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
That’s how chips war gonna start i guess (if not already started)
China Focuses on 3rd Generation Semiconductors in Aim for Self-Sufficiency | TechPowerUp
Should we the taxpayer stand by and let the US government subsidize every industry when they aren't competing well due to their own decisions? How is that a capitalist market?
While we are at it, let's begin subsidizing silicon mining and elemental silicon production.
Again, why should 22% of my earning be turned over to the US Government, to turn around and subsidize Intel?
Nothing more than ridiculous political lobbying to pay off Intel current capital expenditures.
The United States taxpayer shouldn't subsidize every corporation when they can't compete due to their own decisions. This erosion of market share has occurred over a decade of poor business.
Again, no-one is saying that there shouldn't be IC foundries in multiple parts of the world, the currently supply issues are proof that the current way things are done, doesn't work reliably.
There's also no issue with governments trying to entice companies over to their nation, as long as it's done above board.
However, it's unlikely that we're ever going to a foundry per country, just so every government can make "their own" chips. Why does the US have any more right than any other country to produce those chips?
I'm by no means in favour of the PRC or Taiwan being exclusive producers of whatever it might be, it's not a sensible way of doing things, but it's what many companies have allowed to happen, because they could save money by doing so.
It makes it hard to feel sorry for these companies who are now complaining about how they're no longer the market leaders and that the foreign competition is doing better than them.
You can't eat the cake and have it.
And now they whine about it...
Subsidizing Intel simply because they are US based is throwing money away. Maybe the government should appoint bureaucrats to all executive positions at Intel as well.
This is capitalist market, not a welfare state. If this was a wartime effort I would understand, but it's not. It's political lobbying.Who cares what Taiwan does? Should we spend taxpayer dollars because Taiwan does?