Computers and the Internet

Latest story

150 Shares50 Views

New York City Moves to Regulate How AI Is Used in Hiring

by

European lawmakers are finishing work on an A.I. act. The Biden administration and leaders in Congress have their plans for reining in artificial intelligence. Sam Altman, the chief executive of OpenAI, maker of the A.I. sensation ChatGPT, recommended the creation of a federal agency with oversight and licensing authority in Senate testimony last week. And the topic came up at the Group of 7 summit in Japan.Amid the sweeping plans and pledges, New York City has emerged as a modest pioneer in A.I. regulation.The city government passed a law in 2021 and adopted specific rules last month for one high-stakes application of the technology: hiring and promotion decisions. Enforcement begins in July.The city’s law requires companies using A.I. software in hiring to notify candidates that an automated system is being used. It also requires companies to have independent auditors check the technology annually for bias. Candidates can request and be told what data is being collected and analyzed. Companies will be fined for violations.New York City’s focused approach represents an important front in A.I. regulation. At some point, the broad-stroke principles developed by governments and international organizations, experts say, must be translated into details and definitions. Who is being affected by the technology? What are the benefits and harms? Who can intervene, and how?“Without a concrete use case, you are not in a position to answer those questions,” said Julia Stoyanovich, an associate professor at New York University and director of its Center for Responsible A.I.But even before it takes effect, the New York City law has been a magnet for criticism. Public interest advocates say it doesn’t go far enough, while business groups say it is impractical.The complaints from both camps point to the challenge of regulating A.I., which is advancing at a torrid pace with unknown consequences, stirring enthusiasm and anxiety.Uneasy compromises are inevitable.Ms. Stoyanovich is concerned that the city law has loopholes that may weaken it. “But it’s much better than not having a law,” she said. “And until you try to regulate, you won’t learn how.”The law applies to companies with workers in New York City, but labor experts expect it to influence practices nationally. At least four states — California, New Jersey, New York and Vermont — and the District of Columbia are also working on laws to regulate A.I. in hiring. And Illinois and Maryland have enacted laws limiting the use of specific A.I. technologies, often for workplace surveillance and the screening of job candidates.The New York City law emerged from a clash of sharply conflicting viewpoints. The City Council passed it during the final days of the administration of Mayor Bill de Blasio. Rounds of hearings and public comments, more than 100,000 words, came later — overseen by the city’s Department of Consumer and Worker Protection, the rule-making agency.The result, some critics say, is overly sympathetic to business interests.“What could have been a landmark law was watered down to lose effectiveness,” said Alexandra Givens, president of the Center for Democracy & Technology, a policy and civil rights organization.That’s because the law defines an “automated employment decision tool” as technology used “to substantially assist or replace discretionary decision making,” she said. The rules adopted by the city appear to interpret that phrasing narrowly so that A.I. software will require an audit only if it is the lone or primary factor in a hiring decision or is used to overrule a human, Ms. Givens said.That leaves out the main way the automated software is used, she said, with a hiring manager invariably making the final choice. The potential for A.I.-driven discrimination, she said, typically comes in screening hundreds or thousands of candidates down to a handful or in targeted online recruiting to generate a pool of candidates.Ms. Givens also criticized the law for limiting the kinds of groups measured for unfair treatment. It covers bias by sex, race and ethnicity, but not discrimination against older workers or those with disabilities.“My biggest concern is that this becomes the template nationally when we should be asking much more of our policymakers,” Ms. Givens said.“This is a significant regulatory success,” said Robert Holden, center, a member of the City Council who formerly led its committee on technology.Johnny Milano for The New York TimesThe law was narrowed to sharpen it and make sure it was focused and enforceable, city officials said. The Council and the worker protection agency heard from many voices, including public-interest activists and software companies. Its goal was to weigh trade-offs between innovation and potential harm, officials said.“This is a significant regulatory success toward ensuring that A.I. technology is used ethically and responsibly,” said Robert Holden, who was the chair of the Council committee on technology when the law was passed and remains a committee member.New York City is trying to address new technology in the context of federal workplace laws with guidelines on hiring that date to the 1970s. The main Equal Employment Opportunity Commission rule states that no practice or method of selection used by employers should have a “disparate impact” on a legally protected group like women or minorities.Businesses have criticized the law. In a filing this year, the Software Alliance, a trade group that includes Microsoft, SAP and Workday, said the requirement for independent audits of A.I. was “not feasible” because “the auditing landscape is nascent,” lacking standards and professional oversight bodies.But a nascent field is a market opportunity. The A.I. audit business, experts say, is only going to grow. It is already attracting law firms, consultants and start-ups.Companies that sell A.I. software to assist in hiring and promotion decisions have generally come to embrace regulation. Some have already undergone outside audits. They see the requirement as a potential competitive advantage, providing proof that their technology expands the pool of job candidates for companies and increases opportunity for workers.“We believe we can meet the law and show what good A.I. looks like,” said Roy Wang, general counsel of Eightfold AI, a Silicon Valley start-up that produces software used to assist hiring managers.The New York City law also takes an approach to regulating A.I. that may become the norm. The law’s key measurement is an “impact ratio,” or a calculation of the effect of using the software on a protected group of job candidates. It does not delve into how an algorithm makes decisions, a concept known as “explainability.”In life-affecting applications like hiring, critics say, people have a right to an explanation of how a decision was made. But A.I. like ChatGPT-style software is becoming more complex, perhaps putting the goal of explainable A.I. out of reach, some experts say.“The focus becomes the output of the algorithm, not the working of the algorithm,” said Ashley Casovan, executive director of the Responsible AI Institute, which is developing certifications for the safe use of A.I. applications in the workplace, health care and finance. More

More stories

  • 113 Shares54 Views

    in Economy

    Silicon Valley Chosen for $4 Billion Chip Research Center

    by

    Anticipating federal subsidies, Applied Materials said it planned to invest up to $4 billion in the semiconductor project in Sunnyvale, Calif.Silicon Valley got its name from computer chips, but no longer plays a central role in shaping how they are made. A major supplier to the industry hopes to change that.Applied Materials, the biggest maker of machines for producing semiconductors, said on Monday that it planned to build a massive research facility near its hometown, Santa Clara, Calif., to allow chip makers and universities to collaborate on advances to make more powerful chips. Silicon Valley hasn’t seen a comparable semiconductor construction project in more than 30 years, industry analysts say.The company expects to invest up to $4 billion in the project over seven years, with a portion of that money coming from federal subsidies, while creating up to 2,000 engineering jobs.The plan is the latest in a string of chip-related projects spurred by the CHIPs Act, a $52 billion package of subsidies that Congress passed last year to reduce U.S. dependence on Asian factories for the critical components. What sets Applied Materials’ move apart is that it focuses on research, rather than manufacturing, and is a substantial new commitment to the industry’s original hub.Chip makers that grew up in Silicon Valley have long chosen to build new “fabs,” the sophisticated factories that fabricate chips from silicon wafers, in less costly states and countries. But Applied Materials is betting that technical talent at nearby universities and the local companies that design chips will spur innovation quickly, making up for cost differences with other locations.“You can connect more leaders in this ecosystem here than anyplace in the world,” said Gary Dickerson, the chief executive of Applied Materials. “There’s no place like this.”Applied Materials has scheduled an event on Monday in Sunnyvale, Calif., to discuss the project, with expected guests including Vice President Kamala Harris.Politicians from both parties overwhelmingly supported the CHIPs Act, partly out of fears that China will one day exert control over Taiwan and factories there that produce the most advanced chips. Besides encouraging domestic chip manufacturing, the legislation allocated about $11 billion to spur related research and development.Chip research now takes place in several phases in multiple locations, including university labs and collaborative centers such as the Albany NanoTech Complex in New York. Applied Materials participates with other companies in that center and operates a research fab in Silicon Valley where chip makers can work with its machines and those of other toolmakers.But many of the core chores in developing new production processes are carried out by chip manufacturers in fabs outfitted with a broad array of equipment. The proposed center, which Applied Materials calls Epic, is set to have ultraclean production space bigger than three football fields and is designed to give university researchers and other engineers comparable resources to experiment with new materials and techniques for creating advanced chips.One goal is to reduce the time it takes for new ideas to flow from the research labs to companies designing new manufacturing gear, information that is now often delayed as it is filtered through the chip makers.“The trouble is, those customers need time to figure out what they need,” said H.-S. Philip Wong, a Stanford professor of electrical engineering who was briefed on the company’s plans. “There is a big hole in there.”Applied Materials also said chip makers would be able to reserve space in the center and try out new tools before they were commercially available.The plan hinges partly on whether Applied Materials can win subsidies under the CHIPs Act, which the Commerce Department says has already attracted expressions of interest from more than 300 companies. Mr. Dickerson said that the company planned to build the center in any case, but that government funding could affect the project’s scale.Assuming the center evolves as planned, it could substantially bolster Silicon Valley’s role in the evolution of chips, said G. Dan Hutcheson, vice chair at the market research firm TechInsights.“It really is a vote of confidence for the Valley,” he said. More

