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
There was a lot of technical hurdles with that node, 2 years ahead of TSMC back in 2016.
They had very aggressive technical goals to meet, all the while using a new-to-them Cobalt material to help with their sub-10 process.
Lets try to read before writing something nonconstructive and just downright incorrect in the forums.
www.eetimes.com/intels-10nm-node-past-present-and-future/
subsidytracker.goodjobsfirst.org/prog.php?parent=intel&order=sub_year&sort=desc
The only thing that matters is profit. This time Intel just forgot to stop licking their own balls.
What's next? Intel CEO asks Apple to reduce order quotas to leave space for them too?
Imagine begging to be subsided because you preferred to not invest in R&D for a decade.
"Agree that the playing field isn't level. Asian countries heavily subsidize their companies, while also relying on US security, real or imagined, to protect them. US and the rest of the world needs domestic options. If US now has to subsidize semicon, then the government must have a say in:
1) Executive compensation, who sits on the board, how much anyone is paid at that level
2) Stock buybacks, dividends, and all manner of accounting
3) Where $ is spent, and on what
4) Retail Prices
5) and maybe a whole bunch of other things.
This can't be a "just give us money, we will handle it" affair, that won't work. They will just turn around and use it to pay out big bonuses, engage in market manipulation through stock purchases and other machinations, and/or squander it."
He is asking that the CHIPS act be for US companies, not foreign ones.
The choice is really between the subsidies going to US companies, including HP GloFlo Micron and On Semi to name a few.
The alternative is that US citizens tax dollars wind up going to fund other companies like TSMC, which itself has already been heavily funded and in fact started by Taiwan's government.
Intel has not been competing against TSMC, it's been competing against TSMC and the government of Taiwan.
The US really should not be funding these types of entities with tax dollars.
www.scmp.com/tech/big-tech/article/3088207/chip-maker-tsmc-scores-subsidies-picks-site-us12-billion-us-plant
And here Japan is helping fund TSMCs research facilities :
asia.nikkei.com/Business/Tech/Semiconductors/Japan-allocates-5.2bn-to-fund-chip-plants-by-TSMC-and-others
While this is old, it details how UMC and TSMC have been funded and in fact formed by Taiwan's government from the beginning.
Taiwan as a nation is focused on this one industry and as a result, has come to dominate it. This goes all the way back to the 1970s.
www.nap.edu/read/10677/chapter/9#160
With a stronger US TSMC presence; esp. one being a bleeding edge fab, that keeps some of the newest Node developments in the US, and with more GloFo fabs in the US that are running newer nodes, it adds yet another foundry rival to Intel and TSMC (among those producing modern nodes).
Intel frankly has more than enough money to invest on themselves; they don't need much of a handout, if at all.
I guess you could say it's their cashback system to loyal partners.OnSemi, TI and a few others should most likely be involved as well, considering they're key chip makers for the automotive industry, plus both companies already own fairly advanced foundries. However, $52 billion is only going to get you so far...Who? The thing is, none of the other companies that seemingly will be able to get a share of this money, are writing opinion pieces on CNN or are trying to make sure they get the most attention, so they can get the biggest share of the money on offer.
It's also a bit curious that GloFo is counted as a US company, as they're not incorporated in the US and most of their fabs are outside of the US.
Everyone seemingly forgot about Samsung as well... Is it a matter of Korea good, Taiwan bad now?
"AMD President and CEO Lisa Su calls the channel an ‘incredibly important part’ of the chipmaker’s strategy, setting in motion a plan to double MDF, channel staff and funded positions for top solution provider partners."
www.crn.com/news/components-peripherals/lisa-su-s-channel-awakening-why-partners-could-be-amd-s-largest-growth-opportunity-It's about US tax dollars funding US Semiconductor manufacturers, not foreign ones. Samsung can be subsidized by Korea if they so wish (assuming they aren't already), just as TSMC is subsidized by Taiwan.
Channel MDF and MDF to the motherboard and system makers isn't exactly an apples to apples comparison now though, is it? The channel doesn't make products.
And besides, AMD has nothing to do with the US funded CHIPS Act, so I don't know why you brought them up other than to try to enlist brand loyalists who don't know the difference between TSMC and AMD.
The US government should impose heavier tariffs on imported tech products, it will eventually even the playing field for manufacturing to come back to the US
There is a huge labor advantage that creates a drain on the US economy when we are literally borrowing money from Asia to buy Asian made goods for and from companies that only care about profit while exploiting humans and the enviroment of other countries.
It also creates a necessity of a global supply chain that can be broken and damage countries reliant on those products.
The idea is... why Intel is better than Apple that is totally fabless and simply doesn't care about anything as world revolves around them not vice versa and nothing indicates they are worried about anything because of their large and faithful user base and closed ecosystem, now truly one with their own in house design silicon.
I would not argue if someone would mention Samsung, as it is very government(read bribery) backed and deep even into military as it does produce a lot more things ranging dishwashers to tanks and are not comparable to Intel really, because the latter become stagnant and lost their 3 years tech leadership, they only thing they had as trump card really, because any other product has failed to take off for them besides the old venerable x86 derivates. Event their network division has lost their premium knack for top end products and some other parties deliver the same cheaper and last products are more errata filled than usual. Itanium huge flop, Larrabee flop, Optane 99% flop, you expect new GPU's will be OK? I am highly skeptic considering Raja is at the helm.
They want market crippling, I am not talking about AMD here as their direct x86 competition, but Qualcomm and Apple that are in the same sandbox and kinda doesn't play the drama as this CEO lately does.
It has nothing to do with geopolitics it is all greed, they lost the edge to their own US competitors that utilized the market opportunities and try to stir up things and hid the obvious fact, they dropped the ball hard and lost the edge. It is all circus play, nobody cares for patriotism, US inhouse manufacturing etc there, it is all money talk...
Another big part of that bill is having something akin to strategic reserves. So, if you have a big shortage like right now, you can strongarm companies to shift priorities. I've briefly glanced at the bill, and as far as I understand they don't care which company moves production to US, they only care about it being manufactured stateside. Intel is a bit sweaty, because that grant will prioritize the company that's willing to invest more of their own capital to make that happen. I can't find a link, but just a few weeks ago I stumbled upon one of the interveiws with TSMC exec about their plans on US manufacturing, and he said something along the lines: "Intel is investing a lot of money, but Intel is not investing enough". Pat is definitely getting saltier, cause their $44bn plan preemtively relied on these incentives, before there was any competition in the one-horse-race.
I might be very-very wrong [again], but I think this grand project is not as much about "Made in USA", but more about "Made for USA".
Couldn't read the whole 2300-sumptin' pages, but it's full of interesting things (especially Sec. 3213).
To be honest though, the world's reliance on China is outright scary, even more so given the fact they're an oppressive regime based on one of the world's most destructive ideologies, obviously going for number one economy fairly soon. I, however, fail to see how handing money to Intel could help anyone but Intel.
Capitalism has helped more poor countries get their economies started and provided more humanitarian benefits by nature of altruistic investment than anything else, but when companies get that large and their eye is only on the bottom line they need to be smacked around some to prevent continued abuse, or they need to find a new manufacturing home to invest in. Intel needs land, water, shipping, some skilled workers, and political stability. Asia is headed for violence and political upheaval, then again so is the USA.