Intel CEO Pat Gelsinger is lobbying for a large portion of the $52 billion that the U.S. will provide in subsidies for new fab construction—and urging the U.S. to ease up on export controls that are throttling sales to China, the world’s largest semiconductor market.

Were he to not succeed in these efforts, it would amount to a “major double whammy” against Intel, an analyst told EE Times. And, another analyst asserted, the export controls unfairly zero in on Intel and other chipmakers.

“China represents 25% to 30% of [Intel’s] semiconductor exports,” Gelsinger said at the Aspen Security Forum last month. “If I have 25% or 30% less market, I need to build less factories. You can’t walk away from 25% to 30% and the fastest-growing market in the world and expect that you remain funding the R&D and the manufacturing cycle.”

His comments put on the negotiation table the $30 billion that Intel plans to invest in new facilities in Ohio, as well as other U.S. projects. U.S. jobs, the economy and even national security are at stake in the competition for chip dominance with China.

Albright Stonebridge Group’s Paul Triolo.

Intel walks a fine line with the U.S. government, said Paul Triolo, who advises global tech companies at Albright Stonebridge Group. The firm doesn’t include Intel as a client.

“On one hand, they [Intel] are being asked to invest billions in advanced fab construction in the U.S. to onshore manufacturing, investing at least $30 billion before they generate any revenue in the U.S. from these new facilities,” he said. “On the other, the U.S. Department of Commerce is prepared to slap further controls on Intel’s ability to ship commodity semiconductors to China that could significantly cut into its already-reduced revenue from the China market—in essence, a major double whammy.”

Intel wants more than foreign rivals

Gelsinger argues that Intel deserves more U.S. CHIPS Act money than foreign rivals like Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung, which are also bidding for the subsidies to be awarded this year.

“Since the Act was underway, five major projects have been announced—my Arizona project, my Ohio project, TSMC in Arizona, Samsung in Texas and Micron in New York—plus multiple small projects,” Gelsinger said. “I just saw [U.S. Department of Commerce Secretary] Gina Raimondo on Monday [July 24].”

Commerce wields a carrot and a stick, as it will disburse CHIPS Act subsidies later this year while also deciding export controls that have hurt the sales of Intel, TSMC and Samsung, which all rely heavily on China for revenue while also competing for U.S. subsidy money.

“If Samsung and TSMC and others are building in the U.S., we should be happy about that,” Gelsinger said. “All of my essential R&D is done here. Most of their work is done overseas. We [Intel] should benefit more.”

TSMC committed to Taiwan

TSMC on July 28 said it is building a new R&D center in Taiwan that will keep the world’s most advanced semiconductor technology on the island. For decades, TSMC and the Taiwanese government have cooperated to make the island an indispensable chip supplier to the world. Intel and Samsung for years have been trying to catch up with TSMC in process technology.

TSMC CEO C.C. Wei said at the event that the company aims to “keep its roots” in Taiwan. The R&D center will develop 2-nm technology and conduct research into new materials and transistor structures.

“It’s been called the Silicon Shield,” Gelsinger said of Taiwan’s strategy to fend off a potential attack by China, which considers Taiwan a breakaway province.

Taiwan’s security is a conundrum for the U.S.

“We have a massive national security vulnerability because of our dependence on Asia,” Raimondo said at a separate event held by the American Enterprise Institute (AEI) on July 26. “Taiwan, principally.”

Walking fine lines

The Intel CEO said he has been lobbying on the geopolitics of chips in Washington along with the CEOs of U.S. chipmakers Qualcomm and Nvidia.

“We had meetings with Raimondo, [Secretary of State Anthony] Blinken and [National Security Adviser] Jake Sullivan when we were together in D.C. on Monday,” Gelsinger said. “We agree on the priority of national security, but as Jake Sullivan said, ‘High walls, small garden.’”

Raimondo, speaking on potential new export controls, described the fine line she also walks.

Her department is likely to announce new export controls as early as this month, Emily Weinstein, an analyst with the Center for Security and Emerging Technology, said at the AEI event.

“There are certain technologies where the U.S. is ahead of China; China is very clear about this,” Raimondo said. “If they were able to get this technology, including certain advanced AI chips, they could use it in their military against us.”

Still, the U.S. should not make restrictions so broad that U.S. companies lose sales while China finds substitutes for U.S. products in other countries, she said.

“What we’re trying to do is be narrowly defined, work with our allies around these chokepoint technologies, which will deny some revenue to American companies,” she added. “But we think it’s worth it.”

The U.S. aims to keep China as many technology generations as possible behind the U.S. in a semiconductor competition that cuts China’s access to chipmaking tools, materials and high-performance GPUs.

Gelsinger took details of the restrictions to task.

“Today, we have over 1,000 companies on the Entity List, many of which have nothing to do with national security and nothing to do with security concerns in China,” he said.

The U.S. restrictions unfairly coerce chipmakers while failing to encourage much larger U.S. tech giants to support the semiconductor-reshoring goals of the CHIPS Act, Mehdi Hosseini, senior equity research analyst with Susquehanna International Group, told EE Times.

“We should ask semicon companies, the hardware supply chain and even OEMs [from] Apple to Amazon to Microsoft to think about national security and making chips in the U.S.,” he said. “Only a collective action where all the beneficiaries are participating by committing capital can we safeguard U.S. national interest/security while fostering innovation.”

By: DocMemory
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