What do you do when the chips are down?
Samsung warned that chip demand will weaken if the global economy downturns. Intel also reported disastrous quarterly results this week highlighting operational challenges and managerial missteps. Undeterred, among a wave of governments seeking to build domestic manufacturing capacity, the US Congress passed the CHIPS Act providing about $53 billion in government subsidies as well as $24 billion in tax credits for U.S. production of semiconductors, and $200 billion for related scientific research. The industry sector has long been the target of government intervention, but we are entering a new era, where innovation and competition in semiconductors are not driven by globalization and economic efficiency but national security tensions and control over supply chains. Thus the potential for dramatic economic distortions and, ultimately, additional costs reflected in everything which uses semiconductors as an input.
China to classify companies based on “sensitivity of data”
As per the Financial Times, China is preparing a system to sort US-listed Chinese companies into groups based on the sensitivity of the data they hold. Chinese companies would be divided into three broad categories: companies handling non-sensitive data, those with sensitive data and others with “secretive” data. The move comes after months of stalled negotiations between Beijing and Washington over compliance of Chinese companies with US rules that require providing regulators full access to audit records of public companies. Under the tiered scheme, “low-risk” data companies could make their audit records accessible to the Public Company Accounting and Oversight Board (PCAB), while companies handling secretive data would have to delist. As per the report, China is also considering whether “companies in the “sensitive data” category could restructure their operations to become compliant, including by outsourcing the information to a third party.” It remains to be seen if the new classification system will help the two countries reach an agreement on the treatment of listed Chinese companies but China’s concession will improve the chances.
Google kicks 3rd party cookies down the road, again
On Wednesday, Google announced it was pushing back its plan to drop third-party cookies from its Chrome browser until 2H 2024. Its Privacy Sandbox initiative is developing “privacy-preserving alternatives to third-party cookies and other forms of cross-site tracking” that would allow market dominating Chrome to be privacy competitive with other browsers while preserving targeted digital advertising capability and website functionality. While the firm has delayed its effort several times, the public policy writing is on the wall. Passed or proposed privacy legislation in various jurisdictions (EU, China, United States) now bans outright the building of profiles across sites based on sensitive data, and makes the practice of targeted advertising more transparent by requiring opt out for users, etc.
India reconsidering data localization?
India’s Ministry of Electronics and Information Technology (MeitY) is considering relaxing data localization requirements in the draft Data Protection Bill. Under the draft Bill, entities dealing with users’ personal data are mandated to store a copy of such data within India and the transfer of undefined “critical” personal data is prohibited. As per a report in the Indian Express after receiving “hundreds of letters from start-ups” raising concerns that the existing data localization requirements are too “compliance intensive” and could hamper ease of doing business, MeitY is thinking about diluting these provisions. The official said lawmakers are looking into drafting changes for start-ups as it does not want to “stifle innovation” and “does not want to create unnecessary hurdles.” India’s proposed data protection law has been a long time in the making. The first draft appeared in 2018 and was followed by a revised draft, the Personal Data Protection Bill (PDP Bill) in 2019. Marked by controversies, the draft PDP Bill was referred to a Joint Parliamentary Committee composed of members of both Houses of the Parliament. The Committee presented its report consisting of the overarching recommendations on the PDPB and a revised draft of the PDPB, referred to as the Data Protection Bill, to the Parliament on 21 December, 2021.