Tech Brew Ride Home - Wed. 09/04 – Elon Blinks In Brazil

Episode Date: September 4, 2024

SpaceX has agreed to block access to X, in Brazil, on Starlink. Looks like YubiKeys are hackable. Who is the mystery platform looking to expand AI datacenters at an historic scale? And the Catch 22 that Intel is in. They need CHIPS Act money, but can their troubles mean the CHIPS Act money shouldn’t be spent on them? Sponsors: Ramp.com/techmeme Lumen.me/ride Links: Starlink backtracks, complies with order blocking X in Brazil, says regulator (Reuters) No X in Brazil? No problem, Brazilians say. (Washington Post) Microsoft to announce ‘next phase of Copilot’ on September 16th (The Verge) YubiKeys are vulnerable to cloning attacks thanks to newly discovered side channel (ArsTechnica) Nvidia Gets DOJ Subpoena in Escalating Antitrust Probe (Bloomberg) Two AI Developers Are Plotting $125 Billion Supercomputers (The Information) Exclusive: Intel manufacturing business suffers setback as Broadcom tests disappoint (Reuters) Intel’s Money Woes Throw Biden Team’s Chip Strategy Into Turmoil (Bloomberg) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the Tech meme right home for Wednesday, September 4th, 2024. I'm Brian McCullough today. SpaceX has agreed to block access to X in Brazil on Starlink.

Looks like Ubikis are hackable. Who is the mystery platform looking to expand AI data centers at an historic scale? And the catch-22 that Intel is in, they need chipsact money, but can their troubles mean that the chips act money shouldn't be spent on them? Here's what you missed today in the world of tech. This was quick. SpaceX says it's complying with a Brazilian Supreme Court justices order to block Starlink access

to X in Brazil after that country froze some of Starlink's assets. Quoting Reuters, regardless of the illegal treatment of Starlink in freezing our assets, we are complying with the order to block access to X in Brazil's Starlink, which has more than 200,000 customers in the Latin American nation said in a post on X. On Monday, Brazil's telecom regulator Anatole said it had been informed by, Starlink that the Musk back company would not obey the justices order for all internet providers to block domestic access to X. And Anatole representative told Reuters, however, that Starlink had

backtracked and informed the regulator on Tuesday, it would conclude the blocking within hours. Anatole verified Starlink has already started to cut access to X in Brazil. In its post, Starlink said it had initiated legal proceedings in the Brazilian Supreme Court explaining the, quote, gross illegality of Moray's order that froze Starlink's finances and prevents it from conducting financial transactions in Brazil, end quote. Meanwhile, Blue Sky says that as of September 2nd, it had added over 2 million new users in the past week in the wake of this ban on X in Brazil, and I did not know this, but Brazil was once one of Twitter's biggest markets. It once dominated social media in that country, though that clout has waned a bit

since it's become X. Quoting the Washington Post, this nation of 215 million was an early and enthusiastic adopter of Twitter, the platform now known as X, once commanding its largest international market. More than 40 million Brazilians, nearly one-fifth of the population routinely took to the network to engage in heated discussions on politics or gossip over the latest episode of Big Brother Brazil. It was credited with mobilizing massive and wide-ranging protests in 2013, then helping to propel former President Bolsonaro's rise to power. Since then, X's cloud in Brazil has shrunk considerably. At last count, the social media network had an estimated 22 million Brazilian users. Survey showed Brazilians were far more likely to use WhatsApp or Instagram, even the Chinese

video sharing app Kauai, than X. In 2022, only 3% of Brazilians cited the social network as their preferred location to consume political news, the area in which Twitter was once strongest, according to a survey by the Institute for Democracy and Democritization of Communication. For a good five or ten years, Twitter was the Brazilian Public Square, said Pedro Doria, a tech columnist at the national newspaper O'Globo. It's where we had most of our conversations of consequence, but then it got less interesting and less consequential. It used to reverberate a lot, but now it is smaller and less important, end quote.

As if we don't have enough events to cover this month, pencil in yet another one. For Microsoft, September 16th at 8 a.m. Pacific, what will it be all about? Quoting The Verge. Microsoft is holding a special co-pilot event later this month that will be focused on, quote, the next phase of co-pilot innovation. Microsoft CEO, Satcha Nadella, and Vice President of AI work Jared Spataro will host the Wave 2 co-pilot event on September 16th. The event will be hosted on LinkedIn and focus on the business side of Microsoft's co-pilot offerings. I revealed in my

notepad newsletter last month that Microsoft is about to rebrand co-pilot in the most Microsoft way possible. This means that instead of copilot in Word, it will become Microsoft 365 copilot in Word alongside a rebranding of Microsoft Copilot for Microsoft 365 to Microsoft 365 Copilot, end quote. This is not good. Researchers have detailed a side channel attack, which does require around $11,000 worth of equipment, but can be used to clone all Ubikis running firmware prior to version 5.7, quoting Ars Technica. The cryptographic flaw known as a side channel resides in a small microcontroller used in a large number of other authentication. devices, including smart cards used in banking, electronic passports, and the accessing of secure areas. While the researchers have confirmed all Ubiqui 5 series models can be cloned, they haven't

