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Semiconductor Export Restrictions Could Harm U.S. Companies, Industry Says

The United States acted unilaterally, and its allies are not yet ‘on board,’ said the Semiconductor Industry Association.

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Photo of Jimmy Goodrich, vice president of global policy at the Semiconductor Industry Association

WASHINGTON, November 4, 2022 – The Department of Commerce’s recent export restrictions on semiconductors will make American companies less competitive in global markets unless U.S. allies agree to abide by similar measures, Jimmy Goodrich, vice president of global policy at the Semiconductor Industry Association, at a web panel Friday.

In October, Commerce prohibited the exportation to China of certain high-functioning chips necessary for supercomputers and moved to prevent other countries from providing China with certain semiconductors made with American technology.

The Commerce Department also limited American citizens’ ability to work with Chinese chip facilities. The restrictions were billed as a national security imperative and designed to limit the development next-generation, chip-dependent Chinese military technology.

However, the United States acted unilaterally, and her allies are not yet “on board,” Goodrich said.

Until allies opt into similar restrictions, the department’s new rules will “encourage the de-Americanization of [intellectual property] and supply chains,” Goodrich said. “If you’re a multinational company, you’re thinking about developing your intellectual property, where are you going to do it? Probably not the United States at this point.”

“You’re going to look to Singapore, Malaysia, India, Australia, where you may not face that type of regulatory environment,” he added.

China is a huge market for the American chip industry and related businesses, and based on the new restrictions, some firms are predicting revenue declines of $1 billion to $2.5 billion, Goodrich said.

“[The challenge] is balancing a national security with the economic security piece,” stated Paul Triolo, senior vice president for China and technology policy lead at the Albright Stonebridge Group. “There hasn’t really been a significant discussion of how China fits into [global] supply chains and under what conditions.”

Commerce added the export restrictions just two months after President Joe Biden signed into law the CHIPS and Science Act, which allocated $52.7 billion for domestic semiconductor research, development, manufacturing, and workforce development. Since CHIPS, Intel and others have announced or broken ground on several chip factories in the United States.

Crypto

Senators Join CFTB’s Chairman in Calling for Crypto Regulation in Light of FTX Implosion

CFTC Chairman Rostin Behnam called on Congress to institute robust disclosure regimes and barriers against conflicts of interest.

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Screenshot of Sen. Cory Booker, D-NJ

WASHINGTON, December 1, 2022 – The swift collapse of crypto exchange FTX is fortifying the public resolve of federal legislators and regulators to expand the executive branch’s power in digital asset markets, a Senate committee heard Thursday. 

Rostin Behnam, chairman of the Commodity Futures Trading Commission, told the Senate Agriculture, Nutrition, and Forestry committee his agency needs further statutory authority to protect consumers from harms in the digital assets space. The continued solvency of LedgerX, the only FTX affiliate subject to CFTC scrutiny, testifies to the efficacy of regulatory oversight, Behnam argued.

To prevent the recurrence of debacles like the FTX crash, Behnam called on Congress to institute a robust disclosure regime as well as barriers against conflicts of interest. Committee members denounced FTX’s failures and mirrored Behnam’s calls for congressional action.

A bill to further regulate digital asset markets has already been introduced, and continued revelations of FTX’s extensive mismanagement highlight its importance, supporters say.

Committee Chairwoman Debbie Stabenow, D-Mich., and Ranking Member John Boozman, R-Ark., in August sponsored the Digital Commodities Consumer Protection Act, which, in addition to enacting transparency and conflict-of-interest provisions, would require digital commodity platforms to register with the CFTC, crack down on allegedly abusive trading practices, and set cybersecurity standards.

“To be clear: there currently is no federal market regulation of spot crypto assets that are not securities. These include Bitcoin and Ether, the two most heavily traded crypto assets,” Stabenow said in prepared opening comments. “The Digital Commodities Consumer Protection Act does exactly that,” she added.

A spokesperson for Stabenow on Thursday told Broadband Breakfast there is not yet “a firm timeline” for the DCCPA’s passage.

“Millions of Americans have been scammed by this colossal FTX failure,” said Sen. Cory Booker, D-NJ, a co-sponsor of the DCCPA. “Their exposure has lost a lot of folks their resources, and for some people, their hopes and dreams and security.”

One senator, Kansas Republican Rodger Marshall, suggested instituting a “pause” on digital asset exchanges until effective regulatory tools are developed.

FTX was once considered a paradigm of crypto done right and founder Sam Bankman-Fried a visionary entrepreneur. Bankman-Fried – often referred to as “S.B.F.” – garnered much media attention and distinguished himself as an advocate of crypto regulation.

