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Amid debates over how the United States can bring more semiconductor production back into the country and this becoming a national security concern, a surprisingly well-connected group of billionaires has quietly gathered to influence Washington’s approach to this difficult challenge. .

Over the past few months, without attracting much attention, Eric Schmidt, former CEO of Google and longtime Democrat fundraiser, thanked Peter Thiel, co-founder of PayPal and a vocal Trump supporter, an unusual nonprofit venture. joined to support his capital. fund to invest in chip making nationwide. The group also includes a staff of former government officials, including former defense secretary Ashton B. Carter and former national security adviser HR McMaster.

Billionaires aren’t just funding the effort: The group met with lawmakers in Congress, hoping it would help US taxpayers pay the bill.

Demand: $1 billion.

the group called America’s Frontier Funddescribes itself as “the first deep technology fund to invest in the interests of the nation”.

And the effect is already evident: Late last month, the White House Fund to lead the Quadruple Investor NetworkWhat the White House describes as a “consortium of independent investors seeking to advance access to capital for critical and emerging technologies” in the US, Japan, India and Australia.

The fund’s managing director is Gilman Louie, a venture capitalist-turned-games executive who manages In-Q-Tel, a CIA-backed venture fund. Mr. Louie is a familiar face around Washington; he was recently named President Biden’s Intelligence Advisory Board He is expected to testify before senators on the issue. supply chain.

But the Schmidt-Thiel-backed organization also raises more than a few eyebrows and questions: What do billionaires want? Will they divert government dollars to companies they invest or benefit from?

Mr Schmidt was criticized Because he had so much influence in the Biden and Obama administrations; Mr. Thiel was seen as having the ear of former President Donald J. Trump.

“I’m not sure what this organization can accomplish that the US government itself can’t,” said Gaurav Gupta, an emerging technology analyst at industry research firm Gartner.

Mr Louie said skepticism is not warranted: “If anything, we need more Eric Schmidt to be involved, not stand aside. We need more technologists with influence.”

In a statement to DealBook, Mr. Schmidt said: “As all of our national security commissions have shown, government, industry, academia and philanthropy must work together if we want free and open societies to lead this next wave of innovation. It is an important bridge in the effort.”

‘First mover advantage’

What is at stake is the US priority in the global innovation race it has led in the 20th century, largely thanks to American chip breakthroughs and all the benefits that come with it. The risk of inaction, according to industry experts, is that China’s recent investments in deep science and technology will put it first, with Chinese technology, and perhaps even ideology, one day dominating the world.

“In our current orbit, the United States is losing control,” said Edlyn Levine, a quantum physicist and co-founder. fund. “The one who is in charge has the first mover advantage and will actually dominate this industry, just as the United States did in early semiconductors.”

In 2020, the United States accounted for “only 12 percent of global semiconductor manufacturing capacity,” according to the Semiconductor Industry Association. That year, revenues from South Korean electronics giant Samsung surpassed that of American chip pioneer Intel. In 2021, Intel did the unthinkable: The company said it would manufacture more in Asia, specifically Taiwan Semiconductor Manufacturing, an approach that some questioned during the pandemic supply chain struggles and which some believe has led to the departure of Intel’s CEO. time, Bob Swan.

Pat Gelsinger, who replaced Mr. Swan, $43 billion from the company’s board of directors last year to build new chip production facilities, including $20 billion investment in two New factories in Ohio. Mr. Biden pointed to these developments as examples of how to increase American production and stimulate local economies as they fight to reclaim the nation’s chip-making title.

However, progress has stalled on measures to help fund these efforts. Congress passed last year Law of Creating Useful Incentives to Produce SemiconductorsIt’s known as CHIPS, but it remains unfunded as legislators discuss the details of the Bilateral Innovation Act, which will provide more than $50 billion for semiconductor manufacturing efforts, including the kind of technology development hoped by a venture fund like America’s Frontier Fund. investment.

In a speech last month, an exasperated Mr. Biden urged lawmakers to “pass the damn law”. One of its authors, Ohio Democratic Senator Sherrod Brown, told DealBook that members of Congress are working to bring this to the president’s desk, but did not say when that would happen.

“The President is clear that we have no moment to lose,” said White House spokesman Michael Gwin.

It is clear that increasing chip capacity is a priority for the United States, and the people who support the fund have the expertise and deep ties to take action in Washington and Wall Street. But whether this public-private venture can restore production in a country that has long depended on Asian factories will require more than a slight change in broader commercial operations and a lot of government dollars.

The founders say they are committed to the mission, whether or not they receive federal funding. (They have also started a related fund by raising money from nonprofits.) “I don’t need the government to give us permission to save the country,” said Mr. Louie. “They’d better help us.”