AI chips

trump-strikes-“wild”-deal-making-us-firms-pay-15%-tax-on-china-chip-sales

Trump strikes “wild” deal making US firms pay 15% tax on China chip sales


“Extra penalty” for US firms

The deal won’t resolve national security concerns.

Ahead of an August 12 deadline for a US-China trade deal, Donald Trump’s tactics continue to confuse those trying to assess the country’s national security priorities regarding its biggest geopolitical rival.

For months, Trump has kicked the can down the road regarding a TikTok ban, allowing the app to continue operating despite supposedly urgent national security concerns that China may be using the app to spy on Americans. And now, in the latest baffling move, a US official announced Monday that Trump got Nvidia and AMD to agree to “give the US government 15 percent of revenue from sales to China of advanced computer chips,” Reuters reported. Those chips, about 20 policymakers and national security experts recently warned Trump, could be used to fuel China’s frontier AI, which seemingly poses an even greater national security risk.

Trump’s “wild” deal with US chip firms

Reuters granted two officials anonymity to discuss Trump’s deal with US chipmakers, because details have yet to be made public. Requiring US firms to pay for sales in China is an “unusual” move for a president, Reuters noted, and the Trump administration has yet to say what exactly it plans to do with the money.

For US firms, the deal may set an alarming precedent. Not only have analysts warned that the deal could “hurt margins” for both companies, but export curbs on Nvidia’s H20 chips, for example, had been established to prevent US technology thefts, secure US technology leadership, and protect US national security. Now the US government appears to be accepting a payment to overlook those alleged risks, without much reassurance that the policy won’t advantage China in the AI race.

The move drew immediate scrutiny from critics, including Geoff Gertz, a senior fellow at the US think tank Center for a New American Security, who told Reuters that he thinks the deal is “wild.”

“Either selling H20 chips to China is a national security risk, in which case we shouldn’t be doing it to begin with, or it’s not a national security risk, in which case, why are we putting this extra penalty on the sale?” Gertz posited.

At this point, the only reassurance from the Trump administration is an official suggesting (without providing any rationale) that selling H20 or equivalent chips—which are not Nvidia’s most advanced chips—no longer compromises national security.

Trump “trading away” national security

It remains unclear when or how the levy will be implemented.

For chipmakers, the levy is likely viewed as a relatively small price to pay to avoid export curbs. Nvidia had forecasted $8 billion in potential losses if it couldn’t sell its H20 chips to China. AMD expected $1 billion in revenue cuts, partly due to the loss of sales for its MI308 chips in China.

The firms apparently agreed to Trump’s deal as a condition to receive licenses to export those chips. But caving to Trump could bite them back in the long run, AJ Bell, investment director Russ Mould, told Reuters—perhaps especially if Trump faces increasing pressure over feared national security concerns.

“The Chinese market is significant for both these companies, so even if they have to give up a bit of the money, they would otherwise make it look like a logical move on paper,” Mould said. However, the deal “is unprecedented and there is always the risk the revenue take could be upped or that the Trump administration changes its mind and re-imposes export controls.”

So far, AMD has not commented on the report. Nvidia’s spokesperson declined to comment beyond noting, “We follow rules the US government sets for our participation in worldwide markets.”

A former adviser to Joe Biden’s Commerce Department, Alasdair Phillips-Robins, told Reuters that the levy suggests the Trump administration “is trading away national security protections for revenue for the Treasury.”

Huawei close to unveiling new AI chip tech

The end of a 90-day truce between the US and China is rapidly approaching, with the US signaling that the truce will likely be extended soon as Trump attempts to get a long-sought-after meeting with China’s President Xi Jinping.

For China, gutting export curbs on chips remains a key priority in negotiations, the Financial Times reported Sunday. But Nvidia’s H20 chips, for example, are lower priority than high-bandwidth memory (HBM) chips, sources told FT.

Chinese state media has even begun attacking the H20 chips as a Chinese national security risk. It appears that China is urging a boycott on H20 chips due to questions linked to a recent Congressional push to require chipmakers to build “backdoors” that would allow remote shutdowns of any chips detected as non-compliant with export curbs. That bill may mean that Nvidia’s chips already allow for US surveillance, China seemingly fears. (Nvidia has denied building such backdoors.)

Biden banned HBM exports to China last year, specifically moving to hamper innovation of Chinese chipmakers Huawei and Semiconductor Manufacturing International Corporation (SMIC).

