The tech industry will hardly remember 2022 as a peak year. The global economic downturn has prompted Bay Area companies to reduce their operating costs. Overall, tech companies including Meta, Oracle, Microsoft and Twitter have shed 8,512 jobs in the Bay Area since October.
Unfortunately, the outlook for 2023 doesn’t look much better. But the industry’s long-term future looks a lot brighter, thanks in large part to the efforts of an unlikely source — Congress.
Democrats and Republicans put their differences aside and worked together this year to make the biggest science and technology investment of a generation. The Chips and Science Act provides $52.7 billion in US semiconductor manufacturing and research grants and an additional $24 billion in chip fab tax credits. The legislation is intended to bring chip manufacturing back to the United States, reduce our reliance on foreign manufacturing, and ease our supply chain challenges.
As much as the investment is a game changer for chip companies and the companies they serve, it’s the $100 billion in funding from the National Science Foundation that will likely have the larger impact on the long-term future of the tech industry.
The cyclical nature of tech is well documented. During the bad years, it’s important that research and development efforts drive innovative breakthroughs that keep us ahead of our global competitors and lead to the ‘next big thing’ in technology.
Rep. Ro Khanna, D-Santa Clara, played an important role in getting the bill through Congress. He expects the investment to have implications for research in artificial intelligence, quantum computing, plant-based and food-tech alternatives to animal proteins, electronics manufacturing and synthetic biology. The United States hasn’t invested that much in technology since the 1950s and 1960s. This funding led to the moon landing, the Internet, and the Global Positioning System (GPS).
Two weeks later, Democrats and Republicans worked together again on the Inflation Reduction Act, allocating more than $30 billion to boost manufacturing of solar panels and components, wind turbines, inverters and batteries for electric vehicles.
And last week, Congress quietly passed another Khanna-led, bipartisan technology bill aimed at protecting encryption systems and valuable data from powerful, rapidly evolving quantum computers. Tech pundits have long feared that quantum computing could cause serious data breaches of individuals’ personal financial records and critical business and government systems.
With Republicans gaining control of the House of Representatives in 2023, it could prove more difficult to pass meaningful tech legislation in Congress. But Khanna is working with Florida Senator Mario Rubio on a bill aimed at boosting manufacturing in the United States.
The legislation would provide $20 billion in loan guarantees and securities-backed financing over the next 10 years specifically designed to boost manufacturing facilities that would address potential supply chain challenges.
Government investment alone will not secure the future of the technology industry. But a major R&D support has a proven track record of developing innovative products that boost the region and the country’s economy.