Thursday, December 9th 2021
Intel CEO Writes Opinion Piece on CNN Asking For Government Support
Not content with his speech at Fortune Brainstorm Tech conference—Intel's CEO—Pat Gelsinger has now written an opinion piece on CNN where he's telling the US congress that it must pass the CHIPS for America Act. It's quite bold for a CEO of any company to make such demands, least not for one that has been less than a year in the position.
The CHIPS Act involves US$52 billion earmarked for chip makers who are willing to produce chips on US soil, although as we already know, Gelsinger wants the bulk of that to go to US companies. To try and win over the House, his opinion piece on CNN is trying to win over the hearts and minds of the US senators by pitching all the positive things that will happen if Intel gets more money than its competitors.
The first selling point is a bit ridiculous, as he claims that each person that is hired by Intel, creates up to another 13 American jobs, although all these jobs are apparently in the services and supply business at other companies, not at Intel. This is supposedly because when Intel builds a fab, it's like building a small city, so in other words, if you build it, they will come seems to be the reasoning here.
The second argument is about how it's not profitable for US companies to manufacture semiconductors domestically, which again seems like a very odd reasoning, since if that was true, how come Intel is still in business, considering they're the largest semiconductor manufacturer in the US. Someone at Intel has worked out that US foundries have a 30 percent cost disadvantage versus Asian based foundries, which may or may not be true. Regardless, he goes on to further state that the US has gone from making 37 percent to only 12 percent of all semiconductors in the world from 1990 to 2020, with Europe dropping from 44 percent to a mere 9 percent in the same time period. As such, the US government should step up and help balance things, if for no other reason than the fact that the EU has agreed on its own Chips Act.
Gelsinger also seems to be upset that the PRC is planning to invest US$150 billion in its local semiconductor industry over an unspecified time period. He seems to have missed the fact that the PRC is investing more heavily than initially planned due to the various US trade embargos that are in place, which makes it impossible for local companies to manufacture semiconductors in other countries. Even Intel itself has fabs in the PRC and other nations as well, but this is apparently of no importance when asking the government for money.
The only really valid point in his opinion piece is that the current supply chains aren't working when there's a big hiccup and this should be the real reason why semiconductor manufacturing should be spread out globally, as almost everything relies on some form of semiconductors these days. However, this seems more of an issue where various governments should try to win over the semiconductor manufacturers to open fabs in their countries, rather than the US government handing over a bunch of cash to Intel, which isn't likely to change the current situation very much, as Intel is the one company that seems to have the leas supply issues.
As a side note, 90 year old TSMC founder Morris Chang mentioned that Gelsinger is too old to be likely to be able to see the changes he's put in motion at Intel through, due to the fact that Intel has a mandatory retirement age of 65, with Gelsinger already being 60. Time will tell how things play out, but five years isn't a lot of time in the grand scheme of things.
Sources:
CNN, Taiwan News
The CHIPS Act involves US$52 billion earmarked for chip makers who are willing to produce chips on US soil, although as we already know, Gelsinger wants the bulk of that to go to US companies. To try and win over the House, his opinion piece on CNN is trying to win over the hearts and minds of the US senators by pitching all the positive things that will happen if Intel gets more money than its competitors.
The second argument is about how it's not profitable for US companies to manufacture semiconductors domestically, which again seems like a very odd reasoning, since if that was true, how come Intel is still in business, considering they're the largest semiconductor manufacturer in the US. Someone at Intel has worked out that US foundries have a 30 percent cost disadvantage versus Asian based foundries, which may or may not be true. Regardless, he goes on to further state that the US has gone from making 37 percent to only 12 percent of all semiconductors in the world from 1990 to 2020, with Europe dropping from 44 percent to a mere 9 percent in the same time period. As such, the US government should step up and help balance things, if for no other reason than the fact that the EU has agreed on its own Chips Act.
Gelsinger also seems to be upset that the PRC is planning to invest US$150 billion in its local semiconductor industry over an unspecified time period. He seems to have missed the fact that the PRC is investing more heavily than initially planned due to the various US trade embargos that are in place, which makes it impossible for local companies to manufacture semiconductors in other countries. Even Intel itself has fabs in the PRC and other nations as well, but this is apparently of no importance when asking the government for money.
The only really valid point in his opinion piece is that the current supply chains aren't working when there's a big hiccup and this should be the real reason why semiconductor manufacturing should be spread out globally, as almost everything relies on some form of semiconductors these days. However, this seems more of an issue where various governments should try to win over the semiconductor manufacturers to open fabs in their countries, rather than the US government handing over a bunch of cash to Intel, which isn't likely to change the current situation very much, as Intel is the one company that seems to have the leas supply issues.
