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The ‘Endless Frontier Act’ Is Not Merely a Wasteful Boondoggle, It Will Likely Slow High Tech Innovation

By George LandrithTownhall

The ‘Endless Frontier Act’ Is Not Merely a Wasteful Boondoggle, It Will Likely Slow High Tech Innovation
Source: Yao Dawei/Xinhua via AP

The advertised purpose of the “Endless Frontier Act” is to increase high tech competition with China.  This, of course, is a goal that every American should be able to get behind.  However, the advertised purpose of the bill, as laudable as it may be, is not actually what the bill will do.  In other words, the “Endless Frontier Act” was sold under false pretenses and using fabricated promises. 

If the Senate were serious about helping America win the high tech competition with China, it would do a number of important things, including, but not limited to:  (1) protect our nation’s intellectual property from theft and abuse by the Chinese; (2) make our tax code more competitive; (3) allow research and development costs to be deducted more easily thus encouraging capital investment in high tech solutions; (4) review and reform our regulatory regime that in many cases is outdated and hindering the development of new technologies and making us less competitive. 

But the Senate isn’t considering any of that.  Instead, their so-called plan is to spend about $110 billion in taxpayer dollars via government grants to promote new technologies to be administered by the National Science Foundation.  In other words, a government agency with a horrific record of waste, fraud and abuse is going to decide what technologies look most promising and then hand out taxpayer dollars to give them a boost. This sounds like the Solyndra scandal on steroids. 

So in an era when our national debt has been rapidly increasing at unsustainable rates, we are going to borrow even more money from China and become even more indebted to China — all for the purpose of being more competitive with China. Let that sink in.

But the problem doesn’t end there. The truth is the National Science Foundation (NSF) has a horrible record of waste.  The NSF has funded a project to develop a robot that could fold a towel in 25 minutes. A child could fold a whole load of towels in 25 minutes, but for this stupidity you paid $1.5 million. They’ve funded studies of shrimp running on a miniature treadmill. That wasted $500,000 of your hard earned dollars.  They’ve spent millions studying what motivates individuals to make political donations.  They’ve spent millions studying if athlete’s perception that the basketball rim is as large as a hula-hoop, or that a baseball is as large as a grapefruit, or a golf hole appeared as big as a manhole cover impacts the athlete’s performance.

As Senator Rand Paul (R-KY) highlighted on the floor of the Senate,  the NSF spent $700,000 that had been allotted to study autism to listen to a tape of Neil Armstrong’s first moon walk. They wanted to determine if he said “one small step for man …” or “one small step for a man …” It took them a year and $700,000 of your money to determine that they couldn’t tell.  And that was money that was supposed to be spent on autism.  The NSF also spent half a million dollars developing a climate change themed video game to help children feel more alarmed. 

Government is inherently wasteful.  For example, our government spent over $40 million building a natural gas station to refuel cars that run on natural gas in Afghanistan to help them reduce their carbon footprint. Yet Afghanistan is a nation where the annual income is about $800 and often cook their food on open fires, and few drive any sort of car, much less a natural gas powered car.  Any high schooler could have told you that building a natural gas station in a nation that doesn’t have many cars is a dumb idea. 

Government has funded studying whether you and I are more or less likely to eat food that has been sneezed or coughed on by someone else. You and I could answer that question for free. We’d prefer food that hasn’t been sneezed on — even before the pandemic.  But government bureaucrats spent $2 million to get the same answer.  

So now we are going to rely on these same government bureaucrats to make sure we compete in the high tech arena with the Chinese and we will borrow the money that these bureaucrats decide to spend from the Chinese.  What could possibly go wrong?! 

I have grown to expect liberals to gladly fund such utter foolishness from our paychecks.  But it isn’t just them, there were 19 Republicans who voted for this insanity:  Blunt (MO), Capito (WV), Collins (ME), Cornyn (TX), Crapo (ID), Daines (MT), Graham (SC), Grassley (IA), McConnell (KY), Murkowski (AL), Portman (OH), Risch (ID), Romney (UT), Rounds (SD), Sasse (NE), Sullivan (AK), Tillis (NC), Wicker (MS), and Young (IN).