tested other devices using the microcontroller, such as the SLE 78 made by Infinion and successor microcontrollers known as the Infiniinian Optiga Trust M and the Infinian Optiga TPM. The researchers suspect that any device using any of these three microcontrollers and the Infiniin cryptographic library contains the same vulnerability. UBKee maker Ubiko issued an advisory in coordination with a detailed disclosure report from Ninja Lab, the security firm that reverse engineered the Ubikee 5 series and devised the cloning attack. All Ubikis running firmware prior to versions 5.7, which was released in May, and replaces the Infiniin crypto library with a custom one, are vulnerable.

Updating key firmware on the Ubiki isn't possible. That leaves all affected Ubikis permanently vulnerable. Side channels are the result of clues left in physical manifestations such as electromagnetic emanations, data caches, or the time required to complete a task that leaks cryptographic secrets. In this case, the side channel is the amount of time taken during a mathematical calculation known as a modular inversion. The Infinian Crypto Library failed to implement a common side channel defense known as constant time as it performs modular inversion operations involving the elliptic curve digital signature algorithm. Constant time ensures

the time-sensitive cryptographic operations execute is uniform, rather than variable depending on the specific keys. More precisely, the side channel is located in the Infinean implementation of the extended Euclidean algorithm, a method for, among other things, computing the modular inverse, end quote. Sources say the Department of Justice has sent subpoenas to Nvidia and other companies, as it seeks evidence that Nvidia violated antitrust laws by making it harder to switch away from Nvidia. Quoting Bloomberg, the DOJ, which had previously delivered questionnaires to companies, is now sending legally binding requests that oblige recipients to provide information,

according to people familiar with the investigation. That takes the government a step closer to launching a formal complaint. Antitrust officials are concerned that NVIDIA is making it harder to switch to other suppliers and penalizes buyers that don't exclusively use its artificial intelligence chips, according to the people who ask not to be identified because the discussions are private. NVIDIA shares, which suffered a record-setting $279 billion route on Tuesday, fell further in late trading after Bloomberg reported on the subpoenas. Still, the stock has more than doubled this year, fueled by explosive sales growth at the Santa Clara, California-based chipmaker, end quote.

Yeah, about that. Invidia's stock fell 9.5% on Tuesday, losing that $279 billion in market value, the biggest single-day drop for a U.S. company ever, as investors soften their optimism about AI. And yet, according to the information, big tech plans. platforms are continuing to spend bigly to build out their AI footprint, which can only be good for Nvidia right? Case in point, quote, developers of artificial intelligence say they need bigger and bigger data centers to concentrate processing power so that it produces better versions of the technology. Discussions are hot and heavy about even bigger data center projects across the U.S., such as Microsoft and OpenAIs proposed $100 billion supercomputer. It is now

clear that Microsoft isn't the only company drawing up plans for what we'll call mega AI data centers, in fact, I've been speaking with a growing number of people involved in such projects. There's still a long road before mega AI data centers go from schematics to bona fide planning, which would involve securing tens of thousands of acres of land, building new power generation sources, and eventually securing enough chips and related data center equipment to build a large cluster. And last but not least, the companies first need to prove the validity of the AI scaling law idea by improving today's software with smaller clusters before they get to go ahead for bigger ones. Still, recent comments from a state official in North Dakota signaled that some companies are exploring

deals that would enable proposed new data centers to become real. During a five-hour meeting, the Public Service Commission held about data center demand last month. North Dakota Commissioner of Commerce Josh Teigen said two companies approached him and Governor Doug Bergam about building mega-AI data centers. They would initially consume around 500 to 1,000 megawatts of power with plans to scale up to five or 10 gigawatts of power over several years. These projects would be orders of magnitude bigger than any data centers in existence today. To put the scale of the plan in perspective, at the end of last year, Microsoft's global data centers for its Azure cloud computing business consumed around five gigawatts of power combined. The supercomputing projects could cost more than

$125 billion each. Tegan said, according to an audio recording of the meeting, In the meeting held at the state capital in Bismarck, Teigen did not name the entities he spoke with, but said the companies have, quote, trillion-dollar market capitalizations. That narrows down the list to about half a dozen firms in the U.S., Nvidia, Amazon, Microsoft, Google, Meta, and Apple. Elon Musk Tesla, which also develops AI previously crossed the $1 trillion valuation mark, but is now valued at around $700 billion. Not surprisingly, given the typical hush-hush nature of data center planning, spokespeople for the companies as well as T's Tegan and Bergam either declined to comment or didn't respond to requests for comment.

