By Sarah Roach and Nat Rubio-Licht
July 26, 2022
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Good morning! The American chip industry may not exactly need that $52 billion subsidy it’s trying to get from Congress, but it sure would help American semiconductor production.
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Earlier this month, Protocol Policy reporter Hirsh Chitkara wrote about why chip companies might not get the $52 billion they want from Congress. But things changed. Fast.
Senators are likely to approve the funding this week, The Wall Street Journal reported. It's expected to moved ahead in a procedural vote (which was delayed because of inclement weather), and as the Senate prepares for final passage, President Biden and chip companies are giving the bill a final push.
- Biden held a meeting with chip leaders yesterday to talk about the importance of the chips legislation. IBM’s Gary Cohn also held a call yesterday on the bill, and the company sent about 60 leaders to D.C. this week in another push.
- Chip companies have spent lots of money on lobbying for the legislation, too: around $100 million as of April. Intel has spent the most.
- If the Senate gives the final nod this week, it’ll head to the House.
The funding isn’t a make-it-or-break-it moment for chip companies, but it is a big deal as other countries try to maintain dominance or race to the top of the chip competition.
- My colleague Max Cherney, who covers the chips industry, wrote over the weekend about claims that China developed a processor way ahead of its time, which gave Chuck Schumer all the more reason to press for the chips bill to get approved.
- And as Hirsh reported earlier this month, chip companies threatened to build their chips in other countries like France or Germany if Congress can’t get its act together.
Max pointed out that chip companies are fine with or without the legislation. But the bill does give the U.S. an edge over other countries.
— Sarah Roach
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The GDP report on Thursday will determine the big question on every economist’s mind: Is the U.S. facing a recession or not? People have differing opinions.
Biden and Janet Yellen both downplayed recession risks early this week. They pointed to healthy employment rates as proof that the country is not yet in a recession.
- "My hope is we go from this rapid growth to a steady growth,” Biden told reporters.
- But even lawmakers can’t agree. Sen. Elizabeth Warren wrote in a Wall Street Journal op-ed on Sunday that “aggressive interest-rate hikes” implemented by the Fed could put the country on the verge of “a devastating recession.”
But there are warning signs that a recession is looming even if unemployment is low. Inflation is high, disposable income is down 12% year over year, and people are starting to default on auto loans, Dean Kim, head of equity research at William O’Neil, told me.
- On the other hand, the Conference Board recently forecast slower growth for the year, not a recession.
Tech companies were already buckling down, cutting spending, slowing hiring and laying off staff while blaming “macroeconomic conditions” as the trigger. Because of this, experts said the worst of it — at least for tech — is likely largely over.
- Sahak Manuelian, head of equity trading at Wedbush, told me that job cuts were less desperate cost-saving moves and more companies correcting “exuberant hiring” from the past year and a half, and that layoffs are loosening the once-tight labor market.
- The cuts were companies “gearing up for a down cycle in the economy to be stronger when they come out of it,” Kim said. “But in terms of the overall demand for what [tech companies] provide, I don't think that's going to go away anytime soon.”
We may not even know if we’re in a recession for a while. The National Bureau of Economic Research is the final word on business cycles. And it took it over a year to call the beginning and end of the brief 2020 pandemic downturn.
— Nat Rubio-Licht
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SPONSORED CONTENT FROM MICRON
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Chip shortage could undermine national security: The global shortage of semiconductors has impeded the production of everything from pickup trucks to PlayStations. But there are graver implications than a scarcity of consumer goods. If the U.S. does not ensure continued domestic access to leading-edge semiconductor manufacturing, experts say our national security could suffer.
Read more from Micron
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KKR’s David Bauer doesn’t expect the IPO window to open for tech startups until at least next year:
- “There are too many macroeconomic unknowns that need to be solved."
Kylie Jenner and Kim Kardashian posted an Instagram story asking the platform to stop trying to be like TikTok:
- "Make Instagram Instagram again."
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Alphabet, Microsoft, Texas Instruments and Visa report earnings today. You can find a full schedule for tech earnings here.
FTX is thinking of buying Bithumb. If a deal happens, it'll give FTX a stronger presence in Asia.
Meta is considering buying AdHawk, an AR and VR eye-tracking company, sources told Bloomberg.
Michael Canada is Sion Power's new COO. Canada was previously the company's chief manufacturing officer.
Camille Stewart Gloster is the White House’s new deputy national cyber director. She was previously Google’s global head of product security strategy.
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Amazon is raising the cost of Prime in Europe and the U.K. because of "increased inflation and operating costs." The hike takes effect Sept. 15.
The SEC is investigating Coinbase over whether it let customers trade digital assets that should have been registered as securities, sources told Bloomberg.
Hulu won’t run ads on political issues like the midterms, abortion, guns or Jan. 6, and Democrats are upset about it.
General Motors wants to teach you about EVs. It launched EV Live, a program that connects shoppers with EV specialists seven days a week.
Meta started music revenue sharing with a tool called Rights Manager, which helps content owners protect their rights.
The EEOC issued Tesla a cause finding that “closely parallels” complaints by the California Department of Fair Employment and Housing.
An anti-vax dating website exposed the data of 3,500 users through a “debug” mode, leaving sensitive data open and allowing anyone to be a site administrator.
Former Meta staffers raised $150 million for their own crypto startup. Mo Shaikh and Avery Ching formerly worked on Novi, the company’s ditched fintech project.
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Wanna take my jet or yours?
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It’s not new that celebrities get around with the help of their private jets. But critics with their eyes on the celebrity jet trackers of Twitter are starting to call out just how much their travel is hurting the planet. Kylie Jenner, Drake and Kenny Chesney are getting dragged online for taking super-short flights at the expense of the climate. It’s unclear if celebrities will change their ways, but it’s still worth starting the conversation — though Jenner closed comments on her Instagram when the backlash started rolling in.
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SPONSORED CONTENT FROM MICRON
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Chip shortage could undermine national security: To ensure American security, prosperity and technological leadership, industry leaders say the U.S. must encourage domestic manufacturing of chips in order to reduce our reliance on East Asia producers for crucial electronics components.
Read more from Micron
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Thoughts, questions, tips? Send them to sourcecode@protocol.com, or our tips line, tips@protocol.com. Enjoy your day, see you tomorrow.
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