Currently, US firms AMD and Micron remain top suppliers of HBM chips globally, along with South Korean firms Samsung Electronics and SK Hynix, but Chinese firms have notably lagged behind, South China Morning Post (SCMP) reported. One source told FT that China “had raised the HBM issue in some” Trump negotiations, likely directly seeking to lift Biden’s “HBM controls because they seriously constrain the ability of Chinese companies, including Huawei, to develop their own AI chips.”

For Trump, the HBM controls could be seen as leverage to secure another trade win. However, some experts are hoping that Trump won’t play that card, citing concerns from the Biden era that remain unaddressed.

If Trump bends to Chinese pressure and lifts HBM controls, China could more easily produce AI chips at scale, Biden had feared. That could even possibly endanger US firms’ standing as world leaders, seemingly including threatening Nvidia, a company that Trump discovered this term. Gregory Allen, an AI expert at a US think tank called the Center for Strategic and International Studies, told FT that “saying that we should allow more advanced HBM sales to China is the exact same as saying that we should help Huawei make better AI chips so that they can replace Nvidia.”

Meanwhile, Huawei is reportedly already innovating to help reduce China’s reliance on HBM chips, the SCMP reported on Monday. Chinese state-run Securities Times reported that Huawei is “set to unveil a technological breakthrough that could reduce China’s reliance on high-bandwidth memory (HBM) chips for running artificial intelligence reasoning models” at the 2025 Financial AI Reasoning Application Landing and Development Forum in Shanghai on Tuesday.

It’s a conveniently timed announcement, given the US-China trade deal deadline lands the same day. But the risk of Huawei possibly relying on US tech to reach that particular milestone is why HBM controls should remain off the table during Trump’s negotiations, one official told FT.

“Relaxing these controls would be a gift to Huawei and SMIC and could open the floodgates for China to start making millions of AI chips per year, while also diverting scarce HBM from chips sold in the US,” the official said.

Experts and policymakers had previously warned Trump that allowing H20 export curbs could similarly reduce access to semiconductors in the US, potentially disrupting the entire purpose of Trump’s trade war, which is building reliable US supply chains. Additionally, allowing exports will likely drive up costs to US chip firms at a time when they noted “projected data center demand from the US power market would require 90 percent of global chip supply through 2030, an unlikely scenario even without China joining the rush to buy advanced AI chips.” They’re now joined by others urging Trump to revive Biden’s efforts to block chip exports to China, or else risk empowering a geopolitical rival to become a global AI leader ahead of the US.

Photo of Ashley Belanger

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.

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At $250 million, top AI salaries dwarf those of the Manhattan Project and the Space Race


A 24 year-old AI researcher will earn 327x what Oppenheimer made while developing the atomic bomb.

Silicon Valley’s AI talent war just reached a compensation milestone that makes even the most legendary scientific achievements of the past look financially modest. When Meta recently offered AI researcher Matt Deitke $250 million over four years (an average of $62.5 million per year)—with potentially $100 million in the first year alone—it shattered every historical precedent for scientific and technical compensation we can find on record. That includes salaries during the development of major scientific milestones of the 20th century.

The New York Times reported that Deitke had cofounded a startup called Vercept and previously led the development of Molmo, a multimodal AI system, at the Allen Institute for Artificial Intelligence. His expertise in systems that juggle images, sounds, and text—exactly the kind of technology Meta wants to build—made him a prime target for recruitment. But he’s not alone: Meta CEO Mark Zuckerberg reportedly also offered an unnamed AI engineer $1 billion in compensation to be paid out over several years. What’s going on?

These astronomical sums reflect what tech companies believe is at stake: a race to create artificial general intelligence (AGI) or superintelligence—machines capable of performing intellectual tasks at or beyond the human level. Meta, Google, OpenAI, and others are betting that whoever achieves this breakthrough first could dominate markets worth trillions. Whether this vision is realistic or merely Silicon Valley hype, it’s driving compensation to unprecedented levels.

To put these salaries in a historical perspective: J. Robert Oppenheimer, who led the Manhattan Project that ended World War II, earned approximately $10,000 per year in 1943. Adjusted for inflation using the US Government’s CPI Inflation Calculator, that’s about $190,865 in today’s dollars—roughly what a senior software engineer makes today. The 24-year-old Deitke, who recently dropped out of a PhD program, will earn approximately 327 times what Oppenheimer made while developing the atomic bomb.

