Tech group urges Biden administration to keep child care requirement for chips funding
Gina Raimondo, US secretary of commerce, speaks at Georgetown University’s School of Foreign Service in Washington, DC, on Thursday, Feb. 23, 2023.
Al Drago | Bloomberg | Getty Images
Standing against conservative critiques of the Biden administration’s conditions on computer chip-manufacturing funding, the tech industry group Chamber of Progress urged the government to maintain its requirements, which include providing child care for workers.
The group counts Apple, Amazon, Google and Meta among its corporate backers. Though they are not the target audience to receive the funding created by the CHIPS and Science Act, Chamber of Progress spokesperson Chris MacKenzie said it’s important to the group that the program run both effectively and on time, since chip manufacturing is important to the entire tech economy in the U.S.
In the letter to Commerce Secretary Gina Raimondo shared exclusively with CNBC, Chamber of Progress and the National Asian/Pacific Islander American Chamber of Commerce and Entrepreneurship wrote that competitive benefits and fair labor practices are necessary to achieve the CHIPS Act’s “grand scope” both on time and on budget.
MacKenzie said the group aimed to push back on GOP attacks on so-called wokeness in business. In the letter, they argue that incentivizing child care is good business. It will encourage more women and people from underrepresented racial backgrounds to enter or remain in the chip manufacturing field, they wrote, an essential step for the industry to maintain a robust workforce.
Firms like Intel and Taiwan Semiconductor Manufacturing Co. (TSMC) are among those hoping to take advantage of the funding for their plans to build major chipmaking facilities in the U.S. Both companies have already announced massive projects to build up U.S. chip-manufacturing capacity. But the strings attached to the government money have raised concerns among the industry and conservatives.
Earlier this month, The Wall Street Journal reported that TSMC was worried about rules involving profit-sharing of surplus gains and providing details about operations. Chairman Mark Liu called some of the conditions “unacceptable” at an industry event in Taiwan last month, according to the Journal, adding they “aim to mitigate any negative impact from these and will continue discussions with the U.S. government.”
Some Republicans have also railed against the rules.
“What President Biden is doing by jamming woke and green agenda items into legislation we pass is making it harder for him to ever get legislation passed again,” said Sen. Mitt Romney, R-Utah, who supported the law’s passage, according to The Associated Press.
But the Commerce Department has maintained that the rules are necessary to protect taxpayer dollars and ensure a stable workforce.
“We simply will not be successful in achieving the national security goals of the CHIPS initiative unless we invest in our workforce, period. Full stop,” Raimondo told CNN in an interview published in late February. “For decades, we’ve taken our eye off the ball with manufacturing, which means the worker supply of people with the skills to do super technical manufacturing has withered. And so, we need to be honest about that, but also embrace it as an opportunity to come up with creative solutions.”
The $52 billion law was designed to strengthen the chip-manufacturing industry in the U.S., limiting dependence on other countries and shoring up the supply chain for an important component used in computers, cars and medical equipment.
In their letter Monday, the chambers also argued that wage and labor contract requirements serve an important business purpose for controlling costs and timeline. They applauded stipulations that would bar companies that accept government money from pursuing stock buybacks for five years. And they supported a policy to require those companies to share a portion of the surplus returns they receive after accepting CHIPS Act funding with the U.S. government, beyond what they projected in their proposals.
“To ensure continued political and public support for the program, implementing strong transparency measures and safeguards now is the best path forward,” the groups wrote.
WATCH: Commerce Department sees more than 200 companies interested in CHIPS Act funds
Dell Technologies CEO Michael Dell said Tuesday that while demand for computing power is “tremendous,” the production of artificial intelligence data centers will eventually top out.
“I’m sure at some point there’ll be too many of these things built, but we don’t see any signs of that,” Dell said on “Closing Bell: Overtime.”
The hardware maker’s server networking business grew 58% last year and was up 69% last quarter, Dell said. As large language models have evolved to more multimodal and multi-agent systems, the demand for AI processing power and capacity has continued to be strong.
