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TAIPEI, Taiwan — “Foreign chipmakers fighting for government subsidies in the United States will preserve their precious intellectual property on their own soil, guaranteeing that the most profitable and cutting-edge production stays there.” Intel CEO Pat Gelsinger took aim at Washington’s decision to support rival Taiwan Semiconductor Manufacturing Co.’s $12 billion chip fabrication factory in Arizona in a recent Politico article. The United States enticed TSMC with promises of considerable help as part of its endeavor to reduce its dependency on foreign suppliers of crucial components. However, Intel, America’s top chipmaker, which has its own fabs in the desert state and wants to build more, has taken a dim view of international competition being funded practically on its doorstep. The United States has found itself in the heart of a contest between two of the world’s biggest chipmakers due to a clash of interests. “We need to think carefully about what U.S. chip leadership looks like beyond short-term capacity constraints,” Gelsinger wrote in the piece, which Intel paid to be published. “The federal government should invest in American intellectual property and capabilities,” Gelsinger stated, as Washington strives to re-establish the United States as a global industrial leader. “It should put U.S. tax revenues into corporations that are established here and keep their most valuable assets, such as patents and personnel, in the United States.” The apparent dig at TSMC was heightened when Gelsinger stated that while the 5-nanometer production technology to be employed at the Arizona site is currently top-of-the-line in mass production, it will not be in 2024, when the factory is scheduled to start. “The corporation will continue to make its most advanced products in Taiwan,” he stated, meaning that subsidizing TSMC will hurt the development of the US industrial base in the long run. He predicted that the United States will be forced to “face the difficult option between foregoing advanced chips essential for key national security applications or depending on unsecure, foreign supply networks.” In short, Intel, which is already technologically behind TSMC, does not want to see its competitor develop further on the taxpayer’s cost. TSMC, on the other hand, has no intention of giving up the subsidies. According to an insider, the business “decided to continue through with the project because the US government pushed us to do so.” “The discussions came to a conclusion based on the expectation of significant government subsidies.” Founder Morris Chang has continued to make the plea for financial help, openly stating that production in the United States is too expensive. The publication of Gelsinger’s paper caught industry players off guard, as they had assumed the subsidies were a predetermined conclusion.
In a recent essay for Politico, Intel CEO Pat Gelsinger spoke out against US subsidies to TSMC. According to Reuters

On June 8, the Senate eventually enacted a package that included $52 billion in semiconductor sector subsidies, with efforts like the TSMC fab in mind.

However, there is still a lot of uncertainty. In the House of Representatives, debate has only recently begun, and the proposal currently before that body includes no mention of subsidies. The reconciliation of the bills will be a lengthy process that will require President Joe Biden’s signature. Gelsinger’s account adds a new wrinkle to the mix. As the United States attempts to reclaim its dominance in the semiconductor business, one of its major chip makers cannot be ignored. But, with Taiwan dominating 92 percent of the market for cutting-edge semiconductors, Washington can’t afford to listen to only Intel, which has lagged behind in terms of innovation. In the meantime, there have been some unexpected developments in Taiwan. TSMC has been making rapid work on a 3-nm fab near its headquarters, which is expected to be operational by 2022. According to industry insiders, the plant will produce chips for Intel. Originally, the land was set aside for a research and development facility. “When it became apparent that orders from Intel would come in,” one insider added, “there was a quick directive from the top to convert it to a factory.” Intel has previously contracted out some production to TSMC, but if this deal is finalized, it will be the first time the corporation has outsourced cutting-edge semiconductors to the foundry. Advanced Micro Devices is rapidly catching up to Intel in personal computer chips, and outsourcing much of its production to TSMC has helped it keep up. Intel put its pride aside and ordered from TSMC, fearful that insisting on in-house production would allow AMD to close the gap even further. The fact that Intel is a vocal opponent of TSMC subsidies in the United States while relying on it in Taiwan demonstrates the complexities of the global chip domination race. With the globe experiencing a long-term shortage of semiconductors, governments are increasingly viewing chip supply as a national security priority, increasing subsidies and other measures to court makers, especially those from outside the country. Gelsinger’s and others’ remarks come as international competition for chip-related technology intensifies. The tug-of-war between the United States and Taiwan demonstrates that, despite all the talk of international cooperation, forming successful partnerships in the field may be more difficult than it appears./nRead More

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