SEMICONDUCTORS

So, You Want to Build a Fab...

Monday: Intel says it will invest $3.5 billion to upgrade a chip factory in New Mexico. (That’s on top of the $20 billion it’s spending on two new Arizona fabs). 
Tuesday: TSMC is thinking about building up to five fabs in Arizona, Reuters reports. The world’s largest contract chipmaker has already said it will spend $12 billion on an AZ factory. 
Yesterday: IBM reveals a new process that could make chips 45% faster and 75% more power-efficient than today’s most advanced offerings. 

That was just this week. You’d be hard-pressed to find any other industry that has so regularly churned out eye-popping headlines this year, as a perfect storm thrust the word “semiconductor” into earnings calls, Brew newsletters, and the Oval Office: 

1. These processors touch everything we write about.
2. Some chips are in short supply right now, with demand only going in one direction (). 
3. Recently, factories have been disrupted by freak events, like fires and deep freezes. 
4. Foundries—i.e., companies that make chips for others—are getting calls from everyone. But, for reasons we’ll get into, they can’t increase production volume overnight. 
5. The most advanced CPUs and GPUs are made primarily in one place (Hint: It’s on an island). 

With all eyes on semiconductors, leaders on multiple continents have called for billions of dollars more to spend chip manufacturing and R&D. 

• President Biden has floated $50 billion to shore up the US chip supply chain. The EU is investing billions for the same reason. China is spending tens of billions annually to establish chip self-sufficiency.  

In our latest deep dive, we look into the state of semiconductor manufacturing in the US. 

A snapshot 

In 2020, US-based firms captured nearly half of the $440 billion global semiconductor industry. While the US may have an edge in designing the most advanced processors, it doesn’t really manufacture them (save for Intel).

If you’re a tech company, policymaker, or Pentagon military planner, you want more US fabs to be built and finished, like, tomorrow. Even better, yesterday. But spinning up fabs is no small task. “You need years,” Will Hunt, a research analyst at Georgetown’s Center for Security and Emerging Technology, told us.

That’s just a sneak peek. The full article breaks down the history and geopolitics of chip manufacturing, the world’s leading foundries, where the most advanced technological capacities are concentrated, and what to expect over the next few years.  

Read the full thing here.

CLOUD

Sovereign (Processing) Power

Data sovereignty may sound like a string of ones and zeros with a crown and scepter, but in reality, it’s something less fantastical (yet equally political). 

Define it for me: The laws around your individual data—who can access it, who it’s shared with, how it’s used—aren’t decided by the country on your passport. Instead, they’re controlled by the country your data is collected in.

The physical location your data is stored in (i.e., data center) matters. European companies do business with US cloud providers, but the EU doesn’t want its citizens’ data physically flowing through the Wild West without certain heavy-duty protection guarantees. 

Out with the old, in with the new

Last summer, a European court struck down the US’s olive branch (read: legal offer): a user data exchange agreement called the EU-US Privacy Shield. So what’s a billion-dollar cloud provider to do? 

In the case of Microsoft: Make the EU an offer it can’t refuse. Yesterday, Microsoft announced that it’s begun engineering work to enable any personal data held by EU businesses or public sector organizations to be stored and processed in the EU. By the end of 2022, the “engineering work needed to execute on it” will be complete, according to Microsoft. 

• The catch? Cloud customers may make up for it in additional fees. 

Bottom line: Cloud providers will be playing Deal or No Deal with the EU until they can eke out a consensus on how European data should be transported and stored. Microsoft’s offer is just the first episode. —HF 

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VC

Fundraising During Covid-19: April ‘21 Ed.

Before Q1, global VC funding had never hit triple digits.

Venture $$ didn’t just meet that milestone last quarter—it surpassed it, reaching $125 billion, a 94% spike year-over-year. Coming out of that quarter and into April, here are a few of the funding deals that caught our eye.

Robotics: AutoStore, a warehouse robotics company specializing in automated storage and retrieval systems, raised $2.8 billion from SoftBank—making up nearly half of the month’s total for robotics funding. 

• Surgical robots were popular investments last month, too: Israel-based Memic Innovative Surgery, China-based EDDA Technology, and Netherlands-based Microsure raised nearly $250 million combined. 

Autonomous vehicles: Cruise, the GM-backed self-driving startup, raised $2.75 billion in a fresh funding round—and can now count Walmart among its investors. 

• In autonomous shuttle news...French startup EasyMile raised a $66 million Series B, which it plans to use to help scale its shuttle business—in part by amping up commercial, closed-campus deployments. 

Drones: In March, Samsung teamed up with drone delivery startup Manna on a pilot program for Galaxy device delivery in an Irish town. Now, the startup has raised $25 million from investors including Stripe’s founders—and plans to expand its delivery services to the US and UK. 

Chips: SambaNova, a Silicon Valley-based AI chipmaker, raised a $676 million Series D—reportedly the third-largest VC deal in 20 years for chipmaking. Investors include SoftBank, Singapore’s sovereign wealth fund, and GV (previously Google Ventures). —HF 

BITS & BYTES

Stat: The New York Attorney General said that the broadband industry submitted nearly 18 million fake comments supporting the repeal of net neutrality in 2017—around 22 million comments were submitted overall.  

Quote: “If you are a commercial or public sector customer in the EU, we will go beyond our existing data storage commitments and enable you to process and store all your data in the EU.”—Microsoft President Brad Smith. The service will be ready next year, he says.  

Read: How an AI-fueled “Choose Your Own Adventure”-style game, powered in part by GPT-3, got much darker. 

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WHAT ELSE IS BREWING

• Georgia (the country) is exploring central bank digital currencies. 
• Amazon is building a robotic fulfillment center in Virginia and will also hire 1,000 new employees to staff the site. 
• Google plans to auto-enroll users into two-factor authentication. 
• Twitter started the rollout of Tip Jar, a micro-tipping feature. 
• Nio, the Chinese electric vehicle maker, is expanding operations into Norway.

GOING PHISHING

Three of the following news stories are true, and one...we made up. Can you spot the odd one out?

1. A Chinese rocket booster is falling back to Earth this weekend.
2. Self-driving engineers are testing out an “autonomous” unicycle.
3. The Air Force’s autonomous drone, “Skyborg,” flew for the first time.
4. A drone drew a halo over a church in England. 

LEADERBOARD

Jack Dorsey’s little side project, Square, beat its Q1 earnings targets by a mile. Q1 revenue grew 266% year-over-year to $5.06 billion, compared to projections of $3.36 billion. 

There’s only one culprit for growth like that these days: crypto. In Q1, Square made $3.5 billion in bitcoin revenue...up 11X year-over-year. Bitcoin’s price rose more than 6X over the same period.

ICYMI

Catch up on the top Emerging Tech Brew stories from the past few editions: 

• Cybersecurity AI firm Darktrace goes public at $2.4 billion valuation 
• Ether, the world’s second-biggest cryptocurrency by market cap, hits new high
• A Q&A with Neurable on its first product: brain analysis headphones 

GOING PHISHING ANSWER

No unicycles yet—self-driving engineers are sticking mostly to AVs.