Intel CEO Ask U.S Govt Not To Dither On $52bn Chip Industry Subsidies If It Is Serious About Regaining Domestic Chip Manufacturing Capabilities

Intel CEO Pat Gelsinger has requested U.S Congress not to delay further the passing of the CHIPS Act, which, if it becomes a law, will provide $52 billion in federal subsidies to encourage domestic semiconductor manufacturing and research (($40 billion for manufacturing and $12 billion for R&D).

A version of the act has already passed by the Senate over a year ago, but it is still stuck in Congress.

“The rest of the world is moving rapidly despite the inability of Congress to get this finished,” said Gelsinger on a panel at the Aspen Ideas Festival.

Gelsinger said that it is a pivotal moment to act for the U.S. economy, national security and geopolitics. “Please don’t dither in Congress over petty partisanship.”

Passage of the CHIPS Act and Intel’s lead decision would result in a lot more activity from global chip companies, Intel CEO said.

“I’ve talked to most of the major CEOs around the world,” he said, and his peers indicate they will consider coming to the U.S. as well if the economics are attractive. “The Asians all believe they need to put more manufacturing in the U.S. ... At this point, we view it as a domino effect,” he said.

Gelsinger warned that without funding, Intel “would end up investing a lot more in Europe as a result.” The chipmaker already plans to spend about $35 billion to expand its production in the European Union, including a new $18 billion facility in Germany.

Responding to the suggestion that there is no need for a chip giant with $75 billion in annual revenue to receive subsidies from the government, Gelsinger noted state subsidies for semiconductor chip manufacturing is a global reality. While the U.S is planning to cap subsidy for a chip plant at $3 billion, Gelsinger said that it could still be incentive enough to set up domestic plans.

If Intel builds a new plant in Europe, India, South Korea or China, the plants can be subsidized at a range of 30% to 50% (to even 70% in China), he pointed out

“That’s real dollars and it is not economically viable when everyone else in the world is seeing that reduction,” Gelsinger said. “We are not competing with TMSC or Samsung. We are competing with Taiwan and Japan and Korea.” he added.

Intel said last week that it might have to either delay the construction or scale back the scope of its proposed mega chip manufacturing fab at Ohio in the U.S.

Intel cited the failure in Congress to pass the CHIPS Act, including important chip industry subsidies of up to $52 billion.

In January this year, Intel announced that it plans to invest more than $20 billion in constructing two new leading-edge chip factories in Ohio.

The U.S chipmaker said that it is investing in these new chip manufacturing to help boost production to meet the surging demand for advanced semiconductors, powering a new generation of innovative products and serving the needs of foundry customers as part of the company’s IDM 2.0 strategy.

Spanning nearly 1,000 acres in Licking County, just outside of Columbus, the “mega-site” is envisaged to accommodate a total of eight chip factories – also known as “fabs” – as well as support operations and ecosystem partners.

Intel was planning to commence construction on the first two factories by the end of this year, and the production was expected to come online in 2025.

“Unfortunately, CHIPS Act funding has moved more slowly than we expected and we still don’t know when it will get done. It is time for Congress to act so we can move forward at the speed and scale we have long envisioned for Ohio and our other projects to help restore U.S. semiconductor manufacturing leadership and build a more resilient semiconductor supply chain,” the statement from the company further said.