Those who voted for this bill will undoubtedly defend their vote telling you that they want America to compete and win against China in the high tech arena.  We all would like that!  But let’s try something novel. Let’s do things that would actually help our innovators innovate; and help our businesses and industries compete and win. Also let’s not put a wasteful and often silly government agency in charge of the program.  Instead, let’s unleash America’s entrepreneurial and innovative spirit. And let’s not borrow the money from the very nation we claim to be trying to out compete. 


Proposed Defense Merger Puts National Security at Risk

By George LandrithNewsmax

aerojet rocketdyne logo on a computer screen

Lockheed Martin has announced a plan to purchase Aerojet Rocketdyne.

Often mergers are natural responses to market forces that produce a more capable competitor in the marketplace which can benefit the economy and consumers generally. But sometimes, mergers simply kill off competition and end up creating dependence within the marketplace upon a single provider for certain products or services.

This is the problem with the proposed Lockheed Martin and Aerojet Rocketdyne merger — it will give one company virtual monopoly power over any military technology that involves missile propulsion.

Before this merger goes through, the Department of Defense (DoD) and the Federal Trade Commission (FTC) must complete a review of it and approve it. If they look at the facts and learn from history, they will realize how truly problematic the proposed merger is.

In 2018, Northrop Grumman acquired Orbital ATK. This merger left Aerojet Rocketdyne as America’s last independent solid rocket motor provider. That reduced competition by causing major defense contractors to drop out of competitions because they couldn’t get the cooperation needed from the newly acquired rocket motor provider.

This proposed merger would only exacerbate the problem.Aerojet Rocketdyne has partnered with many of the major defense contractors, including: Lockheed, Boeing, Northrup Grumman and Raytheon. Right now, when the military seeks proposals for missile defense systems, it can go to all of these companies and others and ask them to compete on cost, capability and technology.Each of the competitors could go to Aerojet Rocketdyne for subcontracting help on the rocket propulsion portion of the contract. There isn’t enough high-tech missile rocket propulsion work to justify numerous competitors.

But if one of the major competitors owns the sole remaining rocket propulsion company, the other competitors will be effectively locked out. It wouldn’t be in the interest of the new larger monopolist to allow the rocket propulsion portion of the company to help a competitor win the prime contract.

Even if the DoD and FTC require that the new company not use its monopoly power to its advantage, it will. That’s simply how it works. We’ve already seen that.

The DoD and the FTC have ordered other companies to not use the monopoly power that they acquired in a merger, but that doesn’t actually stop them. It just means that they can’t be too obvious about it. They can still give themselves certain competitive advantages in price and cooperation levels.

This limits competition, harms innovation, soaks the taxpayer and in the end endangers our national security.

When it comes to national security matters, buying foreign technology isn’t a smart move and often isn’t even legal. So there is no reason to allow a merger that will reduce competition and give one defense contractor the ability to gain the upper hand in any defense project that involves missile propulsion.

On January 19, 2021, Secretary of Defense Lloyd Austin warnedthat among the weaknesses in our defense sector is “a reliance on sole or single source suppliers, reliance on foreign sources (including adversarial sources) and vulnerabilities to predatory and adversarial capital investments…”

If approved, this merger would only increase the need for prime contractors to look overseas for missile supplies — which is a dangerous direction for national security reasons, and it puts the American taxpayer at additional risk as well. As we saw during the COVID pandemic, being overly dependent on adversarial powers for basic needs is a dangerous place to be.

Additionally, President Biden signed an executive order calling for the federal government to use more U.S.-based suppliers for products. Nowhere is that more important than in the area of defense and national security.

Some defend the merger on grounds that it would increase competition in the space sector. But that is a red herring. This merger is not really about space competition, which is fairly robust with a number of capable players.