Many top athletes can’t compete with these numbers. The New York Times noted that Steph Curry’s most recent four-year contract with the Golden State Warriors was $35 million less than Deitke’s Meta deal (although soccer superstar Cristiano Ronaldo will make $275 million this year as the highest-paid professional athlete in the world).  The comparison prompted observers to call this an “NBA-style” talent market—except the AI researchers are making more than NBA stars.

Racing toward “superintelligence”

Mark Zuckerberg recently told investors that Meta plans to continue throwing money at AI talent “because we have conviction that superintelligence is going to improve every aspect of what we do.” In a recent open letter, he described superintelligent AI as technology that would “begin an exciting new era of individual empowerment,” despite declining to define what superintelligence actually is.

This vision explains why companies treat AI researchers like irreplaceable assets rather than well-compensated professionals. If these companies are correct, the first to achieve artificial general intelligence or superintelligence won’t just have a better product—they’ll have technology that could invent endless new products or automate away millions of knowledge-worker jobs and transform the global economy. The company that controls that kind of technology could become the richest company in history by far.

So perhaps it’s not surprising that even the highest salaries of employees from the early tech era pale in comparison to today’s AI researcher salaries. Thomas Watson Sr., IBM’s legendary CEO, received $517,221 in 1941—the third-highest salary in America at the time (about $11.8 million in 2025 dollars). The modern AI researcher’s package represents more than five times Watson’s peak compensation, despite Watson building one of the 20th century’s most dominant technology companies.

The contrast becomes even more stark when considering the collaborative nature of past scientific achievements. During Bell Labs’ golden age of innovation—when researchers developed the transistor, information theory, and other foundational technologies—the lab’s director made about 12 times what the lowest-paid worker earned.  Meanwhile, Claude Shannon, who created information theory at Bell Labs in 1948, worked on a standard professional salary while creating the mathematical foundation for all modern communication.

The “Traitorous Eight” who left William Shockley to found Fairchild Semiconductor—the company that essentially birthed Silicon Valley—split ownership of just 800 shares out of 1,325 total when they started. Their seed funding of $1.38 million (about $16.1 million today) for the entire company is a fraction of what a single AI researcher now commands.

Even Space Race salaries were far cheaper

The Apollo program offers another striking comparison. Neil Armstrong, the first human to walk on the moon, earned about $27,000 annually—roughly $244,639 in today’s money. His crewmates Buzz Aldrin and Michael Collins made even less, earning the equivalent of $168,737 and $155,373, respectively, in today’s dollars. Current NASA astronauts earn between $104,898 and $161,141 per year. Meta’s AI researcher will make more in three days than Armstrong made in a year for taking “one giant leap for mankind.”

The engineers who designed the rockets and mission control systems for the Apollo program also earned modest salaries by modern standards. A 1970 NASA technical report provides a window into these earnings by analyzing salary data for the entire engineering profession. The report, which used data from the Engineering Manpower Commission, noted that these industry-wide salary curves corresponded directly to the government’s General Schedule (GS) pay scale on which NASA’s own employees were paid.

According to a chart in the 1970 report, a newly graduated engineer in 1966 started with an annual salary of between $8,500 and $10,000 (about $84,622 to $99,555 today). A typical engineer with a decade of experience earned around $17,000 annually ($169,244 today). Even the most elite, top-performing engineers with 20 years of experience peaked at a salary of around $278,000 per year in today’s dollars—a sum that a top AI researcher like Deitke can now earn in just a few days.

Why the AI talent market is different

An image of a faceless human silhouette (chest up) with exposed microchip contacts and circuitry erupting from its open head. This visual metaphor explores transhumanism, AI integration, or the erosion of organic thought in the digital age. The stark contrast between the biological silhouette and mechanical components highlights themes of technological dependence or posthuman evolution. Ideal for articles on neural implants, futurism, or the ethics of human augmentation.

This isn’t the first time technical talent has commanded premium prices. In 2012, after three University of Toronto academics published AI research, they auctioned themselves to Google for $44 million (about $62.6 million in today’s dollars). By 2014, a Microsoft executive was comparing AI researcher salaries to NFL quarterback contracts. But today’s numbers dwarf even those precedents.