  • 125 Shares179 Views

    in Economy

    Commerce Dept. Outlines Its Bid to Fund Cutting-Edge Chip Research

    by

    The Biden administration announced its strategy for the National Semiconductor Technology Center, a string of facilities aimed at propelling U.S. innovation.WASHINGTON — The Biden administration outlined plans on Tuesday to propel research on the type of cutting-edge microchips needed to power computers, cars and other devices, saying it would establish a new national organization with locations in various parts of the United States.The Commerce Department, which is in charge of the administration’s efforts to revitalize the American chip industry, said its new National Semiconductor Technology Center would bring together companies, universities and others to collaborate on next-generation chip technology. The organization would include a string of research centers, the locations of which have yet to be chosen, and aim to be operational by the end of this year.The organization would help “regain America’s leadership in research and development and technologies of the future, and importantly, make sure we stay there for decades to come,” Gina Raimondo, the commerce secretary, said in a briefing Monday.“It’s a place where industry and academia and start-ups and investors can come together to solve the biggest, grandest challenges and set priorities,” she added.The plans are part of the Biden administration’s effort to reinvigorate semiconductor manufacturing and ensure that the United States has a steady supply of chips necessary to feed its factories and support its national defense. The Commerce Department has been charged with doling out $50 billion to revitalize the industry, including $11 billion devoted to research and development.The technology center is expected to be central to that effort. Some of its locations would be capable of end-to-end manufacturing of new chip designs, while others would focus on experimenting with new materials and equipment, or with new ways of putting chips together to make them more powerful, Ms. Raimondo said.Laurie Giandomenico, the vice president and chief acceleration officer of MITRE, a nonprofit organization that operates federally funded research centers, called the $11 billion investment by the United States “pretty significant,” given that the semiconductor industry has in past years spent about $70 billion on research and development globally.The challenge, she said, would be to ensure that the money was spent to encourage collaborative research to solve the industry’s biggest problems, not the “siloed innovation” now carried out by chip firms that carefully guard their creations from competitors.“It should be on areas that no one company can solve alone,” she said.Companies, universities, lawmakers and local governments have been lobbying the administration to set up an outpost of the new organization in their area. Ms. Raimondo emphasized that the organization would be an independent “trusted” player, with board members appointed by a separate selection committee and strict controls for protecting intellectual property.One of the organization’s primary goals, Ms. Raimondo said, would be making it easier and less expensive for start-ups and other new entrants to develop and commercialize new chip technologies.“We want to cut in half the projected cost of moving a new chip from concept to commercialization over the next decade,” she said.Chris Miller, the author of “Chip War,” which chronicles the industry’s development, said it was comparatively easy for a researcher to develop a new idea for a chip in a laboratory. But given the high cost of producing chips, researchers can have a hard time getting their inventions manufactured.Designing an advanced chip, which may have tens of billions of transistors, can cost hundreds of millions of dollars, according to analysts. The latest systems for defining the smallest circuitry on wafers cost more than $100 million each, while the new factories called “fabs” that make advanced chips can cost $10 billion to $20 billion.“The big fabs are interested in producing 100 million chips for an iPhone, not 10 chips for a professor at M.I.T.,” Mr. Miller said.Venture capitalists also often shy away from investing in chip start-ups because they require more initial funding than other kinds of tech companies and more time to generate a return on that investment.To help address some of these issues, the government’s technology center will establish an investment fund to support start-ups, and provide manufacturing facilities for small players to experiment with new technologies.“I see a world where the U.S. can actually revitalize this microelectronics industry because we could bring down the costs of doing a chip start-up by a factor of five to a factor of ten,” said Gilman Louie, a tech investor and chief executive of a nonprofit investment organization called America’s Frontier Fund.The center’s research priorities are expected to be refined in the coming months. But the Commerce Department specified several areas it would focus on, including advancing the technology for analyzing the microscopic components of chips and setting technical standards for new kinds of chip packaging.As progress slows in squeezing ever-smaller transistors onto each piece of silicon, many companies are now breaking up big products into smaller “chiplets” that are placed side by side or stacked on top of one another.The Commerce Department said that setting new standards for these practices would pave the way for the creation of marketplaces in which companies can assemble new products using chiplets from multiple vendors. More

  • 125 Shares159 Views

    in Economy

    Do We Know How Many People Are Working From Home?

