforts to kick off research appear modest, with the center expecting to prioritize engaging community members and stakeholders, launching workforce programs, and identifying early start research programs.
So far, Biden’s efforts to ramp up semiconductor manufacturing in the US have not gone smoothly. Earlier this year, TSMC predicted further delays at chips plants under construction in Arizona and confirmed that the second plant would not be able to manufacture the most advanced chips, as previously expected.
That news followed criticism from private entities last year. In November, Nvidia CEO Jensen Huang predicted that the US was “somewhere between a decade and two decades away” from semiconductor supply chain independence. The US Chamber of Commerce said last August that the reason why the US remained so far behind was because the US had so far failed to prioritize funding in the “science half” of the CHIPS and Science Act.
In 2024, the Biden administration appears to be attempting to finally start funding a promised $11 billion total in research and development efforts. Once NSTC kicks off research, the pressure will be on to chase the Center’s highest ambition of turning the US into a consistent birthplace of life-changing semiconductor technologies once again.
Enlarge/ OpenAI Chief Executive Officer Sam Altman walks on the House side of the US Capitol on January 11, 2024, in Washington, DC. (Photo by Kent Nishimura/Getty Images)
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On Thursday, The Wall Street Journal reported that OpenAI CEO Sam Altman is in talks with investors to raise as much as $5 trillion to $7 trillion for AI chip manufacturing, according to people familiar with the matter. The funding seeks to address the scarcity of graphics processing units (GPUs) crucial for training and running large language models like those that power ChatGPT, Microsoft Copilot, and Google Gemini.
The high dollar amount reflects the huge amount of capital necessary to spin up new semiconductor manufacturing capability. “As part of the talks, Altman is pitching a partnership between OpenAI, various investors, chip makers and power providers, which together would put up money to build chip foundries that would then be run by existing chip makers,” writes the Wall Street Journal in its report. “OpenAI would agree to be a significant customer of the new factories.”
To hit these ambitious targets—which are larger than the entire semiconductor industry’s current $527 billion global sales combined—Altman has reportedly met with a range of potential investors worldwide, including sovereign wealth funds and government entities, notably the United Arab Emirates, SoftBank CEO Masayoshi Son, and representatives from Taiwan Semiconductor Manufacturing Co. (TSMC).
TSMC is the world’s largest dedicated independent semiconductor foundry. It’s a critical linchpin that companies such as Nvidia, Apple, Intel, and AMD rely on to fabricate SoCs, CPUs, and GPUs for various applications.
Altman reportedly seeks to expand the global capacity for semiconductor manufacturing significantly, funding the infrastructure necessary to support the growing demand for GPUs and other AI-specific chips. GPUs are excellent at parallel computation, which makes them ideal for running AI models that heavily rely on matrix multiplication to work. However, the technology sector currently faces a significant shortage of these important components, constraining the potential for AI advancements and applications.
In particular, the UAE’s involvement, led by Sheikh Tahnoun bin Zayed al Nahyan, a key security official and chair of numerous Abu Dhabi sovereign wealth vehicles, reflects global interest in AI’s potential and the strategic importance of semiconductor manufacturing. However, the prospect of substantial UAE investment in a key tech industry raises potential geopolitical concerns, particularly regarding the US government’s strategic priorities in semiconductor production and AI development.
The US has been cautious about allowing foreign control over the supply of microchips, given their importance to the digital economy and national security. Reflecting this, the Biden administration has undertaken efforts to bolster domestic chip manufacturing through subsidies and regulatory scrutiny of foreign investments in important technologies.
To put the $5 trillion to $7 trillion estimate in perspective, the White House just today announced a $5 billion investment in R&D to advance US-made semiconductor technologies. TSMC has already sunk $40 billion—one of the largest foreign investments in US history—into a US chip plant in Arizona. As of now, it’s unclear whether Altman has secured any commitments toward his fundraising goal.
Updated on February 9, 2024 at 8: 45 PM Eastern with a quote from the WSJ that clarifies the proposed relationship between OpenAI and partners in the talks.
China is still finding ways to skirt US export controls on Nvidia chips, Reuters reported.