Several factors explain this unprecedented compensation explosion. We’re in a new realm of industrial wealth concentration unseen since the Gilded Age of the late 19th century. Unlike previous scientific endeavors, today’s AI race features multiple companies with trillion-dollar valuations competing for an extremely limited talent pool. Only a small number of researchers have the specific expertise needed to work on the most capable AI systems, particularly in areas like multimodal AI, which Deitke specializes in. And AI hype is currently off the charts as “the next big thing” in technology.

The economics also differ fundamentally from past projects. The Manhattan Project cost $1.9 billion total (about $34.4 billion adjusted for inflation), while Meta alone plans to spend tens of billions annually on AI infrastructure. For a company approaching a $2 trillion market cap, the potential payoff from achieving AGI first dwarfs Deitke’s compensation package.

One executive put it bluntly to The New York Times: “If I’m Zuck and I’m spending $80 billion in one year on capital expenditures alone, is it worth kicking in another $5 billion or more to acquire a truly world-class team to bring the company to the next level? The answer is obviously yes.”

Young researchers maintain private chat groups on Slack and Discord to share offer details and negotiation strategies. Some hire unofficial agents. Companies not only offer massive cash and stock packages but also computing resources—the NYT reported that some potential hires were told they would be allotted 30,000 GPUs, the specialized chips that power AI development.

Also, tech companies believe they’re engaged in an arms race where the winner could reshape civilization. Unlike the Manhattan Project or Apollo program, which had specific, limited goals, the race for artificial general intelligence ostensibly has no ceiling. A machine that can match human intelligence could theoretically improve itself, creating what researchers call an “intelligence explosion” that could potentially offer cascading discoveries—if it actually comes to pass.

Whether these companies are building humanity’s ultimate labor replacement technology or merely chasing hype remains an open question, but we’ve certainly traveled a long way from the $8 per diem that Neil Armstrong received for his moon mission—about $70.51 in today’s dollars—before deductions for the “accommodations” NASA provided on the spacecraft. After Deitke accepted Meta’s offer, Vercept co-founder Kiana Ehsani joked on social media, “We look forward to joining Matt on his private island next year.”

Photo of Benj Edwards

Benj Edwards is Ars Technica’s Senior AI Reporter and founder of the site’s dedicated AI beat in 2022. He’s also a tech historian with almost two decades of experience. In his free time, he writes and records music, collects vintage computers, and enjoys nature. He lives in Raleigh, NC.

At $250 million, top AI salaries dwarf those of the Manhattan Project and the Space Race Read More »

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Trump caving on Nvidia H20 export curbs may disrupt his bigger trade war

But experts seem to fear that Trump isn’t paying enough attention to how exports of US technology could threaten to not only supercharge China’s military and AI capabilities but also drain supplies that US firms need to keep the US at the forefront of AI innovation.

“More chips for China means fewer chips for the US,” experts said, noting that “China’s biggest tech firms, including Tencent, ByteDance, and Alibaba,” have spent $16 billion on bulk-ordered H20 chips over the past year.

Meanwhile, “projected data center demand from the US power market would require 90 percent of global chip supply through 2030, an unlikely scenario even without China joining the rush to buy advanced AI chips,” experts said. If Trump doesn’t intervene, one of America’s biggest AI rivals could even end up driving up costs of AI chips for US firms, they warned.

“We urge you to reverse course,” the letter concluded. “This is not a question of trade. It is a question of national security.”

Trump says he never heard of Nvidia before

Perhaps the bigger problem for Trump, national security experts suggest, would be if China or other trade partners perceive the US resolve to wield export controls as a foreign policy tool to be “weakened” by Trump reversing course on H20 controls.

They suggested that Trump caving on H20 controls could even “embolden China to seek additional access concessions” at a time when some analysts suggest that China may already have an upper hand in trade negotiations.

The US and China are largely expected to extend a 90-day truce following recent talks in Stockholm, Reuters reported. Anonymous sources told the South China Morning Post that the US may have already agreed to not impose any new tariffs or otherwise ratchet up the trade war during that truce, but that remains unconfirmed, as Trump continues to warn that chip tariffs are coming soon.

Trump has recently claimed that he thinks he may be close to cementing a deal with China, but it appears likely that talks will continue well into the fall. A meeting between Trump and Chinese President Xi Jinping probably won’t be scheduled until late October or early November, Reuters reported.