    by

    New Labor Department numbers indicate that fewer Americans worked remotely last year. But many experts criticize the government’s data collection.Millions of workers, employers, square feet of real estate and dollars of downtown economic retail are wrapped up in the question of how many people are working from home — yet there remain large discrepancies in how remote work is measured.The Labor Department, last week, released data indicating a decline in remote work: 72.5 percent of businesses said their employees rarely or never teleworked last year, up from 60.1 percent in 2021 and quite close to the 76.7 percent that had no such work before the pandemic. But while the Labor Department found that remote work was almost back to prepandemic levels, many other surveys show it is up four- to fivefold.Outside research, including a monthly survey of workers from researchers at Stanford University and the Census Bureau’s household survey, indicate that remote work remains prevalent, with Stanford’s finding that it accounts for over a quarter of paid full-time workdays in the United States, just slightly down from 33 percent in 2021. Some scholars suggested that the Labor Department’s survey may overcount fully in-person work, though the comparisons among the various surveys aren’t direct.“I see this survey as an outlier and not the most reliable measure,” said Adam Ozimek, chief economist of the Economic Innovation Group, a public policy organization, describing the Labor Department’s survey. “We need to think hard as we try to develop better measures of working from home.”Remote work is having profound effects on nearly every dimension of the economy: foot traffic to downtown businesses, housing markets in big cities and far-flung areas, methods of assessing productivity and child care. Public transportation ridership sank during the pandemic, and suburban real estate values rose.Nearly one billion square feet of office real estate was available but in search of a tenant at the end of 2022. People refashioned their lives and routines, working 28 percent more after traditional hours, according to Microsoft.The stakes of measuring remote work’s prevalence are high. And researchers said the wording of the Bureau of Labor Statistics survey on remote work, which was distributed to businesses, might have caused some confusion among respondents.“Telework is a work arrangement that allows an employee to work at home, or from another remote location, by using the internet or a computer linked to one’s place of employment, as well as digital communications, such as email and phone,” the survey read. “Do any employees at this location CURRENTLY telework in any amount?”By defining telework so broadly — as any worker sending an email or making a call outside the office — the Labor Department’s survey question should most likely have turned up a fully in-person figure lower than the one released last week, said Nick Bloom, an economist at Stanford, suggesting that some businesses may have been confused by the question.This particular Labor Department figure on telework also combines fully remote work with hybrid arrangements. But hybrid work has eclipsed fully remote policies, with just over half of the workers who can do their jobs from home combining in-person and remote work, according to Gallup.A spokeswoman for the Labor Department said the survey most likely did not reflect informal work-from-home arrangements.“Taking into account that the self-employed and the public sector are not included in the sample, and that this is a survey of establishments rather than individuals, our estimates do not appear out of line with other estimates,” the spokeswoman said.Stanford’s monthly study on working from home, which surveys 10,000 workers across cities and industries, found that 27 percent of paid full-time days were worked from home in early 2023.Much of that remote work came from hybrid setups. Last month, the survey found that 12 percent of workers were fully remote, roughly 60 percent fully in person and 28 percent hybrid.Other sources of data confirm that working-from-home patterns remain entrenched in certain industries. The building security firm Kastle, for example, tracks data on office badge swipes and reported this month that offices remained at roughly 48 percent of their prepandemic occupancy.A closer look at New York, from the Partnership for New York City, found that 52 percent of Manhattan office workers were working in person on an average day at the start of this year, up from 49 percent in September. But only 9 percent of employees were in the office five days a week, underscoring the reach of hybrid arrangements. And Square, the retail technology company, which tracks payments at food and drink establishments, found that sales growth at bars and restaurants in Brooklyn had recently outpaced growth of those in Manhattan.“It’s clear that the work-from-home trends induced by the pandemic have transformed the food and drink scene in the city,” said Ara Kharazian, an economist at Square.The Partnership for New York City’s data indicated that financial service firms were back in the office in greater numbers than many other companies. Financial service firms reported 59 percent daily office attendance in late January, according to the partnership. The tech industry, by contrast, was at 43 percent.All this data is emerging as hundreds of companies formalize their policies on hybrid work, with many trying to persuade their employees to spend more time at the office.Amazon told corporate workers last month that they had to be in the office three days a week starting in May, and Starbucks called its 3,750 corporate workers back three days a week as well. Disney asked employees to return to the office four days a week. Its chief executive, Robert A. Iger, cited the need for in-person creative collaborations.Other chief executives have also begun to question the merits of remote work. Even Marc Benioff, chief executive of Salesforce, which told all its employees that they could go permanently remote, began voicing concern this year that productivity among some employees has been lower.As executives clamp down on in-person work, worker resistance has become more vocal. At Amazon, more than 29,000 employees joined a Slack channel, called Remote Advocacy, protesting the shift to in-person work. At Starbucks, more than 40 corporate employees signed an open letter opposing the new return-to-office policy.Wherever people are doing the jobs they already have, mostly in person per the Labor Department or over a quarter of the time at home per others, one metric does indicate that hybrid work is here to stay: job postings.A study from researchers at Stanford, Harvard and other institutions analyzing over 50 million job postings last month found that postings explicitly mentioning remote work are at 12.2 percent — a fourfold increase since before the pandemic. More

  • 125 Shares189 Views

    in Economy

    Tinkering With ChatGPT, Workers Wonder: Will This Take My Job?

    by

    In December, the staff of the American Writers and Artists Institute — a 26-year-old membership organization for copywriters — realized that something big was happening.The newest edition of ChatGPT, a “large language model” that mines the internet to answer questions and perform tasks on command, had just been released. Its abilities were astonishing — and squarely in the bailiwick of people who generate content, such as advertising copy and blog posts, for a living.“They’re horrified,” said Rebecca Matter, the institute’s president. Over the holidays, she scrambled to organize a webinar on the pitfalls and potential of the new artificial-intelligence technology. More than 3,000 people signed up, she said, and the overall message was cautionary but reassuring: Writers could use ChatGPT to complete assignments more quickly, and move into higher-level roles in content planning and search-engine optimization.“I do think it’s going to minimize short-form copy projects,” Ms. Matter said. “But on the flip side of that, I think there will be more opportunities for things like strategy.”OpenAI’s ChatGPT is the latest advance in a steady march of innovations that have offered the potential to transform many occupations and wipe out others, sometimes in tandem. It is too early to tally the enabled and the endangered, or to gauge the overall impact on labor demand and productivity. But it seems clear that artificial intelligence will impinge on work in different ways than previous waves of technology.The positive view of tools like ChatGPT is that they could be complements to human labor, rather than replacements. Not all workers are sanguine, however, about the prospective impact.Katie Brown is a grant writer in the Chicago suburbs for a small nonprofit group focused on addressing domestic violence. She was shocked to learn in early February that a professional association for grant writers was promoting the use of artificial-intelligence software that would automatically complete parts of an application, requiring the human simply to polish it before submitting.The platform, called Grantable, is based on the same technology as ChatGPT, and it markets itself to freelancers who charge by the application. That, she thought, clearly threatens opportunities in the industry.“For me, it’s common sense: Which do you think a small nonprofit will pick?” Ms. Brown said. “A full-time-salary-plus-benefits person, or someone equipped with A.I. that you don’t have to pay benefits for?”Artificial intelligence and machine learning have been operating in the background of many businesses for years, helping to evaluate large numbers of possible decisions and better align supply with demand, for example. And plenty of technological advancements over centuries have decreased the need for certain workers — although each time, the jobs created have more than offset the number lost.Guillermo Rubio has found that his job as a copywriter has changed markedly since he started using ChatGPT to generate ideas for blog posts.In-camera double exposure by Mark Abramson for The New York TimesChatGPT, however, is the first to confront such a broad range of white-collar workers so directly, and to be so accessible that people could use it in their own jobs. And it is improving rapidly, with a new edition released this month. According to a survey conducted by the job search website ZipRecruiter after ChatGPT’s release, 62 percent of job seekers said they were concerned that artificial intelligence could derail their careers.“ChatGPT is the one that made it more visible,” said Michael Chui, a partner at the McKinsey Global Institute who studies automation’s effects. “So I think it did start to raise questions about where timelines might start to be accelerated.”That’s also the conclusion of a White House report on the implications of A.I. technology, including ChatGPT. “The primary risk of A.I. to the work force is in the general disruption it is likely to cause to workers, whether they find that their jobs are newly automated or that their job design has fundamentally changed,” the authors wrote.For now, Guillermo Rubio has found that his job as a copywriter has changed markedly since he started using ChatGPT to generate ideas for blog posts, write first drafts of newsletters, create hundreds of slight variations on stock advertising copy and summon research on a subject about which he might write a white paper.Since he still charges his clients the same rates, the tool has simply allowed him to work less. If the going rate for copy goes down, though — which it might, as the technology improves — he’s confident he’ll be able to move into consulting on content strategy, along with production.“I think people are more reluctant and fearful, with good reason,” Mr. Rubio, who is in Orange County, Calif., said. “You could look at it in a negative light, or you can embrace it. I think the biggest takeaway is you have to be adaptable. You have to be open to embracing it.”After decades of study, researchers understand a lot about automation’s impact on the work force. Economists including Daron Acemoglu at the Massachusetts Institute of Technology have found that since 1980, technology has played a primary role in amplifying income inequality. As labor unions atrophied, hollowing out systems for training and retraining, workers without college educations saw their bargaining power reduced in the face of machines capable of rudimentary tasks.The advent of ChatGPT three months ago, however, has prompted a flurry of studies predicated on the idea that this isn’t your average robot.One team of researchers ran an analysis showing the industries and occupations that are most exposed to artificial intelligence, based on a model adjusted for generative language tools. Topping the list were college humanities professors, legal services providers, insurance agents and telemarketers. Mere exposure, however, doesn’t determine whether the technology is likely to replace workers or merely augment their skills.Shakked Noy and Whitney Zhang, doctoral students at M.I.T., conducted a randomized, controlled trial on experienced professionals in such fields as human relations and marketing. The participants were given tasks that typically take 20 to 30 minutes, like writing news releases and brief reports. Those who used ChatGPT completed the assignments 37 percent faster on average than those who didn’t — a substantial productivity increase. They also reported a 20 percent increase in job satisfaction.A third study — using a program developed by GitHub, which is owned by Microsoft — evaluated the impact of generative A.I. specifically on software developers. In a trial run by GitHub’s researchers, developers given an entry-level task and encouraged to use the program, called Copilot, completed their task 55 percent faster than those who did the assignment manually.Those productivity gains are unlike almost any observed since the widespread adoption of the personal computer.“It does seem to be doing something fundamentally different,” said David Autor, another M.I.T. economist, who advises Ms. Zhang and Mr. Noy. “Before, computers were powerful, but they simply and robotically did what people programmed them to do.” Generative artificial intelligence, on the other hand, is “adaptive, it learns and is capable of flexible problem solving.”That’s very apparent to Peter Dolkens, a software developer for a company that primarily makes online tools for the sports industry. He has been integrating ChatGPT into his work for tasks like summarizing chunks of code to aid colleagues who may pick up the project after him, and proposing solutions to problems that have him stumped. If the answer isn’t perfect, he’ll ask ChatGPT to refine it, or try something different.“It’s the equivalent of a very well-read intern,” Mr. Dolkens, who is in London, said. “They might not have the experience to know how to apply it, but they know all the words, they’ve read all the books and they’re able to get part of the way there.”There’s another takeaway from the initial research: ChatGPT and Copilot elevated the least experienced workers the most. If true, more generally, that could mitigate the inequality-widening effects of artificial intelligence.On the other hand, as each worker becomes more productive, fewer workers are required to complete a set of tasks. Whether that results in fewer jobs in particular industries depends on the demand for the service provided, and the jobs that might be created in helping to manage and direct the A.I. “Prompt engineering,” for example, is already a skill that those who play around with ChatGPT long enough can add to their résumés.Since demand for software code seems insatiable, and developers’ salaries are extremely high, increasing productivity seems unlikely to foreclose opportunities for people to enter the field.That won’t be the same for every profession, however, and Dominic Russo is pretty sure it won’t be true for his: writing appeals to pharmacy benefit managers and insurance companies when they reject prescriptions for expensive drugs. He has been doing the job for about seven years, and has built expertise with only on-the-job training, after studying journalism in college.After ChatGPT came out, he asked it to write an appeal on behalf of someone with psoriasis who wanted the expensive drug Otezla. The result was good enough to require only a few edits before submitting it.“If you knew what to prompt the A.I. with, anyone could do the work,” Mr. Russo said. “That’s what’s really scares me. Why would a pharmacy pay me $70,000 a year, when they can license the technology and pay people $12 an hour to run prompts into it?”To try to protect himself from that possible future, Mr. Russo has been building up his side business: selling pizzas out of his house in southern New Jersey, an enterprise that he figures won’t be disrupted by artificial intelligence.Yet. More

