Intel Condemns US Grants To TSMC Amid Clash Of Chip Titans In Arizona

TAIPEI – “Foreign chipmakers vying for US grants will keep their valuable intellectual property on their own shores, ensuring that the most lucrative and forward-thinking manufacturing stays there.”

In Politico last month, Intel CEO Pat Gelsinger criticized Washington’s decision to subsidize the $ 12 billion chip manufacturing plant built by rival Taiwan Semiconductor Manufacturing Co. in Arizona.

The United States drew TSMC with the promise of generous support as part of its efforts to break its dependence on foreign supplies of critical parts. But Intel – America’s largest microchip company, which has its own factories in the desert state and plans to build more – has not kindly accepted funding for foreign competition just outside the US. ‘business.

The conflict of interest has placed the United States in the midst of a rivalry between two of the world’s largest chipmakers.

“We need to look beyond short-term capacity issues and seriously think about what US chip leadership really looks like,” Gelsinger wrote in the article, which Intel paid to publish.

As Washington seeks to make the United States a world leader in manufacturing, “the federal government should invest in American intellectual property and capabilities,” Gelsinger continued. “It should invest US tax dollars in companies based here and house their most critical assets – including patents and people – nationwide.”

The apparent jab at TSMC was made more explicit when Gelsinger noted that the 5-nanometer production technology that will be used at the Arizona plant, although currently at the peak of mass production, does not. will not be in 2024, when the plant is set to open.

“The company will continue to manufacture its most advanced products in Taiwan,” he said, implying that subsidizing TSMC will end up hurting the development of the US industrial base.

The United States will eventually be forced to “make the difficult choice between forgoing the advanced chips needed for critical national security applications or relying on foreign supply chains that are insecure for them,” he said.

In short, Intel, already technologically behind TSMC, does not want to see its rival progress further at the expense of Washington.

TSMC, however, has no interest in waiving the grants. The company “decided to go ahead with the plant because the US government begged us to do so,” an insider said. “The talks were concluded on the assumption of substantial government subsidies.”

Founder Morris Chang has continued to implicitly advocate for financial support, publicly declaring that production in the United States is too expensive.

The publication of Gelsinger’s article surprised industry players who saw the subsidies as inevitable.

Two weeks earlier, on June 8, the Senate finally passed a bill providing $ 52 billion in subsidies for the semiconductor industry, led by initiatives like the TSMC factory.

But a lot of things are still pending. Debate has only just begun in the House of Representatives, and legislation before that chamber currently makes no mention of subsidies. Reconciling the bills will be a complex process, and the signature of President Joe Biden will then be required.

Gelsinger’s story throws another key in the works. As the United States seeks to regain its crown in the semiconductor industry, it cannot brush aside the views of one of its major chip companies.

But with Taiwan controlling 92% of the advanced semiconductor market, Washington also can’t afford to listen to only Intel, which has been slower to innovate.

Meanwhile, there have been some surprising developments in Taiwan. TSMC has made rapid progress on a plant near its headquarters that will use 3nm technology, which is expected to go live as early as 2022. Industry insiders agree the plant will manufacture chips for Intel.

The site was originally intended for a research and development facility. But “when it became likely that orders would come from Intel, there was a sudden order from the top to turn it into a factory,” an insider said.

Intel has already outsourced some production to TSMC, but if this order is made official, it will mark the US company’s first advanced semiconductor outsourcing to the foundry. Advanced Micro Devices is quickly catching up with Intel in personal computer chips, and the fact that TSMC manages much of its production has accelerated its pace.

Fear that insisting on in-house production could allow AMD to close the gap has likely led Intel to put its pride aside and order TSMC. The fact that Intel vehemently opposes subsidies for TSMC in the United States while relying on it in Taiwan shows the complexity of the global competition for chip dominance.

As the world suffers from a prolonged semiconductor shortage, governments increasingly view chip supply as a national security concern and step up subsidies and other efforts to woo producers, including foreign ones.

The comments by Gelsinger and others come as international competition for chip-related technology continues to grow. The push and pull between the United States and Taiwan suggests that despite all the talk about international cooperation, building successful ties on the ground may be easier said than done.