Exactly.

But I'll add another observation: if the chip does become a standard,
the algorithm won't _remain_ secret.

Leaving the government with the only remaining option: to make use
of un-escrowed keys illegal. Which won't begin to bother the terrorists
and child abusers the government is so fond of referring to.

Note that the Federalist papers stress _one_ reason for the right
of citizens to bear arms: to defend themselves _against_ the army.
_Our_ army.

IMHO the _primary_ purpose of private crypto is defend ourselves
_against_ the government. The odd terrorist I'm not worried about;
the goverment damages my quality of life every day.

Rob