Dell’s AI servers are powered by Nvidia‘s Blackwell Ultra chips. The company then sells its devices to customers like cloud service provider CoreWeave and xAI, Elon Musk’s startup.
Dell shares rose over 3% Tuesday after increasing its expected long-term revenue and profit growth in an analyst meeting.
The computer maker raised its expected annual revenue growth to 7% to 9%, up from its previous target of 3% to 4%, with diluted earnings per share now expected to be 15% higher, up from its previous 8% target.
The company reported strong second-quarter earnings in August, and said it planned to ship $20 billion worth of AI servers in fiscal 2026. That is double what it sold last year.
Dell year-to-date stock chart.
Technology
OpenAI’s Sora 2 must stop allowing copyright infringement, Motion Picture Association says
Cfoto | Future Publishing | Getty Images
The Motion Picture Association on Monday urged OpenAI to “take immediate and decisive action” against its new video creation model Sora 2, which is being used to produce content that it says is infringing on copyrighted media.
Following the Sora app’s rollout last week, users have been swarming the platform with AI-generated clips featuring characters from popular shows and brands.
“Since Sora 2’s release, videos that infringe our members’ films, shows, and characters have proliferated on OpenAI’s service and across social media,” MPA CEO Charles Rivkin said in a statement.
OpenAI CEO Sam Altman clarified in a blog post that the company will give rightsholders “more granular control” over how their characters are used.
But Rivkin said that OpenAI “must acknowledge it remains their responsibility – not rightsholders’ – to prevent infringement on the Sora 2 service,” and that “well-established copyright law safeguards the rights of creators and applies here.”
OpenAI did not respond to a request for comment.
Concerns erupted immediately after Sora videos were created last week featuring everything from James Bond playing poker with Altman to body cam footage of cartoon character Mario evading the police.
Although OpenAI previously held an opt-out system, which placed the burden on studios to request that characters not appear on Sora, Altman’s follow-up blog post said the platform was changing to an opt-in model, suggesting that Sora would not allow the usage of copyrighted characters without permission.
However, Altman noted that the company may not be able to prevent all IP from being misused.
“There may be some edge cases of generations that get through that shouldn’t, and getting our stack to work well will take some iteration,” Altman wrote.
Copyright concerns have emerged as a major issue during the generative AI boom.
Disney and Universal sued AI image creator Midjourney in June, alleging that the company used and distributed AI-generated characters from their films and disregarded requests to stop. Disney also sent a cease-and-desist letter to AI startup Character.AI in September, warning the company to stop using its copyrighted characters without authorization.
Thoma Bravo co-founder Orlando Bravo said that valuations for artificial intelligence companies are “at a bubble,” comparing it to the dotcom era.
But one key difference in the market now, he said, is that large companies with “healthy balance sheets” are financing AI businesses.
Bravo’s private equity firm boasts more than $181 billion in assets under management as of June, and focuses on buying and selling enterprise tech companies, with a significant chunk of its portfolio invested in cybersecurity.
Bravo told CNBC’s “Squawk on the Street” on Tuesday that investors can’t value a $50 million annual recurring revenue company at $10 billion.
“That company is going to have to produce a billion dollars in free cash flow to double an investor’s money, ultimately,” he said. “Even if the product is right, even if the market’s right, that’s a tall order, managerially.”
OpenAI recently finalized a secondary share sale that would value the ChatGPT-maker at $500 billion. The company is projected to make $13 billion in revenue for 2025.
Nvidia recently said it would invest up to $100 billion in OpenAI, in part, to help the ChatGPT maker lease its chips and build out supercomputing facilities in the coming years.
Other public companies have soared on AI promises, with Palantir’s market cap climbing to $437 billion, putting it among the 20 most valuable publicly traded companies in the U.S., and AppLovin now worth $213 billion.
Even early-stage valuations are massive in AI, with Thinking Machines Lab notching a $12 billion valuation on a $2 billion seed round.
Despite the inflated numbers, Bravo emphasized that there’s a “big difference” between the dotcom collapse and the current landscape of AI.
“Now you have some really big companies and some big balance sheets and healthy balance sheets financing this activity, which is different than what happened roughly 25 years ago,” he said.
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