  • 113 Shares179 Views

    in Economy

    Meta, Facebook’s Parent, to Lay Off Another 10,000 Workers

    by

    It would be the tech company’s second round of cuts since November. Mark Zuckerberg, its chief executive, has declared 2023 the “year of efficiency.”Meta, the owner of Facebook and Instagram, said on Tuesday that it planned to lay off about 10,000 employees, or roughly 13 percent of its work force, the latest move to hew to what the company’s founder, Mark Zuckerberg, has called a “year of efficiency.”The layoffs will affect Meta’s recruiting team this week, with a restructuring of its tech and business groups to come in April and May, Mr. Zuckerberg said in a memo posted on the company’s website. The announcement is the company’s second round of cuts within the past half year. In November, Meta laid off more than 11,000 people, or about 13 percent of its work force at the time.Meta also plans to close about 5,000 job postings that have yet to be filled, Mr. Zuckerberg said in the memo. Other restructuring efforts include a plan to wrap up this summer an analysis of Meta’s hybrid return-to-office model, which it began testing last March.“This will be tough and there’s no way around that,” he wrote.Meta’s stock rose more than 7 percent by the close of trading on Tuesday.Mr. Zuckerberg is culling employees after years of hiring at a breakneck pace. His company gobbled up workers as its family of apps, which also includes WhatsApp, became popular worldwide. The coronavirus pandemic also supercharged the use of mobile apps, leading to more growth. At its peak last year, Meta had 87,000 full-time employees.But as the global economy soured, and digital advertising markets contracted last year, Mr. Zuckerberg began putting an end to unchecked growth. Meta trimmed employee perks. And after the layoffs in November, which largely affected the business divisions and recruiting teams, Mr. Zuckerberg hinted at further cuts.On an earnings call in February, the chief executive said he did not want the company to be overstuffed with a layer of middle management, or “managers managing managers.” He said he took responsibility for last year’s layoffs, blaming his zeal for staffing up on the surge of use early in the pandemic.Meta’s layoffs are part of a wave of job cuts from the biggest tech companies. In recent months, Amazon, Google, Microsoft, Salesforce and others have also said they are trimming their ranks, and some of the companies have increased the number of people they are letting go after initial announcements. Many of the companies have cited a challenging global economic environment for their actions.But even beyond the macroeconomic conditions, Meta is dealing with many challenges. It is grappling not only with a digital advertising slowdown but also with Apple’s privacy changes to its mobile operating system, which have restricted Meta’s ability to collect data on iPhone users to help target ads. It also faces steep competition from TikTok, which has soared in popularity over the past few years. And regulators have stepped up efforts to rein in the company by pushing for new laws that would limit Meta’s data collection abilities.Meta is also in the midst of a tricky transition to become a “metaverse” company, connecting people to an immersive digital world through virtual-reality headsets and applications. Mr. Zuckerberg sees the metaverse as the next-generation computing platform, so Meta has been spending billions of dollars on the effort and reallocating workers to its Reality Labs division, which is focused on products for the metaverse.Yet it’s unclear if people will want to use metaverse products. In recent months, the public has instead gravitated to chatbots, which are built on artificial intelligence. Meta has invested in A.I. for years but lately has not been at the center of the conversation about the technology.Employees have been bracing for more layoffs for months, watching with anxiety as Mr. Zuckerberg embarked on a quest to dial back what he felt was no longer necessary to run the company, according to current and former employees. But the expectation was that he would take a light touch to his favored project of the metaverse.Some Meta employees who were affected by Tuesday’s announcement of layoffs — especially in the recruiting division — felt “gut-punched,” according to current and former employees who have spoken with those in the organization.“People are entering a job market that is the worst I’ve ever seen,” said Erin Sumner, a global director of human resources at DeleteMe, who was laid off from Facebook in November. She said the staggered nature of Meta’s cuts over the next two months was adding to employee anxiety.“There’s a lot of uncertainty,” Ms. Sumner said. “There’s a lot of anger, and there’s the question many folks are asking: ‘How do you expect me to do work for the next two months while wondering if I will still have a job?’”In his announcement on Tuesday, Mr. Zuckerberg laid out a vision for streamlining the company by removing layers of management, ending lower-priority projects and rebalancing product teams with a focus on engineering.To that end, Mr. Zuckerberg wound down efforts on building NFTs, or nonfungible tokens, a cryptocurrency-based initiative that has dropped out of favor in recent months. Many of Mr. Zuckerberg’s crypto initiatives in general have fallen by the wayside over the past nine months as the public has grown more skeptical of the market after the implosion of FTX, the cryptocurrency exchange.In his note, Mr. Zuckerberg added that the moves were a response to global conditions, including increased regulation, geopolitical instability, higher interest rates and a cooling economy.“The world economy changed, competitive pressures grew and our growth slowed considerably,” he said. “We should prepare ourselves for the possibility that this new economic reality will continue for many years.”Gregory Schmidt More

