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
The point is quit making a non political article political. I actually worked in the press, this articles still up, and I have an allergy for BS.
Plus, Patt Gelsinger never mentions subsiding Intel specifically but US Companies, which of course includes Intel, but it's a list far greater than that.He is not lying about any of that. Taiwan is in a geopolitically unstable situation. Unless you are saying that there's no conflict there.
And they already produce the most out of any country So it wouldn't make sense even if we assume that there were no conflicts there.
Chips are also a strategic asset. So it would be like building your weapon factories in another country, where your (potential) enemy can strike it easily.You are being dishonest, he never asked for money specifically for Intel.Dishonest. Pat said that the money should go to US companies.
Which there are more than Intel, like Micron, ON Semiconductor, Texas Instruments, Applied Materials and etc.
Part of the rationale for that is logically because investments should prioritize national companies, as that's where you get the most benefits, due to a bigger portion of the money staying in your country.
You do projects with foreign companies when their conditions are just too much better than nationals or you have no national alternative.Then what's wrong with what he is saying?
I believe that countries should be able to invest whenever they want, giving priorities to their local companies as those are their own citizens.
I reiterate that he doesn't say that the money should go to Intel as you said multiple times. He gave an example about Intel jobs and the mega fabs.
You might disagree, but this is Intel trying to get as much money out of this as possible and nothing else.
As you implied several times that he want is the lion share of this to go to Intel.
Honestly, if we take a look in the CNN opinion piece itself(which you didn't link), we see that it's a bit different from what you describe.Pat Gelsinger actually linked a report/research, so by saying it's ridiculous, you would have to dispute the claims made there.
The claims do make some sense, as if Intel is building a fab, they will need an increased amount of supplies so the suppliers will have to hire more people. The 'small city' comment is probably because it's preferable for those suppliers to build next to the fab.
It's the same logic/reasoning of how something like investing in railways or whatever.
In addition, you never clarify on "why it's a bit ridiculous". You are just telling the readers to feel that way and hope they don't think on it too deeply.The same thing as the first one, especially thisThat's not true. Pat Gelsinger is talking about(and he has linked) a report from that SIA(the semiconductors association founded in 2020) made together with a consulting group.
Have a link to it:
www.semiconductors.org/wp-content/uploads/2020/09/Government-Incentives-and-US-Competitiveness-in-Semiconductor-Manufacturing-Sep-2020.pdf
Secondly is that yourself said that Intel has fabs in other regions too and note that it's a competitive advantage, even if it's true, it doesn't mean that Intel would go bankrupt or leave the business as you are implying.
About the EU Chip Act, he was just giving an example of how Europe and other countries are reacting to the situation. Note that he mentions China in the same paragraph.No, this is all that he said about ChinaAt no other point, does he say anything that would indicate that he is upset or so. In addition, the fact that his numbers are outdated and that China has invested more than that does nothing to the reasoning that he presented. You might have a point if the PRC decided to greatly reduce the investment or stop it altogether, but they didn't.
And etc, etc. I am not going to sit here all day and point everything wrong that you said in this editorial(which wasn't marked as one when it was posted).
Right, so we're supposed to trust Intel research about how great Intel is att giving non Intel people jobs in unrelated businesses? Sure, whatever...
Railways in the 1800's are nothing like Intel building a fab in the 2020's, please...
So a US based industry association wouldn't fiddle the numbers to suit the situation? I mean, the same would apply for any industry association in any country, it's their job to create reports that tilt one way or another.
It's also funny that it's always a disadvantage when it affects a company in a negative way, but it's perfectly fine for the same company to take advantage of these low cost nations when it suits them. We're back at the cake and eating it or having it.
I never implied that Intel would go bankrupt, I have no idea where you pulled that one from. Have you looked at how many business units Intel has sold off over the past few years? Successful business units mind you. So they are clearly very good at leaving various businesses by their own accord.
The upset part is fairly obvious, since the US government is "only" providing $52 billion, whereas the PRC government is investing almost 3x as much. I think that would make most people in a similar situation upset and wonder why can't my government do the same.
Again, you accuse me of things, yet come up with reasoning that either is false, or links to information that is anything but facts, but hey, whatever, I don't need to justify myself to you at the end of the day. If you have a problem, take it up with management, at the end of the day, they're the ones that decide about the content here. You could always ask for your subscription money back...
If a fab is built with tax dollars then it should be an independent fab and profits should go back into the country, perhaps education system so can keep advancing the fab?
maybe more competition is what Intel really needs?
I have never said that the research is right or wrong. But that you are misrepresenting Pat Gelsinger.And? That's just an analogy of large investments being able to bring more jobs than just the direct one itself.I am not saying that they are right or wrong.
But, it's certainly not "Someone at Intel has worked out that US foundries have a 30 percent cost disadvantage versus Asian based foundries". Which is what you wrote.
You are also just saying that they are wrong because they have an agenda. They certainly have, but it doesn't mean that they are wrong.
I don't know about the specific numbers, but I wouldn't be surprised if there were cost advantages due to those subsidies, incentives, tax breaks and etc etc.
China has been investing in this for a long time.
But this is beside the point.Right. I am not saying that the company is morally justified or anything. They can be a shitty company and your opinion piece also be similarly bad too.SeeYou are implying that if that was true(the cost advantage), then how is Intel still in business? As they are the biggest US manufacturer.
For me, the implication is that they would be bankrupt or outside of the business.
Otherwise, what are you saying there? Literally, nothing since if there isn't such implication then the phrase has no meaning.That's your complete conjecture. Even if he is upset about it,No, I am just presenting information that was in the CNN opinion piece, but that you ignored instead rephrasing it in a way that's way worse.
And lol at the 'take it up to the management.
It's better late than never, I guess. Passing TheLostSwede's anti-Intel and implicitly pro-TSMC
ramblingopinion piece as news was a tad too much.It's been already mentioned in some comments buried in the previous pages, but there's pretty much a large consensus in favour of the CHIPS Act in the Congress, so tax dollars are going to private companies no matter what. Gelsinger in his opinion piece implied that it should be used to lift American companies, Intel is incorporated in Delaware, rather than simply focusing on the increasing of the US-based production of semiconductors. The logic is that Asian based companies, including TSMC and Samsung, have for decades received support from their state's governments, TSMC was actually co-founded by the Taiwanese government, so it's time for the USA to draw its own industrial policy in order to support its domestic firms. Of course it's pure lobbying, but it's at best disingenuous to imply that only Intel begs for money and protection from its national government because they're pushing for it publicly, while the rest of the industry, in particular the Asian part of the industry, hasn't ever taken a single penny.EDIT: At any rate we could end up with less competition, not more, if nothing is done from both the private and public sector, TSMC already holds something close to a monopoly in the newest production nodes. What should be done, no matter the choice on who should receive the money, is making sure that those tax dollars are matched with investments from the private sector and they're not used to save money that is used for other purposes (like buybacks).
Within WTO zone, Libertarian small government ideals doesn't work when a major country like China doesn't believe it. Blame Bush/Clintons and CCP apologists in the US that argued for the failed "open China" regime change experiment.
From medium.com/discourse/tsmc-the-taiwanese-titan-be0774531bb
In the 1970s and 1980s, the Taiwanese government gave the semiconductor industry strategic priority for development.
Historical context is important. There's a reason why USSR was trade blocked from western markets.
Try again.