Editorial: Despite layoffs, tech industry’s long-term future looks bright
2022 will hardly be remembered as a banner year for the tech industry. The global economic downturn has Bay Area firms reducing their operating costs. All told, tech companies, including Meta, Oracle, Microsoft and Twitter, have made 8,512 job cuts in the Bay Area since October.
Sadly, the outlook for 2023 doesn’t look much better. But the industry’s long-term future looks considerably brighter, thanks in large part to the efforts of an unlikely source — Congress.
That’s right.
Democrats and Republicans put aside their differences and worked together this year to craft what is the biggest science and technology investment in a generation. The Chips and Science Act provides $52.7 billion in grants for U.S. semiconductor production and research and another $24 billion in tax credits for chip plants. The legislation is designed to bring chip manufacturing back to the United States, reducing our reliance on foreign production and easing our supply-chain challenges.
As much as the investment is a game-changer for chip companies and the firms they supply, it’s the $100 billion National Science Foundation funding that likely will have the bigger impact on the tech industry’s long-term future.
Tech’s cyclical nature is well documented. During the down years, it’s essential that research and development efforts fuel innovative breakthroughs that keep us ahead of our global competitors and lead to the “next big thing” in tech.
Rep. Ro Khanna, D-Santa Clara, played a major role in pushing the bill through Congress. He expects the investment to impact research in Artificial Intelligence, quantum computing, plant-based and food-technology alternatives to animal proteins, electronics manufacturing and synthetic biology. The United States hasn’t made this level of investment in technology since the 1950s and 1960s. That funding led to the lunar landing, the internet and the global positioning system (GPS).
Two weeks later, Democrats and Republicans collaborated again on the Inflation Reduction Act, providing more than $30 billion to advance manufacturing of solar panels and components, wind turbines, power inverters and batteries for electric vehicles.
And last week Congress quietly passed another Khanna-led, bipartisan tech bill that is designed to protect encryption systems and valuable data from powerful, rapidly emerging quantum computers. Tech experts have long feared that quantum computers carry the capacity to cause serious data breaches of individuals’ personal financial data and crucial business and government systems.
With Republicans gaining control of the House of Representatives in 2023, it may prove more challenging to pass meaningful tech legislation in Congress. But Khanna is working with Florida Sen. Mario Rubio on a bill designed to further manufacturing in the United States.
The legislation would provide $20 billion over the next 10 years for loan guarantees and securities-backed financing designed to specifically encourage manufacturing plants that would address potential supply-chain challenges.
Federal investment alone won’t secure the tech industry’s future. But significant research and development support has a proven track record of creating innovative products that spur the region and the nation’s economy.