  • 113 Shares179 Views

    in Economy

    Silicon Valley Bank’s Collapse Causes Strain for Young Companies

    by

    Young companies raced to get their money out of the bank, which was central to the start-up industry. Some said they could not make payroll.Ashley Tyrner opened an account with Silicon Valley Bank for her company, FarmboxRx, two years ago. She was setting out to raise venture capital and knew the bank was a go-to for the start-up industry.On Thursday, after reading about financial instability at the bank, she rushed to move FarmboxRx’s money into two other bank accounts. Her wire transfers didn’t go through. And on Friday, Silicon Valley Bank collapsed, tying up cash totaling eight figures for her company, which delivers food to Medicare and Medicaid participants.“None of my reps will call me back,” Ms. Tyrner said. “It’s the worst 24 hours of my life.”Her despair was part of the fallout across the start-up ecosystem from the failure of Silicon Valley Bank. Entrepreneurs raced to get loans to make payroll because their money was frozen at the bank. Investors doled out and asked for advice in memos and on emergency conference calls. Lines formed outside the bank’s branches. And many in the tech industry were glued to Twitter, where the collapse of a linchpin financial partner played out in real time.The implosion rattled a start-up industry already on edge. Hurt by rising interest rates and an economic slowdown over the past year, start-up funding — which had been supercharged by low interest rates for years — has shriveled, resulting in mass layoffs at many young companies, cost-cutting and slashed valuations. Investments in U.S. start-ups dropped 31 percent last year to $238 billion, according to PitchBook.On top of that, the fall of Silicon Valley Bank was especially troubling because it was the self-described “financial partner of the innovation economy.” The bank, founded in 1983 and based in Santa Clara, Calif., was deeply entangled in the tech ecosystem, providing banking services to nearly half of all venture-backed technology and life-science companies in the United States, according to its website.Silicon Valley Bank was also a bank to more than 2,500 venture capital firms, including Lightspeed, Bain Capital and Insight Partners. It managed the personal wealth of many tech executives and was a stalwart sponsor of Silicon Valley tech conferences, parties, dinners and media outlets.The bank was a “systemically important financial institution” whose services were “immensely enabling for start-ups,” said Matt Ocko, an investor at the venture capital firm DCVC.On Friday, the Federal Deposit Insurance Corporation took control of Silicon Valley Bank’s $175 billion in customer deposits. Deposits of up to $250,000 were insured by the regulator. Beyond that, customers have received no information on when they will regain access to their money.That left many of the bank’s clients in a bind. On Friday, Roku, the TV streaming company, said in a filing that roughly $487 million of its $1.9 billion in cash was tied up with Silicon Valley Bank. The deposits were largely uninsured, Roku said, and it did not know “to what extent” it would be able to recover them.Josh Butler, the chief executive of CompScience, a workplace safety analytics start-up, said he was unable to get his company’s money out of the bank on Thursday or before the bank’s collapse on Friday. The last day, he said, had been nerve-racking.“Everyone from my investors to employees to my own mother are reaching out to ask what’s going on,” Mr. Butler said. “The big question is how soon will we be able to get access to the rest of the funds, how much if at all? That’s absolutely scary.”CompScience was pausing spending on marketing, sales and hiring until it solved more pressing concerns, like making payroll. Mr. Butler said he had been prepared for a big crunch, given the doom and gloom swirling around the industry.But “did I expect it to be Silicon Valley Bank?” he said. “Never.”Camp, a start-up selling gifts and experiences for children, added a banner to its website on Friday that read: “OUR BANK JUST CLOSED — SO EVERYTHING IS ON SALE!”The site offered 40 percent off with the promo code “bankrun” alongside a meme that included the words “i never liked the bay area” and “how could this happen.” A Camp representative said the sale was related to Silicon Valley Bank’s collapse and declined to comment further.Sheel Mohnot, an investor at Better Tomorrow Ventures, said his venture firm advised its start-ups on Thursday to move money into Treasuries and open other bank accounts out of prudence.“Once a bank run has started, it’s hard to stop,” he said.Some of the start-ups that Mr. Mohnot’s firm has invested in chose not to move their money, while others were unable to act in time before the bank failed, he said. Now their biggest concern was making payroll, followed by figuring out how to pay their bills, he said.Haseeb Qureshi, an investor at Dragonfly, a cryptocurrency-focused venture capital firm, said his firm was counseling several of its start-ups that had funds tied up in Silicon Valley Bank.“The first thing you think about is survival,” he said. “It’s a harrowing moment for a lot of people.”Other start-ups were benefiting from the bank’s collapse. On Friday afternoon, Brex, a provider of financial services to start-ups, unveiled an “emergency bridge line of credit” for new customers migrating from Silicon Valley Bank. The service was aimed at helping those start-ups shore up expenses like payroll.For part of Thursday, Brex received billions of dollars in deposits from several thousand companies, a person with knowledge of the situation said. The company rushed to open accounts as fast as possible to meet demand, with its chief executive reviewing applications, the person said.But by Thursday afternoon, the incoming deposits to Brex slowed to a halt, as founders began reporting that Silicon Valley Bank’s online portal had frozen and customers were no longer able to access their money, the person said.A man trying to enter a Silicon Valley Bank branch in Manhattan on Friday. David Dee Delgado/ReutersMany venture capital firms had also used lines of credit with Silicon Valley Bank to make investments quickly and smoothly, Mr. Ocko of DCVC said. Those lines of credit are now frozen, he said.Mr. Ocko added that he did not foresee systemic collapse among start-ups and tech, but predicted “pain and friction and uncertainty and complexity in the middle of what’s already a painful macro environment for start-ups.”To stave off any taint from Silicon Valley Bank, some venture funds blasted updates to their backers. Sydecar, a service that facilitates venture capital deals, shared a list of the banks it uses that were not affected. Origin Ventures promised to help companies “create contingency plans around working capital.”Another venture firm outlined its exposure to Silicon Valley Bank and apologized in a memo, saying, “This is the worst email I’ve ever had to write to you.” The memo was seen by The New York Times.Entrepreneurs also weighed into group chats with the dollar amounts that they could no longer tap at Silicon Valley Bank or what they had managed to pull out, ranging from hundreds of thousands to tens of millions, according to communications viewed by The Times.A trickle of customers walked up to Silicon Valley Bank’s branch in Menlo Park, Calif., on Friday afternoon and discovered that its doors were locked. Some read an F.D.I.C. notice, taped by the entrance, that said the regulator was in control.One person who tried the doors was carrying a Chick-fil-A bag. A woman in the office cracked a door open, asked who the person was and then took the bag with a smile. Then she pulled the door shut.Reporting was contributed by More