Instead, this merger is primarily about hypersonic technology and missile defense. Aerospace industry analyst Andrew Penn came to the same conclusion. This merger is about securing a monopoly.The nation’s security cannot afford a monopoly when it comes to missile defense. The Russians and the Chinese are developing hypersonic missiles that could evade our current defenses.If we want to keep our competitive advantage and protect the nation from the threat of hypersonic missile attack, we will need our best defense companies competing in a robust fashion to come up with innovative and cost-effective solutions. This merger does not make that more likely — in fact, it makes it very unlikely.

Let’s hope the DoD and FTC are paying attention. It isn’t often that a proposed merger could lead to missile attack vulnerabilities, but this is precisely that case.


The ‘Endless Frontier Act’ Is Not Merely a Wasteful Boondoggle, It Will Likely Slow High Tech Innovation

By George LandrithTownhall

The ‘Endless Frontier Act’ Is Not Merely a Wasteful Boondoggle, It Will Likely Slow High Tech Innovation
Source: Yao Dawei/Xinhua via AP

The advertised purpose of the “Endless Frontier Act” is to increase high tech competition with China.  This, of course, is a goal that every American should be able to get behind.  However, the advertised purpose of the bill, as laudable as it may be, is not actually what the bill will do.  In other words, the “Endless Frontier Act” was sold under false pretenses and using fabricated promises. 

If the Senate were serious about helping America win the high tech competition with China, it would do a number of important things, including, but not limited to:  (1) protect our nation’s intellectual property from theft and abuse by the Chinese; (2) make our tax code more competitive; (3) allow research and development costs to be deducted more easily thus encouraging capital investment in high tech solutions; (4) review and reform our regulatory regime that in many cases is outdated and hindering the development of new technologies and making us less competitive. 

But the Senate isn’t considering any of that.  Instead, their so-called plan is to spend about $110 billion in taxpayer dollars via government grants to promote new technologies to be administered by the National Science Foundation.  In other words, a government agency with a horrific record of waste, fraud and abuse is going to decide what technologies look most promising and then hand out taxpayer dollars to give them a boost. This sounds like the Solyndra scandal on steroids. 

So in an era when our national debt has been rapidly increasing at unsustainable rates, we are going to borrow even more money from China and become even more indebted to China — all for the purpose of being more competitive with China. Let that sink in.

But the problem doesn’t end there. The truth is the National Science Foundation (NSF) has a horrible record of waste.  The NSF has funded a project to develop a robot that could fold a towel in 25 minutes. A child could fold a whole load of towels in 25 minutes, but for this stupidity you paid $1.5 million. They’ve funded studies of shrimp running on a miniature treadmill. That wasted $500,000 of your hard earned dollars.  They’ve spent millions studying what motivates individuals to make political donations.  They’ve spent millions studying if athlete’s perception that the basketball rim is as large as a hula-hoop, or that a baseball is as large as a grapefruit, or a golf hole appeared as big as a manhole cover impacts the athlete’s performance.

As Senator Rand Paul (R-KY) highlighted on the floor of the Senate,  the NSF spent $700,000 that had been allotted to study autism to listen to a tape of Neil Armstrong’s first moon walk. They wanted to determine if he said “one small step for man …” or “one small step for a man …” It took them a year and $700,000 of your money to determine that they couldn’t tell.  And that was money that was supposed to be spent on autism.  The NSF also spent half a million dollars developing a climate change themed video game to help children feel more alarmed. 

Government is inherently wasteful.  For example, our government spent over $40 million building a natural gas station to refuel cars that run on natural gas in Afghanistan to help them reduce their carbon footprint. Yet Afghanistan is a nation where the annual income is about $800 and often cook their food on open fires, and few drive any sort of car, much less a natural gas powered car.  Any high schooler could have told you that building a natural gas station in a nation that doesn’t have many cars is a dumb idea. 

Government has funded studying whether you and I are more or less likely to eat food that has been sneezed or coughed on by someone else. You and I could answer that question for free. We’d prefer food that hasn’t been sneezed on — even before the pandemic.  But government bureaucrats spent $2 million to get the same answer.  

