Intel seeks US Govt help in contract chip manufacturing

The US government could soon push harder for local chip production. The Biden administration and Intel Inc. are deeply concerned about America sourcing the majority of its chips from Taiwan, specifically, from TSMC.

Intel CEO voices frustration at poor response to US chip production

The U.S. Department of Commerce Secretary Gina Raimondo had a meeting with Intel CEO Pat Gelsinger. The latter reportedly, “expressed frustration with America’s reliance on TSMC to produce advanced chips.”

It is no secret that Intel is struggling in the chip manufacturing business. Especially after the Generative Artificial Intelligence (Gen AI) race began, Intel has been trailing behind Samsung, TSMC, and others.

Intel is aggressively building chip foundries in the U.S. The company has fab plants under construction in four U.S. states.

Intel is trying to become more of a foundry business. In other words, the company intends to manufacture chips for other suppliers on a contractual basis.

In this alone, Intel was awarded $8.5 billion under the CHIPS Act. Passed in 2022, the CHIPS Act has provisions to grant Intel $11 billion more in loans. Incidentally, there’s a huge delay in the disbursement of the funds. Some reports suggest Intel could get some funds before the current year ends.

Will the US government urge Apple and other big tech to source chips locally?

Taiwan, and more specifically, the Taiwan Semiconductor Manufacturing Company (TSMC) is the leading chip manufacturer. However, the geopolitical tensions in the region are quite high.

After interacting with the Intel CEO, Raimondo reportedly met with a handful of public market investors. Raimondo may have reiterated the importance of local chip manufacturing in the U.S.

There’s no official announcement yet, however, sources close to the developments, have indicated Raimondo met with multiple big tech companies, including Apple, Amazon, Google, and Broadcom to pitch the idea of sourcing chips locally.

Intel is one of the biggest recipients of funds under the CHIPS Act. Hence, it would be in the Biden administration’s best interest to see the company succeed as a foundry business, boosting chip production in the US. The company would also help shield America from geopolitical uncertainty and ensure it is self-reliant in terms of advanced microchips.