Intel Chief Promotes Chipmaking Plan to U.S., Global Leaders
August 17, 2021
Intel chief executive Pat Gelsinger and board members met with the Biden administration to promote his company’s plan to build more semiconductor factories with subsidies from the U.S. government. Currently, Asian-owned chip factories, which receive hefty incentives, dominate chip production. There’s also an “unprecedented” global shortage of chips, which is impacting the auto and consumer appliance industries. Gelsinger was hired this year to improve the fortunes of the beleaguered Intel.
The Wall Street Journal reports that Intel “had lost its technological edge, leading to missteps in making its newest semiconductors,” and, last year, “lost its title as America’s most valuable semiconductor company to graphics-chip developer Nvidia.”
In Q2, Samsung Electronics also surpassed Intel as “the world’s top chipmaker by revenue.” Gelsinger is attempting to position Intel as “the first in line for U.S. government grants of as much as $3 billion per factory project — potentially more with a presidential signoff — from a program making its way through Congress.”
Gelsinger also hopes that the European Union can “help offset the difference in costs between setting up within the bloc as opposed to Asia,” which could be “as much as 40 percent.”
The U.S. currently accounts for a mere 12 percent of global chip manufacturing and Europe makes up 9 percent. Gelsinger “has said he would like to see the U.S. at 30 percent of global capacity within the next 10 years and Europe at 20 percent.” Once skeptical of government funding, Senator John Cornyn (R-Texas) now noted that, “China is playing a different game than we have ever seen before.”
Last year, “U.S. lawmakers put together an incentive plan … worth tens of billions of dollars to induce Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, and Samsung to build new semiconductor plants in the U.S.” Taiwanese and South Korean politicians “responded with rival subsidy plans worth tens of billions of dollars … [and] the EU then announced plans in March to spend $150 billion to develop next-generation digital industries.”
Gelsinger discussed Intel’s plans with leaders throughout Europe. He also went to Brussels, “where he presented European Commissioner Thierry Breton with a plan suggesting a modern manufacturing site with two factory modules would cost €17 billion, equivalent to roughly $20 billion,” and met with President Biden to “discuss the semiconductor supply chain and Intel’s manufacturing plans.”
Intel is also considering “a potential $30 billion deal for contract chipmaker GlobalFoundries,” whose chief executive Tom Caulfield said that, “you’re seeing now the European Union and the U.S. changing industrial policy, recognizing that it’s not what we always wanted it to be, but we will lose this on principle if we don’t change to be more globally competitive.”
In the U.S., “Intel is investing $23.5 billion in new factories in Arizona and New Mexico, and nearing completion of a $3 billion expansion in Oregon … [and] is evaluating sites in states including New York and North Carolina for a future factory complex.” Intel has also “pitched factory projects to governments in China, Singapore, Vietnam, Malaysia and India.”
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