As a side note, 90 year old TSMC founder Morris Chang mentioned that Gelsinger is too old to be likely to be able to see the changes he's put in motion at Intel through, due to the fact that Intel has a mandatory retirement age of 65, with Gelsinger already being 60. Time will tell how things play out, but five years isn't a lot of time in the grand scheme of things.
89 Comments on Intel CEO Writes Opinion Piece on CNN Asking For Government Support
EDIT:I don't think he has missed anything, it was the US government that has created this situation, thus the US governement should help its own local industries in facing the consequences of the trade wars. Incidentally Intel wanted to increase production in China and the White House stopped them. Some kind of reparation is in order.
I'm also not sure how this is speaking ill of someone, he simply stated that five years isn't likely to be enough time to transform Intel into whatever Gelsinger has in mind.
This is an Intel corporate issue that could easily be resolved if they change their mandatory retirement age.
TSMC is selling their FABs out. Why doesn't Intel do the same? AMD already went through all of this, went on the verge of bankruptcy, sold their fabs, and went fabless. Intel needs to decide what they want to do.
It's tactless at best and it's really kind of silly when Intel wants to make certain products at TSCM in Taiwan.
As for the rest of it, if this is his way of trying to convince US politicians, then that's up to him, but it doesn't look like the smartest plan to get money from the government.Apparently both the Democrats and Republicans are largely in favour of the CHIPS Act, so it might not matter which way you vote.The longer term plan seems to be for Intel to start their own foundry business and produce chips for third parties. However, that's not something you do overnight, especially when the tools for designing chips on your nodes aren't available to your potential customers in the same way they are for customers of TSMC, Samsung, UMC of GloFo.
TSMC aren't selling any fabs, as that's their bread and butter, they don't actually have a product of their own, they offer a service to all the fabless chip makers.
Most of the semi industry in China is state sponsored / owned, in particular SMIC.
It seems to me a lot of people from China and Taiwan on this thread are upset that maybe Intel and a few others will get some state help to bring semi manufacturing back into the US and EU.
It's notable that while that view is probably beneficial to Taiwan and China, it probably is not beneficial to the US or EU.
The longer-term plan is fine, but I don't think American tax payers need to subsidize anything for them.
First and foremost, shouldn't the most money go to the company that is willing to invest the most into new foundries on US soil in this instance?
If that is Intel, then there's no problem, but asking for money without even saying what it will be used for, seems like a cash grab.
Normally when anti-competitive practices are conducted by foreign competitors, their products are tariffed to level the playing field. Why isn't this being done to Taiwan and China's products? That type of thing is usually only allowed in 'developing' countries not 'developed' countries.
Most of the CHIPS act is to provide incentives and support in building new fabs. Are you telling us Taiwan didn't do that?
The issue isn't the fact that the US government wants to give money to companies to build more fabs, the issue is that Pat is asking to be given more money, because reasons.
What makes Intel deserve more money than any other semiconductor company that wants to build a semiconductor fab on US soil?
As for the PRC, well, neither you nor I have any say in what they do and the Party seems to have their hands, fingers, feet and toes shoved into just about everything that goes on in that place, so don't expect things to change there.
And if a government want to give tax incentives to grow a certain industry, what's technically wrong with that? It's not like Taiwan in this case, is propping up TSMC, it's more likely the other way around.
If I'm not mistaken, both local and national US government organisations are giving tax incentives to win over businesses all the time.Intel claim that is what they'll be doing at some point in the future.
www.eetimes.com/with-chips-act-us-risks-building-a-white-elephant/
He wants the bulk of the funds to go to US companies. Why wouldn't it? It's our tax dollars. How much has Taiwan subsidized Japanese, EU, or US companies? Zero? Did that bother you?
I'm not expecting some foreign country to subsidize US companies, but it is rather bizarre to see someone from Taiwan expecting the US will subsidize Taiwanese companies.
You are really starting to stray into a very deceptive / dishonest arguments.Then why would you complain when the US might maybe do it? Maybe start posting articles about how bad it is when China / Taiwan / Korea etc etc. use state funding to subsidize their industries?After 35 years of being propped up, yes TSMC is giving them a return now. History and context matters.That is mostly local state level incentives, typically they give low interest loans or don't hit them with property taxes for X number of years. That's not the same as Federal funding and infrastructure build-out, and states don't set corporate tax rates.
In point of fact, TSMC is a benefactor of this already as are many foreign companies like Toyota and Samsung. It's something any company that builds in the US will typically get - they put states in competition with each other to provide the best deal, regardless of what country they are for. That's a red herring as it is totally separate and can \ will happen anyway regardless of what happens with CHIPS act.
pretty funny this is going on CNN after that news broke
and I apparently learned it is legal to have a mandatory retirement age in the USA? I never knew that could be legal since it sounds like the definition of "ageism"