  • 75 Shares189 Views

    in Economy

    The Furniture Hustlers of Silicon Valley

    by

    As tech companies cut costs and move to remote work, their left-behind office furniture has become part of a booming trade.Brandi Susewitz touched the curved stitching on a pair of bright red Arne Jacobsen Egg Chairs and announced they were worth around $5,000 each. The chairs were in pristine condition, perched in the reception area of the software company Sitecore’s office in downtown San Francisco.Trisha Murcia, Sitecore’s workplace manager, said she was likely the only person who ever sat on them. “It’s really sad,” she said. “They opened this office in 2018 and then Covid happened.”Ms. Murcia led Ms. Susewitz around Sitecore’s office, pointing out bar stools that had never been used, 90-inch flat screens, shiny conference room tables and accent chairs from the retailer Blu Dot. The whiteboard walls, outfitted with markers and erasers, were spotless. And rows upon rows of 30-by-60 inch, height-adjustable Knoll desks with Herman Miller Aeron chairs sat collecting dust.Ms. Susewitz measured and snapped photos, identifying designer brands and models. Her office furniture resale business, Reseat, would take all of it, she declared. “We can find a home for this,” she said. “We have time.”Brandi Susewitz looked at two red Arne Jacobsen Egg Chairs during a visit to the Sitecore office in San Francisco last month.Jason Henry for The New York TimesSitecore was reducing its office space because the pandemic meant more employees worked remotely.Jason Henry for The New York TimesMs. Susewitz, who started Reseat in 2020, is one of an increasing number of behind-the-scenes specialists in the Bay Area who are carving out a piece of the great office furniture reshuffling. There are professional liquidators, Craigslist flippers and start-ups spouting buzzwords like “circular economy.” And a few guys with warehouses full of really nice chairs.All of them are capitalizing on a wave of tech companies that are drastically shrinking their physical footprints in the wake of the pandemic-induced shift to remote work and the recent economic slowdown.Nowhere is the furniture glut stronger than in San Francisco. Tech workers have been slowest to return to the office in the city, where commercial vacancy rates jumped to 28 percent last year, up from 4 percent in 2019, according to the real estate firm CBRE. Occupancy in San Francisco in late January was 4 percent below the average of the top 10 U.S. cities, according to the building security firm Kastle. And companies of all sizes, including PayPal, Block and Yelp, are giving up their expensive downtown headquarters or downsizing their office space.Add to that the tech industry’s recent U-turn from optimistic hypergrowth to fear and penny pinching. That has led tech giants such as Google and Salesforce, along with smaller companies like DoorDash and Wish, to carry out widespread layoffs, cutting more than 88,000 workers in the Bay Area over the last year, according to Layoffs.fyi.Some start-ups have abruptly gone under, including the flying car company Kittyhawk, the autonomous vehicle start-up Argo AI and the interior design start-up Modsy. Others have slashed spending, starting with their dusty, rarely-used offices full of designer furniture.Ms. Susewitz checked out an Aeron chair during her visit to Sitecore. She toured the office with Trisha Murcia, Sitecore’s workplace managerJason Henry for The New York TimesMs. Susewitz measured office furniture at Sitecore’s office in downtown San Francisco.Jason Henry for The New York TimesLast month, Twitter held a public auction for some of its furniture, hawking dry erase boards, conference tables and a three-foot blue statue of its bird logo. The social media company, which is owned by Elon Musk, at one point stopped paying the rent on some of its office leases.Layoffs in Big TechAfter a pandemic hiring spree, several tech companies are now pulling back.A Growing List: Alphabet, Microsoft and Zoom are among the latest tech giants to cut jobs amid concerns about an economic slowdown.Salesforce: The company said it would lay off 10 percent of its staff, a decision that seemed to go against the professed commitment of its co-founder and chief executive, Marc Benioff, to its workers.New Parents Hit Hard: At tech companies that spent recent years expanding paid parental leave, parents have felt the whiplash of mass layoffs in an especially visceral way.Tech’s Generational Divide: The recent cuts have been eye-opening to young workers. But to older employees who experienced the dot-com bust, it has hardly been a shock.Martin Pichinson, a founder of Sherwood Partners, an advisory firm that helps restructure failing start-ups, said he was staffing up to handle increased demand. Today’s reckoning was not as severe as that of the dot-com bust in the early 2000s when dozens of tech companies collapsed, he said, but “everyone is acting as if businesses are falling apart.”That’s led to a lot of expendable furniture, much of it hewing to a specific youthful aesthetic of Instagrammable bright colors and midcentury modern shapes. That look, complemented by plant walls of succulents and kombucha on tap, was a hallmark of the tech talent wars over the past two decades, telegraphing a company’s success and sophistication.Then there’s the Aeron chairs. The $1,805 black roller-wheel desk chairs are a closely-watched barometer of tech excesses. Their sleek design makes them a work of art, according to the Museum of Modern Art. And in the tech industry, where workers are used to being pampered while chained to their desks, they are ubiquitous.When internet companies imploded in 2000, liquidators filled their warehouses with the “dot-com thrones.” Now any whiff of empty Aerons piling up conjures memories of that slump and sets off fears that another is imminent.The Bay Area’s Craigslist currently has gobs of the chairs for sale, photographed in warehouses, lined up in corners of conference rooms and wrapped in plastic outside a storage unit. Some are selling for as cheap as a few hundred bucks.The listings are a reminder: Silicon Valley is a place of booms and busts, with enterprising hustlers who see nothing but opportunity, even in the rubble.Mr. Norbu’s furniture reselling business, called Enliven, has expanded to include a van, three employees and a warehouse.Jason Henry for The New York TimesA trail of Dropbox furnitureFor furniture specialists, it all starts with supplies from tech companies like Dropbox.In 2019, the file storage company moved into its 735,000-square-foot headquarters in San Francisco. Its 15-year lease was the largest in the city’s history at the time. Dropbox’s old office was rented to other companies, and last year, a cache of furniture — futuristic-chic chairs, couches and tables — from that office made its way to a liquidator.The inventory included several emerald green velvet Jean Royère-style Polar Bear chairs that cost roughly $10,000 to custom make in 2016, according to their maker, Classic Design LA.Three of those chairs sold to Tenzin Norbu, a furniture reseller in Richmond, Calif., who paid around $1,000 for each. Mr. Norbu, 25, started buying and selling high-end furniture on online marketplaces early in the pandemic, when people were eager to redecorate the homes they were stuck inside and stymied by supply chain delays on furniture.Since then, his business, called Enliven, has expanded to include a van, three employees, a 4,000-square-foot warehouse and annual revenue in the mid-six figures.The tech talent wars, with companies competing to out-perk one another with the fanciest offices, were good for designer furniture. The retreat from that battle has been just as good for resellers.Last year, Mr. Norbu scored some lounge chairs and couches from Fast, a payments start-up that collapsed in the spring. He also paid “tens of thousands” of dollars, he said, to fill a 20-foot truck of still-in-the-box furniture that WeWork, whose valuation had plummeted, had kept in storage since 2019. The trove included dining chairs, lamps, couches and a chunky red Bollo armchair by the Swedish designer Fogia.Mr. Norbu’s