So now we are going to rely on these same government bureaucrats to make sure we compete in the high tech arena with the Chinese and we will borrow the money that these bureaucrats decide to spend from the Chinese.  What could possibly go wrong?! 

I have grown to expect liberals to gladly fund such utter foolishness from our paychecks.  But it isn’t just them, there were 19 Republicans who voted for this insanity:  Blunt (MO), Capito (WV), Collins (ME), Cornyn (TX), Crapo (ID), Daines (MT), Graham (SC), Grassley (IA), McConnell (KY), Murkowski (AL), Portman (OH), Risch (ID), Romney (UT), Rounds (SD), Sasse (NE), Sullivan (AK), Tillis (NC), Wicker (MS), and Young (IN).

Those who voted for this bill will undoubtedly defend their vote telling you that they want America to compete and win against China in the high tech arena.  We all would like that!  But let’s try something novel. Let’s do things that would actually help our innovators innovate; and help our businesses and industries compete and win. Also let’s not put a wasteful and often silly government agency in charge of the program.  Instead, let’s unleash America’s entrepreneurial and innovative spirit. And let’s not borrow the money from the very nation we claim to be trying to out compete. 


TikTok collected data from mobile devices to track Android users: report

By MARTY JOHNSONThe Hill

TikTok collected data from mobile devices to track Android users: report
© getty

Video app TikTok, which has come under intense scrutiny from the U.S. government, sidestepped Google policy and collected user-specific data from Android phones that allowed the company to track users without allowing them to opt out, according to an analysis conducted by The Wall Street Journal.

The report released Tuesday comes on the heels of President Trumpsigning an executive order that targets Beijing-based ByteDance, the parent company of TikTok. The order essentially gives the Chinese tech company 45 days to divest from the app or see it banned in the U.S.

“The spread in the United States of mobile applications developed and owned by companies in the People’s Republic of China continues to threaten the national security, foreign policy, and economy of the United States,” the executive order states. “At this time, action must be taken to address the threat posed by one mobile application in particular, TikTok.”

The White House has grown increasingly wary of TikTok, with the administration claiming that TikTok is selling American user data to the Chinese government. TikTok has repeatedly said that it has not and would never do so.

The data that was taken from the Android phones is a 12-digit code called a “media access control” (MAC) address, according to the Journal. Each MAC address is unique and are standard in all internet-ready electronic devices. MAC addresses are useful for apps that are trying to drive targeted adds because they can’t be changed or reset, allowing tech companies to create consumer profiles based off of the content that users view. 

Under the Children’s Online Privacy Protection Act, MAC addresses are considered by the Federal Trade Commission to be personally identifiable information.

A 2018 study from AppCensus, a mobile-app firm that analyzes companies’ privacy practices, showed that roughly 1 percent of Android apps collect MAC addresses.

“It’s a way of enabling long-term tracking of users without any ability to opt-out,” Joel Reardon, co-founder of AppCensus, told the Journal. “I don’t see another reason to collect it.”

Back in 2013, Apple safeguarded its phones’ MAC addresses and Google did the same with Android phones in 2015. However, TikTok got around this by accessing a backdoor that allows apps to get a phone’s MAC address in a roundabout way, the Journal’s analysis reveals.

The Journal says that TikTok utilized MAC addresses for 15 months, ending with an update in November 2019.

“We are committed to protecting the privacy and safety of the TikTok community,” a TikTok spokesperson told The Hill in a statement, citing the “decades of experience” of company chief information security officer Roland Cloutier.

The spokesperson added: “We constantly update our app to keep up with evolving security challenges, and the current version of TikTok does not collect MAC addresses. We have never given any US user data to the Chinese government nor would we do so if asked.”

Google told the Journal that it was “committed to protecting the privacy and safety of the TikTok community. Like our peers, we constantly update our app to keep up with evolving security challenges.”

Microsoft, which has said that it is actively working to purchase the wildly popular app, declined the Journal’s request for comment.