Trump caving on Nvidia H20 export curbs may disrupt his bigger trade war Read More »

openai-and-partners-are-building-a-massive-ai-data-center-in-texas

OpenAI and partners are building a massive AI data center in Texas

Stargate moves forward despite early skepticism

When OpenAI announced Stargate in January, critics questioned whether the company could deliver on its ambitious $500 billion funding promise. Trump ally and frequent Altman foe Elon Musk wrote on X that “They don’t actually have the money,” claiming that “SoftBank has well under $10B secured.”

Tech writer and frequent OpenAI critic Ed Zitron raised concerns about OpenAI’s financial position, noting the company’s $5 billion in losses in 2024. “This company loses $5bn+ a year! So what, they raise $19bn for Stargate, then what, another $10bn just to be able to survive?” Zitron wrote on Bluesky at the time.

Six months later, OpenAI’s Abilene data center has moved from construction to partial operation. Oracle began delivering Nvidia GB200 racks to the facility last month, and OpenAI reports it has started running early training and inference workloads to support what it calls “next-generation frontier research.”

Despite the White House announcement with President Trump in January, the Stargate concept dates back to March 2024, when Microsoft and OpenAI partnered on a $100 billion supercomputer as part of a five-phase plan. Over time, the plan evolved into its current form as a partnership with Oracle, SoftBank, and CoreWeave.

“Stargate is an ambitious undertaking designed to meet the historic opportunity in front of us,” writes OpenAI in the press release announcing the latest deal. “That opportunity is now coming to life through strong support from partners, governments, and investors worldwide—including important leadership from the White House, which has recognized the critical role AI infrastructure will play in driving innovation, economic growth, and national competitiveness.”

OpenAI and partners are building a massive AI data center in Texas Read More »

trump-can’t-keep-china-from-getting-ai-chips,-tsmc-suggests

Trump can’t keep China from getting AI chips, TSMC suggests

“Despite TSMC’s best efforts to comply with all relevant export control and sanctions laws and regulations, there is no assurance that its business activities will not be found incompliant with export control laws and regulations,” TSMC said.

Further, “if TSMC or TSMC’s business partners fail to obtain appropriate import, export or re-export licenses or permits or are found to have violated applicable export control or sanctions laws, TSMC may also be adversely affected, through reputational harm as well as other negative consequences, including government investigations and penalties resulting from relevant legal proceedings,” TSMC warned.

Trump’s tariffs may end TSMC’s “tariff-proof” era

TSMC is thriving despite years of tariffs and export controls, its report said, with at least one analyst suggesting that, so far, the company appears “somewhat tariff-proof.” However, all of that could be changing fast, as “US President Donald Trump announced in 2025 an intention to impose more expansive tariffs on imports into the United States,” TSMC said.

“Any tariffs imposed on imports of semiconductors and products incorporating chips into the United States may result in increased costs for purchasing such products, which may, in turn, lead to decreased demand for TSMC’s products and services and adversely affect its business and future growth,” TSMC said.

And if TSMC’s business is rattled by escalations in the US-China trade war, TSMC warned, that risks disrupting the entire global semiconductor supply chain.

Trump’s semiconductor tariff plans remain uncertain. About a week ago, Trump claimed the rates would be unveiled “over the next week,” Reuters reported, which means they could be announced any day now.

Trump can’t keep China from getting AI chips, TSMC suggests Read More »

tsmc-to-invest-$100b-as-trump-demands-more-us-made-chips,-report-says

TSMC to invest $100B as Trump demands more US-made chips, report says

Currently, TSMC only builds its most advanced chips in Taiwan. But when the most advanced US fabs are operational, they’ll be prepared to manufacture “tens of millions of leading-edge chips” to “power products like 5G/6G smartphones, autonomous vehicles, and AI datacenter servers,” the Commerce Department said in 2024.

TSMC has not confirmed the WSJ’s report but provided a statement: “We’re pleased to have an opportunity to meet with the President and look forward to discussing our shared vision for innovation and growth in the semiconductor industry, as well as exploring ways to bolster the technology sector along with our customers.”

Trump threat of semiconductor tariffs still looms

Advanced chips are regarded as critical for AI innovation, which Trump has prioritized, as well as for national security.

Without a steady supply, the US risks substantial technological and economic losses as well as potential weakening of its military.