inventory included three green Polar Bear chairs that were custom made for Dropbox.Jason Henry for The New York TimesMr. Norbu said he planned to buy furniture from more tech start-ups as his business grows.Jason Henry for The New York TimesOn a recent tour of his warehouse, Mr. Norbu pointed out a pair of never-used felt poufs from a start-up, two glass coffee tables from Delta Air Lines, some gray lounge chairs that were “probably from Google” and plants from a venture capital firm.Mr. Norbu aims to target more tech start-ups as his business expands. The companies are always acquiring or shedding furniture, since they tend to grow quickly and shut down abruptly. Many of his buyers also work in tech, he said, which means they could find themselves eating dinner at the very conference table they once gathered around for meetings.Last year, Mr. Norbu sold one of the Polar Bear chairs that had been owned by Dropbox to a fellow furniture flipper, Nate Morgan, for $1,400. Mr. Morgan started trading furniture in the fall after he was laid off from a business development job at Meta, which owns Facebook and Instagram. He said he quickly discovered the Bay Area contains “crazy pockets of massive amounts of furniture.”Mr. Morgan’s business, Reclamation, recently worked with a wealthy tech entrepreneur who had bought a second San Francisco home to live in while his main home was being renovated. The entrepreneur furnished the 4,000-square-foot second home with new goods from Restoration Hardware. Nine months later, when the entrepreneur moved into his main home, Mr. Morgan bought all of the second home’s furniture for 10 percent of its retail price.Mr. Morgan, 44, said the furniture business was a welcome shift from the 15 years he spent working in tech. “It feels really good to be building a local community business that’s tied to this geographic area,” he said.Outside Mr. Norbu’s 4,000-square-foot furniture warehouse.Jason Henry for The New York TimesMr. Morgan later sold the Polar Bear chair that had been at Dropbox for a profit to an interior designer in Los Angeles, who then sold it to a client in the Hollywood Hills. From the liquidator, to Mr. Norbu, to Mr. Morgan, to the interior designer, each person in the chain made a little money.Dropbox declined to comment. During the pandemic, the company shifted to remote work and made plans to sublet 80 percent of its headquarters. Takers have been slow; the company recently lowered its expected rate, pushed out its target for finding tenants by two years and recorded a $175 million charge on its real estate holdings in 2022.Dropbox’s remaining space has been converted into what the company calls a “studio” instead of an “office,” designed for meetings and “touchdown spots,” or cafes and libraries for people to sit, chat and work briefly. There are no more desks.‘It was a ghost town’Ms. Susewitz, 49, has worked in office furniture since 1997, when she became a customer service representative at Lindsay-Ferrari, a Bay Area furniture dealer now known as One Workplace.The furniture industry’s wastefulness always bugged her, she said, with companies discarding durable, commercial-grade items that were built to last decades every time they moved. Companies waited until the last minute to deal with the furniture, she said, increasing the odds it wound up in the trash.In the late 1990s dot-com boom, Ms. Susewitz created a business plan to build an online marketplace for used office furniture. She abandoned it when eBay took off, thinking the company would eventually solve the problem. “But that never happened,” she said.Over the next two decades, she worked in sales and business development, outfitting Bay Area businesses with goods from “the big five” of workplace furniture — Steelcase, MillerKnoll, Haworth, Allsteel and Teknion.Before the pandemic, Sitecore was expanding its space so rapidly that it had leased another half of a floor in its office tower.Jason Henry for The New York TimesWhen the pandemic hit, Ms. Susewitz’s livelihood of new office furniture screeched to a halt. She watched with disgust as companies tossed out barely-used desks and chairs.“Perfectly good, brand-new furniture is just being carted off to landfills,” she said. So she created Reseat to help businesses liquidate furniture. The company uses an inventory management system that tracks the items’ “life cycles” so it can quickly share the specifications for the furniture, making the goods easier to sell. Given enough time, sellers can expect 20 cents on the dollar for their furniture, she said. Reseat, which has 14 employees, has worked with more than 100 companies and sold more than eight million pounds of furniture.“Our goal is to sell it standing,” Ms. Susewitz said. “Once it ends up in a warehouse, it loses value and ends up collecting dust.”In December, Reseat was hired to liquidate more than 900 work stations, 96 office chairs, 40 work benches, 24 sofas and 84 file cabinets at an office in Santa Clara, Calif. Analog Devices, the semiconductor company that had moved out, hardly used the space during the pandemic. But Pure Storage, the data storage company moving in, didn’t want those pieces. Reseat had just four weeks to sell the items.“It just ate me up inside,” Ms. Susewitz said. That she found buyers in time was “a miracle,” she added.Pure Storage said it was reusing a “substantial” amount of Analog Devices’s furniture, including desk chairs and conference room items, but it planned to install its existing desks “to better suit how Pure employees work in a more open office environment.” An Analog Devices representative declined to comment.Ms. Susewitz was excited about the furniture at Sitecore because the company had contacted Reseat months ahead of its move, setting it up to easily find a home for its goods. At Sitecore’s office, she showed off how to identify the size of an Aeron chair. Each one has a set of plastic bumps hidden on its back. Two bumps indicate the most common size, a “B.”There were 16 size Bs around a wooden conference table that Sitecore had built using wood from a houseboat that was in Sausalito, Calif. In the center, a basin filled with Legos was flanked by the universal emblems of the pandemic: a bottle of Purell and a package of Clorox wipes.Ms. Susewitz said she would take everything from Sitecore’s kitchen area, except for the plates and silverware.Jason Henry for The New York TimesBefore the pandemic, Sitecore was expanding its space so rapidly that it had leased another half of a floor in its office tower. But “once the pandemic hit, it was a ghost town,” said Brad Hamilton, the company’s head of real estate and facilities.Sitecore plans to downgrade to 30 desks from 170. “We’re paying an outrageous amount of money for a floor that nobody uses,” he said.Toward the end of the office tour, Ms. Susewitz surveyed Sitecore’s empty kitchen area, outfitted with a Ping-Pong table, a Ms. Pac-Man machine and two curved, six-foot privacy coves. Ms. Susewitz said she would take everything, except for the plates and silverware.Chair influencersOne result of the furniture trading is a lot more people logging into Zoom meetings from very nice chairs — and not only in the Bay Area.In January, Gilad Rom, a software engineer in Los Angeles, decided to upgrade his work station at home. He searched Craigslist and found a seller with 500 Aeron chairs — apparently acquired from a SiriusXM office that had shifted to remote work — in Culver City, Calif.When he posted a picture of the chairs gathered in a room, their black foam arms intertwined, the reaction was explosive. Some people wanted to score their own cheap Aeron. Many more wanted to reminisce about what the empty chairs represented — corporate excess gone awry.“I think it brought back a lot of memories,” Mr. Rom, 43, said. “Flashbacks from 2008 and 2000.”The seller, a secondhand furniture shop called Wannasofa, was so overwhelmed with calls after Mr. Rom’s tweet that the store gave him a 25 percent discount. “Apparently I’m a chair influencer now,” he said.The reaction also gave him an idea.“Maybe I should build an app that helps people find cheap luxury furniture,” he said. “Maybe there’s something there.” More