How a So-Called “Expert Witness” Derailed an East Texas Jury

Pat

The dynamic nature of our tech sector fosters a flow of new startups entering markets constantly.  The speed at which companies can collaborate and innovate can significantly influence which may be the next Apple or Google and which will fail in their first year.  These innovations, often the result of tireless investment in R&D, are frequently safeguarded through our system of intellectual property – through protections like patents and trade secrets.

However, abuse exists in nearly every system, and a 2018 Texas trade secrets decision boasts record-setting spoils for potential abusers and how a so-called expert witness can derail a jury. This case, if left unchecked, is a stark warning of just how high the cost of collaboration can be.

As I’ve previously written, since the enactment of the Defense of Trade Secrets Act (DTSA) in May 2016, the United States has experienced a rapid spike in trade secret lawsuit filings – with the number of civil trade secrets cases filed in federal and state courts increasing by 30%. 

For example, in 2018 a suit involving autonomous-driving technology trade secrets between Uber and Waymo resulted in a $245 million settlement in San Francisco early last year. In another California-based lawsuit, a jury awarded the U.S. branch of a Dutch semiconductor maker, ASML, $223 million in its suit against a local rival, XTAL, for misappropriating trade secrets.

But the $740 million award handed down in Bexar County, Texas’ Title Source v. HouseCanary takes the cake for 2018’s most costly verdict in a trade secrets case. This record-setting award is especially concerning because just days following the decision it emerged that the victor, HouseCanary, may never have possessed any of the trade secrets at issue in the first place.

Title Source, now known as Amrock, sued Silicon Valley-based HouseCanary for breach of contract when the company failed to develop an automated valuation model (AVM) mobile application. In the meantime, Amrock developed their own AVM based off common industry practices and publicly available information. HouseCanary, in turn, accused Amrock of trade secret misappropriation.  

The case is currently under appeal with the Texas Fourth Court of Appeals, which rests on the new evidence that emerged only after the award was already handed down. Whistleblower testimony from four former HouseCanary employees confirms that the app they were hired to develop was not a “functioning product,” was “vapor ware,” and had “none of the [promised] capabilities.”

Notably, the high-dollar remedy was awarded with reliance on suspect “expert” testimony from HouseCanary’s witness, Walter Bratic. As it turns out, Bratic knows his way to the witness stand, having established a career as an expert witness willing who doesn’t let logic or facts inhibit his “expertise,” so long as the check clears. Several of his lofty uncorroborated damages estimates have ultimately resulted in reversal on appeal with his logic-defying damages figures cited prominently among the reasons why the lower court had erred in its initial findings.

In what would have been one of the largest patent awards to date, a U.S. District Judge in East Texas in 2011  overturned a $625 million jury verdict in Mirror Worlds LLC v. Apple Inc.  The judge  pointed out “the scope of Mirror Worlds’ case and Apple’s potential liability exposure changed during the course of trial” and “Mr. Bratic did not adjust his damages calculations after dismissal of Mirror Worlds’ indirect infringement claims,” – which would have reduced damages by approximately 50% to about $300 million.

In his opinion overturning the verdict, the judge wrote the record “lacks substantial evidence to support the jury’s award of damages” liable for patent infringement, taking particular issue with the damages in Bratic’s dubious valuation suggesting Apple should pay whopping royalties.

However, these damages are only considered if it was proven that the infringed patent was so central to the entire product that it can be considered key driver of customer demand. On whether or not that standard was met, the appellate judge  stated, “The record lacks substantial evidence to support the jury’s award of damages. The Court grants Apple’s request for Judgment as a Matter of Law to vacate the jury’s damages award.” 

Bratic’s handiwork doesn’t end there. In 2013, his testimony in Xpertuniverse v. Cisco was deemed baseless and thrown out after he employed a bizarre “hypothetical negotiation” in which he contended both parties would have agreed to a $32.5 million lump sum royalty.

In the 2015 case IVS v. Microsoft, in which IVS accused Microsoft’s Xbox and Kinect of infringing on a facial recognition patent, the court ruled that Bratic erred in opining that royalty damages should be a running royalty of 3x the court-ordered royalty rate based on a prior case involving handheld controllers.