To avert that, Trump campaigned on imposing tariffs that he claimed would drive more semiconductor manufacturing into the US, while criticizing the CHIPS Act for costing the US billions. Following through on that promise, in February, he threatened a “25 percent or more tariff” on all semiconductor imports, the WSJ reported. According to CNBC, Trump suggested those tariffs could be in effect by April 2.

“We have to have chips made in this country,” Trump said last month. “Right now, everything is made in Taiwan, practically, almost all of it, a little bit in South Korea, but everything—almost all of it is made in Taiwan. And we want it to be made—we want those companies to come to our country, in all due respect.”

While it’s unclear if Trump plans to overtly kill the CHIPS Act, his government funding cuts could trigger a future where the CHIPS Act dies with no workers left to certify that companies meet requirements for ongoing award disbursements, a semiconductor industry consultant group, Semiconductor Advisors, warned in a statement last month.

“If I were running a chip company, I would not count on CHIPS Act funding, even if I had a signed contract,” SA’s statement said.

TSMC to invest $100B as Trump demands more US-made chips, report says Read More »

openai’s-secret-weapon-against-nvidia-dependence-takes-shape

OpenAI’s secret weapon against Nvidia dependence takes shape

OpenAI is entering the final stages of designing its long-rumored AI processor with the aim of decreasing the company’s dependence on Nvidia hardware, according to a Reuters report released Monday. The ChatGPT creator plans to send its chip designs to Taiwan Semiconductor Manufacturing Co. (TSMC) for fabrication within the next few months, but the chip has not yet been formally announced.

The OpenAI chip’s full capabilities, technical details, and exact timeline are still unknown, but the company reportedly intends to iterate on the design and improve it over time, giving it leverage in negotiations with chip suppliers—and potentially granting the company future independence with a chip design it controls outright.

In the past, we’ve seen other tech companies, such as Microsoft, Amazon, Google, and Meta, create their own AI acceleration chips for reasons that range from cost reduction to relieving shortages of AI chips supplied by Nvidia, which enjoys a near-market monopoly on high-powered GPUs (such as the Blackwell series) for data center use.

In October 2023, we covered a report about OpenAI’s intention to create its own AI accelerator chips for similar reasons, so OpenAI’s custom chip project has been in the works for some time. In early 2024, OpenAI CEO Sam Altman also began spending considerable time traveling around the world trying to raise up to a reported $7 trillion to increase world chip fabrication capacity.

OpenAI’s secret weapon against Nvidia dependence takes shape Read More »

us-blocks-china-from-foreign-exports-with-even-a-single-us-made-chip

US blocks China from foreign exports with even a single US-made chip

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.”

US blocks China from foreign exports with even a single US-made chip Read More »

workers-demand-more-transparency-after-intel-secures-$8b-chips-funding

Workers demand more transparency after Intel secures $8B CHIPS funding


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.”

Photo of Ashley Belanger

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.

Workers demand more transparency after Intel secures $8B CHIPS funding Read More »

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US suspects TSMC helped Huawei skirt export controls, report says

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.

US suspects TSMC helped Huawei skirt export controls, report says Read More »

doj-subpoenas-nvidia-in-deepening-ai-antitrust-probe,-report-says

DOJ subpoenas Nvidia in deepening AI antitrust probe, report says

DOJ subpoenas Nvidia in deepening AI antitrust probe, report says

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.

After the DOJ’s most recent big win, which successfully proved that Google has a monopoly on search, the DOJ appears intent on getting ahead of any tech companies’ ambitions to seize monopoly power and essentially become the Google of the AI industry. In June, DOJ antitrust chief Jonathan Kanter confirmed to the Financial Times that the DOJ is examining “monopoly choke points and the competitive landscape” in AI beyond just scrutinizing Nvidia.

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.

DOJ subpoenas Nvidia in deepening AI antitrust probe, report says Read More »

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AI’s future in grave danger from Nvidia’s chokehold on chips, groups warn

Controlling “the world’s computing destiny” —

Anti-monopoly groups want DOJ to probe Nvidia’s AI chip bundling, alleged price-fixing.

AI’s future in grave danger from Nvidia’s chokehold on chips, groups warn

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.

Perhaps most closely monitoring Nvidia’s dominance, France antitrust authorities launched an investigation into Nvidia last month over antitrust concerns, the letter said, “making it the first enforcer to act against the computer chip maker,” Reuters 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.

AI’s future in grave danger from Nvidia’s chokehold on chips, groups warn Read More »