Microsoft seems like a likely contender, given our prior report about its discussions with OpenAI, about building a $100 billion supercomputer, North Dakota's governor Doug Bergam, incidentally, is a former Microsoft executive who sold a software company to the tech giant in 2001 for $1.1 billion. But we also know other companies such as Google and Amazon are aggressively expanding their AI computing capacity, Teagan said in the meeting that a, quote, number of corporate jets have landed in the state over the past six weeks and that, quote, things can happen pretty fast when you've got a trillion dollars, end quote. Meanwhile, things continue to go not well over at Intel. Sources are telling Reuters that Intel's contract manufacturing business, the whole strategy they've been leaning into to turn things around, has suffered a setback after tests with chipmaker Broadcom using Intel's advanced 18A chipmaking process, failed. quote, the tests conducted by Broadcom involved sending silicon wafers, the foot-wide disks on which chips are printed through Intel's most advanced manufacturing process known as 18A, the sources said.

Broadcom received the wafers back from Intel last month. After its engineers and executive studied the results, the company concluded the manufacturing process is not yet viable to move to high-volume production. Reuters could not determine the current relationship between Broadcom and Intel or whether Broadcom had decided to walk away from a potential manufacturing deal. Intel's contract manufacturing business was launched in 2021 as a key part of Chief Executive Pat Gelsinger's turnaround strategy. Broadcom is not a household name, but makes crucial networking gear and radio chips that helped generate $28 billion in overall chip sales in its last fiscal year. It has benefited from the boom in spending on artificial intelligence hardware and JP Morgan analyst Harlan Sir estimated it will bank $11 to $12 billion from AI this year, up from $4 billion last year. Typically fabricating an advanced chip requires more than a thousand separate steps inside a chip factory or fab, and takes roughly three months to complete. Production success is determined by the number of working chips on each silicon wafer. Achieving a substantial yield is crucial to producing the tens of thousands or hundreds of thousands of wafers

demanded by big chip designers. Broadcom's engineers had concerns with the viability of the process, the sources said. Typically, that refers to the number of defects on each wafer, or the quality of the chips fabricated, end quote. Now, there is another angle to this. You know how with the Chips Act, the Biden administration was giving out tons of money to stimulate onshore chip development. They made a big bet on Intel,

giving them a lot of that money, because, you know, Intel was basically the big name left in U.S. chip manufacturing. But given Intel's troubles, is that whole strategy in trouble? is betting on Intel now a bad idea. Conversely, if Intel can't secure more of that government money, could that precipitate a sort of death spiral for Intel? Quoting Bloomberg, five months after the president traveled to Arizona to unveil a potential $20 billion package of incentives alongside

Chief Executive Officer Pat Gelsinger, there are growing questions around when or if Intel will get its hands on that money. Intel's woes may also jeopardize the government's ability to reach its policy goals, which include establishing a secure supply of cutting-edge chips for the Pentagon and making a fifth of the world's advanced processors by 2030. Intel is mired in a sales slump worse than anticipated and hemorrhaging cash, forcing its board to consider increasingly drastic actions, including possibly splitting off its manufacturing division or pairing back global factory plans. Bloomberg reported this week. That threatens to further complicate its quest for government funding at a time when Intel desperately needs the help. The Silicon Valley Company is supposed to

receive $8.5 billion in grants and $11 billion in loans from the 2022 Chips and Science Act, but only if the chipmaker meets key milestones, and after significant due diligence. That process, which applies to all Chips Act winners, has been clear from the outset and aims to ensure that companies only get taxpayer dollars once they've actually delivered on their promises. Intel, like other potential recipients, hasn't received any money yet. In ongoing negotiations, Intel has grown frustrated with what it sees as the government dragging its feet and has urged officials to release funding faster, according to people familiar with the matter. Still, the company has resisted sharing certain information requested by U.S. officials who are seeking

to vet the viability of Intel's manufacturing roadmap, said the people who asked not to be identified because the talks are private. Intel will evaluate its next steps at a board meeting in September, according to people familiar with the matter. If the company lowers the ambitions of its U.S. projects, the people said its subsidy package would almost certainly change too. The corporate turmoil risks turning a landmark public-private partnership into a political liability. During his March trip to Chandler, Arizona, President Joe Biden announced that Intel would get the largest award from the Chips Act, which earmarked a total of $39 billion in grants, plus billions more in loans and tax breaks to boost domestic manufacturing of critical electronic components. The watershed bipartisan law has seen some substantial success helping catalyze $400 billion and announced investments from industry leaders like Taiwan's semiconductor manufacturing company,

and Samsung Electronics. The White House is confident in those commitments, spokesperson Robin Patterson said in a statement and will continue working to achieve the program's national and economic security aims. Around a quarter of the total private sector pledge amount comes from Intel, which is also the sole intended beneficiary of a $3.5 billion program to make chips for defense and intelligence purposes. That makes its factory plans crucial to the broader Chips Act effort, end quote. Nothing more for you today. Talk to you tomorrow.