Likewise in his damages valuation testimony for HouseCanary, Bratic used an outrageous price of $11 per use for the AVM, which emails between Amrock employees from February 2015 make clear would never have been the agreed upon rate.

This case is the epitome of trade secrets litigation abuse – potentially an ominous high-dollar indication of an even costlier problem with broader impact on American innovation and competitiveness in a global technology sector. If the decision stands, the established precedent will further open the floodgates for abuse of IP protections – offering an attractive option for companies looking for a way around fair market competition and innovation.

What began as a $5 million contract has morphed into three-quarters of a billion dollars and a legal spectacle – in large part due to faulty reasoning and voodoo math of an expert witness with a history of over valuating for his clients and being overturned by the courts. Legal scholars and the entire tech sector are closely watching to see how this case plays out for the future of American innovation. 


GOP Lawmakers Craft Plan to Battle China in Emerging Tech

Legislation would boost public-private partnership, cut regulations

By Adam KredoThe Washington Free Beacon

The United States is falling behind China when it comes to emerging technologies such as artificial intelligence and quantum computing, according to Rep. Cathy McMorris Rodgers (R., Wash.), who told the Washington Free Beaconshe is working on a package of legislative measures that would boost public-private partnerships to ensure the United States does not lose its competitive edge in these markets.

As China invests $1.4 trillion over the next five years to dominate the field of cutting-edge technologies, the United States must create its own plan to foster innovation in this area, McMorris Rodgers said. Her plan, which is garnering support among House Republicans, would increase federal research into new technologies and remove much of the bureaucratic red tape currently restraining the private sector. While the United States cannot compete by throwing money at the problem, it can eliminate many of the restrictions that have prevented the federal government from partnering with private tech startups already making inroads into these technologies.

“We will never outspend them, we will never out-subsidize these industries like the Chinese government plans to do,” McMorris Rodgers, a member of the House Energy and Commerce Committee, told the Free Beacon.

Instead, Republicans aim to level the playing field with an unprecedented legislative package comprised of 15 bills that would force the federal government to identify the areas where it is lagging behind China and work with the private sector to spur growth. This includes beefing up American investments into A.I., facial recognition technology, blockchains, quantum computing, and unmanned delivery services—all areas where China is outpacing the United States due to massive investments.

The legislative package is one of the largest and most comprehensive currently circulating on Capitol Hill. It is part of a larger push by Republican members in the House and Senate to combat China’s massive investment in cutting edge tech at a time when the world is becoming increasingly dependent on the communist regime.

The private sector has become more attractive to the federal government as bloated budgets and bureaucratic regulations slow its foray into a range of fields. These types of partnerships proved successful during the weekend when the United States launched its first man-based mission into space in nearly a decade. NASA partnered with tech billionaire Elon Musk’s SpaceX to make that mission a reality.

Some Democrats, however, have already balked at the GOP plan, citing concerns about privacy and the potential for civil rights abuses by government authorities. They maintain that these technologies could be used for unethical purposes—much in the way China has used them to solidify its police state and spy on dissidents. If the GOP does not find a way to compromise with its colleagues in the Democrat-controlled House, the bills could be dead on arrival.

Nine of the bills included in the GOP package identify new fields of research where the federal government can help spur private-sector innovation. They include A.I., 3D printing, facial recognition technology, and other new technologies still in development. All of the bills would require the Federal Trade Commission and Commerce Department to identify roadblocks preventing innovation in these fields and then create a plan to reduce bureaucratic challenges, such as restrictions on interstate commerce.

Another set of bills seeks to create protections for sensitive U.S. data to ensure the Chinese government does not intercept them, which comes on the heels of reports about China’s efforts to steal sensitive U.S. research and infiltrate the American academic system.

Other legislative efforts would require the federal government to assess its partnerships with tech startups and other smaller private businesses focusing on fields of interest.