In early November, CoinDesk reported that FTX’s sister trading company, Alameda Research, had a balance sheet flush with FTX’s house digital currency, FTT. Shortly thereafter, rival exchange Binance announced it would dump its own FTT holdings, which sparked a massive user run on FTX and a correspondingly dire liquidity crisis. 

Binance agreed to acquire the flailing FTX but almost immediately reversed course, saying FTX was beyond saving. FTX filed for chapter 11 bankruptcy on November 11 and Bankman-Fried resigned as CEO. 

Further reports revealed that FTX had improperly siphoned billions of dollars in customer investments to Alameda’s risky investments. Such allegations of mismanagement have only amplified public outcry over the meltdown, which has cost FTX users billions of dollars.

FTX’s new chief, John J. Ray III, the executive who guided Enron through bankruptcy, wrote in a recent filing that he has never “seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”

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Drones

Amazon Asks FCC to Allow Drones in 60-64 GHz Band in Preparation For New Delivery Service

Limited customer-facing operations are scheduled to begin this year for Amazon’s drone delivery service.

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Photo of Jaime Hjort, Amazon's head of wireless and spectrum policy

WASHINGTON, November 23, 2022 – Amazon on Friday continued its campaign to persuade the Federal Communications Commission to allow near–ground level drones to utilize the 60–64 GigaHertz band, a move the company said would make drone operations safer.

Amazon has long developed Amazon Prime Air, its drone-based delivery service. Then-CEO Jeff Bezos made a dramatic TV reveal in 2013, and limited customer-facing operations are scheduled to begin this year.

Allowing radar applications in this band would improve “a drone’s ability to sense and avoid persons and obstacles in and near its path without causing harmful interference to other spectrum users,” argued Friday’s letter, signed by Jaime Hjort, head of wireless and spectrum policy, and Kristine Hackman, senior manager of public policy.

In an October filing, cited in Friday’s letter, Amazon laid out its case more fully, stating that the proposed drone activity in the band would not clash with the existing operations of earth-exploration satellite services.

The company urged the commission to adopt a new perspective on drones, a novel technology: “A drone package delivery operating near ground level operates much more like a last-mile delivery truck than a cargo plane,” the October filing read.

Spectrum allocation is a top priority for lawmakers and experts, alike. Many believe increased spectrum access is vital to the development of next-generation 5G and 6G technologies as well as general American economic success.

In August, the FCC and National Telecommunications and Information Administration – overseers of non-federal and federal spectrum, respectively – announced an updated memorandum of understanding to better coordinate Washington’s spectrum policy. In September, the FCC announced the winners of the 2.5 GHz auction and approved a notice seeking comment on the 12.7–13.25 GHz band the next month.

A senior NTIA official in October stated his agency would create “spectrum strategy” that will rely heavily on public input.

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Artificial Intelligence

AI Should Compliment and Not Replace Humans, Says Stanford Expert

AI that strictly imitates human behavior can make workers superfluous and concentrate power in the hands of employers.

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Photo of Erik Brynjolfsson, director of the Stanford Digital Economy Lab, in January 2017 by Sandra Blaser used with permission

WASHINGTON, November 4, 2022 – Artificial intelligence should be developed primarily to augment the performance of, not replace, humans, said Erik Brynjolfsson, director of the Stanford Digital Economy Lab, at a Wednesday web event hosted by the Brookings Institution.

AI that complements human efforts can increase wages by driving up worker productivity, Brynjolfsson argued. AI that strictly imitates human behavior, he said, can make workers superfluous – thereby lowering the demand for workers and concentrating economic and political power in the hands of employers – in this case the owners of the AI.

“Complementarity (AI) implies that people remain indispensable for value creation and retain bargaining power in labor markets and in political decision-making,” he wrote in an essay earlier this year.

What’s more, designing AI to mimic existing human behaviors limits innovation, Brynjolfsson argued Wednesday.

“If you are simply taking what’s already being done and using a machine to replace what the human’s doing, that puts an upper bound on how good you can get,” he said. “The bigger value comes from creating an entirely new thing that never existed before.”

Brynjolfsson argued that AI should be crafted to reflect desired societal outcomes. “The tools we have now are more powerful than any we had before, which almost by definition means we have more power to change the world, to shape the world in different ways,” he said.

The AI Bill of Rights

In October, the White House released a blueprint for an “AI Bill of Rights.” The document condemned algorithmic discrimination on the basis of race, sex, religion, or age and emphasized the importance of user privacy. It also endorsed system transparency with users and suggested the use of human alternatives to AI when feasible.

To fully align with the blueprint’s standards, Russell Wald, policy director for Stanford’s Institute for Human-Centered Artificial Intelligence, argued at a recent Brookings event that the nation must develop a larger AI workforce.

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