  • 138 Shares189 Views

    in Economy

    Chip Makers Turn Cutthroat in Fight for Share of Federal Money

    by

    Semiconductor companies, which united to get the CHIPS Act approved, have set off a lobbying frenzy as they argue for more cash than their competitors.WASHINGTON — In early January, a New York public relations firm sent an email warning about what it characterized as a threat to the federal government’s program to revitalize the U.S. semiconductor industry.The message, received by The New York Times, accused Intel, the Silicon Valley chip titan, of angling to win subsidies under the CHIPS and Science Act for new factories in Ohio and Arizona that would sit empty. Intel had said in a recent earnings call that it would build out its facilities with the expensive machinery needed to make semiconductors when demand for its chips increased.The question, the email said, was whether officials would give funding to companies that outfitted their factories from the jump “or if they will give the majority of CHIPS funding to companies like Intel.”The firm declined to name its client. But it has done work in the past for Advanced Micro Devices, Intel’s longtime rival, which has raised similar concerns about whether federal funding should go to companies that plan to build empty shells. A spokesman for AMD said it had not reviewed the email or approved the public relations firm’s efforts to lobby for or against any specific company receiving funding.“We fully support the CHIPS and Science Act and the efforts of the Biden administration to boost domestic semiconductor research and manufacturing,” the spokesman said.Rival semiconductor suppliers and their customers pulled together last year as they lobbied Congress to help shore up U.S. chip manufacturing and reduce vulnerabilities in the crucial supply chain. The push led lawmakers to approve the CHIPS Act, including $52 billion in subsidies to companies and research institutions as well as $24 billion or more in tax credits — one of the biggest infusions into a single industry in decades.President Biden with Intel’s chief executive, Patrick Gelsinger, at an Intel semiconductor facility under construction in New Albany, Ohio, in September.Pete Marovich for The New York TimesBut that unity is beginning to crack. As the Biden administration prepares to begin handing out the money, chief executives, lobbyists and lawmakers have begun jostling to make their case for funding, in public and behind closed doors.In meetings with government officials and in a public filing, Intel has called into question how much taxpayer money should go to its competitors that have offshore headquarters, arguing that American innovations and other intellectual property could be funneled out of the country.“Our I.P. is here, and that’s not insignificant,” said Allen Thompson, Intel’s vice president of U.S. government relations. “We are the U.S. champion.”The Global Race for Computer ChipsA Ramp-Up in Spending: Amid a tech cold war with China, U.S. companies have pledged nearly $200 billion for chip manufacturing projects since early 2020. But the investments have limits.Crackdown on China: The United States has been aiming to prevent China from becoming an advanced power in chips, issuing sweeping restrictions on the country’s access to advanced technology.Arizona Factory: Internal doubts are mounting at Taiwan Semiconductor Manufacturing Company, the world’s biggest maker of advanced chips, over its investment in a new factory in Phoenix.CHIPS Act: The sprawling $280 billion bill passed by U.S. lawmakers last year gives the federal government new sway over the chips industry.States, cities and universities have also gotten into the act, hoping to lure subsidies and jobs expected to be generated by manufacturing sites and new research and development.Purveyors of chips, their suppliers and the trade associations that represent them together spent $59 million on lobbying last year, according to tracking from OpenSecrets, up from $46 million in 2021 and $36 million in 2020, as they tried to ensure that Congress approved their funding.Some of those activities have now shifted to making sure companies snag the biggest portion.“Everybody wants their piece of the pie,” said Willy Shih, a management professor at Harvard Business School who follows semiconductor issues. He said it wasn’t surprising that companies would be raising tough questions about competitors, which could be helpful for the Commerce Department in setting policies.“We haven’t done something of this scale in the U.S. in a long time,” he said. “There is a lot at stake.”How the Biden administration distributes the funding in coming months could shape the future of an industry that is increasingly seen as a driver of both economic prosperity and national security. It may also influence how vulnerable the United States remains to foreign threats — particularly the possibility of a Chinese invasion of Taiwan, where more than 90 percent of the world’s advanced chips are made.Since American researchers invented the integrated circuit in the late 1950s, the U.S. manufacturing share has dwindled to around 12 percent. Most American chip companies, including AMD, focus on designing cutting-edge products while outsourcing the costly manufacturing to overseas foundries, most of which are in Asia.AMD’s chief executive, Lisa Su, at a technology trade show last month. AMD and Intel have been fierce competitors.David Becker/Getty ImagesTaiwan Semiconductor Manufacturing Company developed the foundry concept in the 1980s and dominates that market, followed by Samsung Electronics. Intel, which both designs and makes its own chips, fell behind TSMC and Samsung in manufacturing technology but has vowed to catch up and build its own foundry business to make chips for customers.The industry’s concentration has left it particularly vulnerable to supply chain disruptions. During the pandemic, shortages of lower-end “legacy” chips that are used in cars forced automakers to repeatedly close factories, sending prices soaring.The CHIPS Act aims to rectify some of these shortcomings by allocating $39 billion in grants for new or expanded U.S. factories. The Commerce Department has indicated that about two-thirds of the money will be steered toward makers of leading-edge semiconductors, a category that includes TSMC, Samsung and Intel. All three companies have already broken ground on major expansions of their U.S. facilities.The remaining third is expected to go toward legacy chips, which are heavily used in cars, appliances and military equipment.Another $11 billion of funding is expected to go toward building a handful of chip research centers around the country. Government and academic institutions in Texas, Arizona, Georgia, Indiana, Florida and Ohio have filed documents describing why they should be considered for funding. Even tiny Guam has raised its hand.One challenge for the Commerce Department will be to distribute the money widely enough across the nation to create several thriving “ecosystems” that can bring together raw materials, research and manufacturing capacity, but not undermine the effort by spreading it too thinly. With dozens of companies, universities and other players interested in snagging a share, the funding could go fast.Commerce Secretary Gina Raimondo told reporters on Wednesday that the goal was to create “at least two” new clusters of manufacturing capacity for leading-edge chips, in addition to facilities producing other kinds of semiconductors. Each cluster would employ thousands of workers and support a web of businesses supplying the raw materials and services they need.“We have very clear national security goals, which we must achieve,” Ms. Raimondo said, noting that not every chip maker will get what it wants. “I suspect there will be many disappointed companies who feel that they should have a certain amount of money, and the reality is the return on our investment here is the achievement of our national security goal. Period.”The competition has intensified as the Biden administration prepares to release the ground rules for applications next week. The grants, which can range up to $3 billion or more per project, could start going out this spring.Executives say huge spending by governments in South Korea, Taiwan, China and elsewhere has helped shape the chip industry globally. And the current U.S. policy push could again alter the market, by giving some companies advantages that allow them to edge out competitors.Most chip companies, in publicly discussing the subsidies, have stressed the common goal of bolstering U.S. production. But clear differences among them have emerged. Many are outlined in the more than 200 filings that companies, organizations, universities and others submitted to the Commerce Department last March.Beyond extolling the merits of their own manufacturing plans, some applicants made the case that rival projects deserved less funding or should face strict limits on how they operated, though few companies mentioned their competitors by name.Intel, along with other U.S.-based firms like GlobalFoundries and SkyWater Technology, expressed concerns about foreign-owned companies, including whether their U.S. factories could continue operating in the event of a crisis in their home country.Taiwan Semiconductor Manufacturing Company, which is building a factory site in Phoenix, has objected to “preferential treatment based on the location of a company’s headquarters.”Adriana Zehbrauskas for The New York TimesIntel has argued that foreign investment is welcome, but that its longtime concentration of chip design, research and manufacturing in the United States meant that it should get special consideration.But competitors argue that investing heavily in Intel could be a risky bet for the U.S. government, and some Biden administration officials have questioned whether Intel can follow through on its plans to catch up to its competitors technologically. The company has suffered from a severe drop in sales and announced on Wednesday that it would cut its stock dividend.U.S. officials have also stressed the need to support a U.S. expansion by TSMC, in part because it produces leading-edge chips crucial to the military.TSMC, which has broken ground on a $40 billion investment in two advanced factories in Arizona, countered in its filing that “preferential treatment based on the location of a company’s headquarters” would not be an effective or efficient use of U.S. money. AMD, one of TSMC’s largest customers, has advocated its U.S. expansion.AMD and Intel, both based in Santa Clara, Calif., have competed fiercely for the market for microprocessor chips.In its filing in March, AMD expressed concerns about whether certain unnamed competitors had proved that they could operate effectively as a foundry and make leading-edge chips. Intel has struggled on both counts. And AMD highlighted the risk that grant recipients would not immediately spend that money to outfit their factories with equipment.“Any facility receiving federal assistance must be operational upon completion of construction,” AMD wrote. “A facility that sits idle or is held in reserve for demand increases should immediately forfeit any federal funds.”Mr. Thompson of Intel declined to comment on the email. But he defended the “smart capital” strategy articulated by Patrick Gelsinger, Intel’s chief executive, which has stressed building factory shells and then investing to equip them in accordance with market demand.Intel is continuing to follow that strategy with construction projects in Arizona, New Mexico and Ohio, to ensure that its new facilities are built out “in alignment with the market,” Mr. Thompson said. But Intel has no intention of using the government money for “basically just building shells,” he said. “The goal is to ensure that we have the capacity to support our customers.”Ana Swanson reported from Washington, and Don Clark from San Francisco. More