A Reuters review of publicly available tender documents showed that last year dozens of entities—including “Chinese military bodies, state-run artificial intelligence research institutes, and universities”—managed to buy “small batches” of restricted Nvidia chips.
The US has been attempting to block China from accessing advanced chips needed to achieve AI breakthroughs and advance modern military technologies since September 2022, citing national security risks.
Reuters’ report shows just how unsuccessful the US effort has been to completely cut off China, despite repeated US attempts to expand export controls and close any loopholes discovered over the past year.
China’s current suppliers remain “largely unknown,” but Reuters confirmed that “neither Nvidia” nor its approved retailers counted “among the suppliers identified.”
An Nvidia spokesperson told Reuters that the company “complies with all applicable export control laws and requires its customers to do the same.”
“If we learn that a customer has made an unlawful resale to third parties, we’ll take immediate and appropriate action,” Nvidia’s spokesperson said.
It’s also still unclear how suppliers are procuring the chips, which include Nvidia’s most powerful chips, the A100 and H100, in addition to slower modified chips developed just for the Chinese market, the A800 and H800. The former chips were among the first banned, while the US only began restricting the latter chips last October.
Among military and government groups purchasing chips were two top universities that the US Department of Commerce has linked to China’s principal military force, the People’s Liberation Army, and labeled as a threat to national security. Last May, the Harbin Institute of Technology purchased six Nvidia A100 chips to “train a deep-learning model,” and in December 2022, the University of Electronic Science and Technology of China purchased one A100 for purposes so far unknown, Reuters reported.
Other entities purchasing chips include Tsinghua University—which is seemingly gaining the most access, purchasing “some 80 A100 chips since the 2022 ban”—as well as Chongqing University, Shandong Chengxiang Electronic Technology, and “one unnamed People’s Liberation Army entity based in the city of Wuxi, Jiangsu province.”
In total, Reuters reviewed more than 100 tenders showing state entities purchasing A100 chips and dozens of tenders documenting A800 purchases. Purchases include “brand new” chips and have been made as recently as this month.
Most of the chips purchased by Chinese entities are being used for AI, Reuters reported. None of the purchasers or suppliers provided comments in Reuters’ report.
Nvidia’s highly sought-after chips are graphic processing units capable of crunching large amounts of data at the high speeds needed to fuel AI systems. For now, these chips remain irreplaceable to Chinese firms hoping to compete globally, as well as nationally, with China’s dominant technology players, such as Huawei, Reuters suggested.
While the “small batches” of chips found indicate that China could still be accessing enough Nvidia chips to enhance “existing AI models,” Reuters pointed out that US curbs are effectively stopping China from bulk-ordering chips at quantities needed to develop new AI systems. Running a “model similar to OpenAI’s GPT would require more than 30,000 Nvidia A100 cards,” research firm TrendForce reported last March.
For China, which has firmly opposed the US export controls every step of the way, these curbs remain a persistent problem despite maintaining access through the burgeoning black market. On Monday, a Bloomberg report flagged the “steepest drop” in the value of China chip imports ever recorded, falling by more than 15 percent.
China’s black market for AI chips
The US still must confront whether it’s possible to block China from accessing advanced chips without other allied nations joining the effort by lobbying their own export controls.
In October 2022, a senior US official warned that without more cooperation, US curbs will “lose effectiveness over time.” A former top Commerce Department official, Kevin Wolf, told The Wall Street Journal last year that it’s “insanely difficult to enforce” US export controls on transactions overseas.
On top of that activity, a black market for chips developed quickly, selling “excess stock that finds its way to the market after Nvidia ships large quantities to big US firms” or else chips imported “through companies locally incorporated in places such as India, Taiwan, and Singapore,” Reuters reported.
The US has maintained that its plan is not to ensure that China has absolutely no access but to limit access enough to keep China from getting ahead. But Nvidia CEO Jensen Huang has warned that curbs could have the opposite effect. While China finds ways to skirt the bans and acquire chips to “inspire” advancements, US companies that have been impacted by export controls restricting sales in China could lose so much revenue that they fall behind competitively, Huang predicted.