McMorris Rodgers said the coronavirus pandemic has exacerbated concerns about China’s influence on the global stage, exposing the United States’ weaknesses and vulnerabilities.

Republican lawmakers also want the United States to directly combat China’s weaponization of new technologies that allow it to promote misinformation. One of the bills in the legislative package directs the Federal Trade Commission to determine how A.I. can be used to combat propaganda, such as deepfakes—videos altered to make it appear as if people are saying and doing things they are not.


US Must Secure High-Tech Capacity From China’s Adventurism

By George LandrithNewsmax

China - technology

If we’ve learned anything from the COVID-19 virus, it is that dependence on the Communist country is dangerous. For example, the Chinese authorities stopped a ship in transit filled with paid-for medical supplies at a strategic moment, hoping to hold us hostage. The Communist regime mixes all Chinese businesses with its military objectives using economics, trade and a growing dominance in the high-tech world to make their power and military might in the world greater.

That party has even bragged of its future capacity to attack and defeat the United States during an international pandemic. We must understand therefore that China isn’t merely a trading partner, it is also a dangerous international enemy. In response, we must always maintain a strong military. That is obvious. But what may not be quite so obvious, but every bit as important:

We must maintain our high-tech advantages and not make ourselves dependent upon a hostile power.

The Trump administration has been aware of these risks and has taken steps to stop China’s high-tech adventurism.

The administration recently enacted restrictions on Chinese tech company Huawei, which is infamous for placing backdoors in their chips so that the communist regime has control over any device with Huawei chipsets. This alone should make it clear the U.S. can never allow itself to become dependent upon China for its technology. Imagine American fighter jets, radars and missile defense that would work only if the communist regime in China decided not to switch them off.

This is why it seemed to be good news when the world’s third-largest chip maker, Taiwan Semiconductor Manufacturing Company (TSMC), and the Trump administration recently announced TSMC’s plans to build a large chip manufacturing facility in Arizona, bringing in over 1,600 good-paying high-tech jobs. It also puts a major chip manufacturing facility on U.S. soil.

If we look more deeply into the details though, there is lot that needs to be improved if this deal is to truly advance America’s economic and security interests.

First, the deal would build a factory that when complete will be building yesterday’s chip sets. The factory is currently planned to make 5 nanometer chips. But the next generation 3 nanometer chips are just a few years off. Given that the factory won’t be fully complete until 2030, it should be built to manufacture the highest tech chips — not ones that will be a generation behind by then. The 5 nanometer chips may still be used widely in consumer electronics in the future, but they won’t be the most powerful, efficient and capable chip sets needed for the most demanding applications.

Bottom line: We won’t be getting a facility capable of manufacturing the highest tech chip sets that will be needed in the future. However, TSMC is updating some of its facilities in Asia to build these next generation 3 nanometer chipsets. So we should insist that if we’re going to build a chip factory in the U.S., it must be a top of the line, high-tech factory — not yesterday’s tech.

The planned factory would also have a relatively low monthly output capacity. Other TSMC factories can produce more than five times the monthly capacity of the proposed U.S. factory. If the planned factory is too small to truly act as a counterweight to China’s plans or to make us truly independent of China’s high-tech tentacles, it doesn’t actually do that much to make America stronger or safer. We should insist therefore that the factory capacity be expanded to make it a true counter-balance to China’s aims.

Here is a solution to all of these concerns — the U.S. requires TSMC as a condition of the deal to form a joint venture with an American firm. It could increase the available funding to build a factory capable of manufacturing the latest and greatest and most powerful chipsets. Moreover, it would allow the factory to be built bigger so that its monthly capacity qualifies it as a true, cutting edge “Gigafab” facility. And finally, a joint venture with an American firm would insulate the venture from China’s active efforts to co-opt strategic businesses and thereby make America and others dependent or at risk to China’s designs.

