Gelsinger: Intel should get more CHIPS Act funding than rivals

Intel should benefit more from the US government's $52 billion CHIPS Act largesse than some other companies building local chip plants because it conducts its R&D Stateside as well, according to CEO Pat Gelsinger.

Gelsinger made the remarks at the Aspen Security Forum in Colorado in July, while taking part in a discussion on the theme of semiconductors and national security. A video of the session is online here.

The boss of the chipmaker was commending the progress so far with the CHIPS Act, although pointing out that wheels were only just starting to be set in motion.

"It's just getting underway, and it's both subsidizing of manufacturing to make us competitive with Asia – it's 30 to 40 percent more expensive to do that in the US – so the CHIPS Act sort of levels the playing field to make our investments in this space competitive in the worldwide sense," Gelsinger said. "And funding also covers medium term investments in industry formations, supply chain rebuilding in the US, and also long term research."

But when asked by the host whether Intel cared about foreign semiconductor manufacturers also being able to get CHIPS Act funding to build factories on American soil, Gelsinger had this to say: "I believe if Samsung and TSMC and others are building in the US, we should be happy about that – I just want more."

He clarified that remark by adding "Because all of my essential R&D is done here, most of their R&D is done overseas, so I believe we should benefit more."

"But I do believe that if I migrate their manufacturing here as well, that's good for the US, it's good if the R&D and the manufacturing are done here, and I believe the CHIPS Act is designed to encourage that whole range of capabilities," he explained.

This conveniently overlooks the fact that Intel also has R&D facilities in other countries, of course, and the chipmaker's own website boasts that: "Israel is home to the largest development center of Intel in the world and our contribution to Intel's global technology development is significant. For example, the 7th and 8th Generation Intel Core processors were developed mainly in Israel."

Intel is also set to be the recipient of subsidies from Europe in order to build chip plants there, particularly in Germany. We look forward to Gelsinger's declaration that his company should get less funding from the European Chips Act than others because its R&D is done elsewhere.

Gelsinger said Intel had a "very audacious plan" to catch up to TSMC by 2025, at which point "we believe we are building the best transistors again and the best semiconductors in the world." He added: "we are rapidly expanding our manufacturing so that the statement about them building the majority of leading edge chips [will be] no longer true."

But the world is acutely dependent on Taiwan for semiconductor production right now, which is which is why the CHIPS Act and its investments are so critical, according to Intel's CEO, as "we need to move quickly to create more balance."

"This actually began 30 years ago. The US and EU were about 80 percent of worldwide manufacturing and Asia 20 percent. And all the leadership stuff happened here. Now, we're 20 percent here and 80 percent in Asia, and continuing to decline," he said.

However, when it came to China and Washington's efforts to contain China's own plans for expanding its semiconductor industry and technical expertise, Gelsinger neatly illustrated the US dichotomy about wanting to eat your cake and still have it.

It was put to Gelsinger that the Biden administration was exasperated by tech companies like Intel now telling it to row back on its export restrictions on technology sold to China.

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"Right now, China represents 25 to 30 percent of semiconductor exports," Gelsinger responded. "If I have 25 or 30 percent less market, I need to build less factories, right? We believe we want to maximize our exports to the world, we want to maximize selling fish, not fishing rods, across the world, including China."

"You can't walk away from 25 to 30 percent and the fastest growing market in the world and expect that you can remain funding the R&D and the manufacturing cycle that we've released. We want to maximize and right now semiconductors are the number two export to China behind the strategic category of soybeans, and there's not even a close number three," Gelsinger claimed.

Sadly, for Intel, selling high-value goods to other markets is almost certain to end in your target markets working out how to produce them for themselves, as the British textile industry discovered. ®