The Trump administration is smart to build positive relationships that strengthen America and reduce our dependence upon China. But the details matter, and the deal with TSMC needs some serious improvement if it is to truly end our dependence on high tech semiconductors that are within China’s orbit. The last 30 years have been disastrous for American manufacturing. China has been the primary beneficiary of those wrong-headed policies, taxes and regulations that drove business overseas. Hopefully, the COVID-19 virus has woken us up to the malignancy of the communist regime and the risks of relying up on it for things that are fundamental to our security.


Keeping America’s Telecom Sector Great

By Peter RoffFort Madison Daily Democrat

Washington, DC — The race to the 5G generation of telecommunications technology is on. By 2035 it will be responsible for more than $13 trillion in global economic output.

The nation getting the best technology to market the quickest will enjoy an incredible competitive advantage. For America to produce the first fully functional 5G network involves many things that must happen. The development of the hardware that will make things happen and the writing of software to control it all is only part. Anything operating wirelessly, as many of these new applications will, needs enough clean spectrum to carry the load.

Without it, the U.S. will end behind the Chinese and others who are already clearing the midrange C-Band to deploy 5G. In the U.S, that space is occupied, allocated to satellite companies who are using it, putting the issue before the U.S. Federal Communications Commission, which has regulatory authority over the spectrum.

The chairman of the FCC, Ajit Pai, has been a real leader in the campaign to keep the government from doing anything stupid that would slow the evolution of the Internet or hamper the technological progress needed to support it. Late last week, he announced his proposal for dealing with the C-Band issue so the folks prepared to use it for the next level of what cyberspace can do can get it, and the folks who have it can be compensated adequately.

To remove the potential roadblock to progress, the companies who’ve already made investments in the C-Band space need to be compensated fairly and have their relocation costs addressed. We’re talking of course about a communal public asset regulated by the government, but that doesn’t mean the feds can just take it back because it wants it for something else. “It’s only fair,” Pai said while revealing his plan, “that every single reasonable cost should be covered. So, under my draft rules, the winning bidders in the C-band auction would be required to reimburse satellite operators for their reasonable relocation costs.”

Some in Congress are also trying to make sure compensation happens, but on the cheap. Louisiana GOP Sen. John Kennedy’s SMART Act that would delay an FCC auction and, unintentionally to be sure, give the Chinese time to take a great leap forward on 5G faster than America can. His bill allocates just $5 billion in reimbursements to the companies involved as incentive to relocate to another part of the spectrum and grants them no more than a $1 billion share in the revenues the auction is sure to generate.

As an incentive to cooperate rather than sue, that’s not much. Even Kennedy admits the auction could generate $60 billion in revenues — and that’s probably a low estimate. A $5 or $6 billion buy-out of a 40-year, $50 billion investment in building out C-Band based businesses that currently provide content to 120 million U.S. households just won’t cut it.

Some folks say the push for a more realistic incentive is merely crony capitalism. That’s not so, and the people saying it is are trying to manipulate the opinions of President Donald Trump and his supporters. The SMART Act undermines U.S. technology innovation and investment because it signals to the marketplace that private companies cannot be sure their capital spending in government-regulated space is safe from federal confiscation sometime in the future if needs change or political winds shift.

The commission’s scheduled to take up Chairman Pai’s proposal on February 28. So far, under his leadership, it’s been doing a lot of good things. The Pai-led FCC has been protecting a huge percentage of the economic growth that’s occurred in the U.S. economy over the last several years. And we’ll all benefit if his colleagues stand with him regarding what’s to happen with the C-Band spectrum. Trillions in future economic growth are at stake. He’s found a way to thread the needle and keep everyone, the people to whom it is licensed and the people who want it, happy. If his proposal fails, or of the Kennedy plan is adopted by Congress, the whole thing almost surely ends up in litigation for years as someone else, probably the Chinese, take control of the world’s telecommunications sector.

We don’t have forever. We must move fast. We need the private sector to lead the way to U.S. dominance in 5G. The federal government can’t do it fast enough to beat the Chinese. President Trump and Chairman Pai need to offer a fair deal with real incentives from which the taxpayers will ultimately benefit because of the jobs and wealth a 5G global network led by America will produce for us.

Think of it as keeping America’s telecom sector great!


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