Intel Exec Says US. Competitiveness Is At Stake With Chip Manufacturing Capacity
This year, Manufacturing Day could not come at a more important time for the future of our country. Last week, I was able to experience something extraordinary as a new member of the Intel team – the groundbreaking for two new semiconductor fabrication facilities (fabs) in Arizona and a firsthand look at how semiconductors are made. Intel fabs are among the world’s most technically advanced manufacturing facilities.
Seeing the beginning of these new facilities to build semiconductor chips firsthand emphasized this pivotal moment we face as an industry. A chip shortage is affecting multiple supply chains, just as semiconductors become more foundational to modern digital life. The start of construction in Arizona, where our footprint will grow to six fabs, underscores Intel’s commitment to opening its fab doors wide to serve the needs of foundry customers globally and ultimately boost domestic chip manufacturing in the U.S.
As Intel’s chief government affairs officer, it is my job to advance our collaboration with governments around the world as we address the soaring global demand for semiconductors. I have joined Intel at an exciting time for the company and the industry. Just this week, the Semiconductor Industry Association (SIA) published its 2021 State of the U.S. Semiconductor Industry report identifying how the semiconductor has supported us through the pandemic and made great technological advances in 2021. But the report also underscored areas where the industry still faces significant challenges.
For example, the SIA report notes that the U.S. share of global semiconductor manufacturing capacity has dwindled from 37% percent in 1990 to just 12% today. In contrast, Asia is home to about 75% of the world’s total semiconductor manufacturing capacity. This imbalance exists mostly because foreign governments have invested heavily in chip manufacturing incentives while the U.S. government has not. That disparity highlights the need for the U.S. to consider strategic incentives to support domestic manufacturing.
At Intel, we like to say that we’ve put our chips on the table and are significantly expanding our U.S. manufacturing operations. Previously announced plans for our Arizona and New Mexico facilities together represent a $23.5 billion investment that will drive American innovation and increase semiconductor manufacturing. Intel Foundry Services (IFS) will also position Intel to become a major provider of foundry capacity in the U.S. and Europe, serving customers globally.
These efforts are key to strong economic and national security, but more needs to be done to promote a robust chip manufacturing industry in the U.S. and maintain its technological leadership.
Intel CEO Pat Gelsinger recently met with Commerce Secretary Gina Raimondo, White House officials and industry leaders to discuss the global chip shortage and how the public and private sectors can work together to respond to the challenges faced by semiconductor supply chain constraints.
Further, Congress recognizes the importance of strengthening American leadership in semiconductor manufacturing, innovation, and research and development. In June, the Senate passed the bipartisan U.S. Innovation and Competition Act (USICA) with $52 billion in funding for the CHIPS for America Act. A single, advanced manufacturing facility can cost upwards of $10 billion to build and operate in the U.S. Fully funding the grant program established in the CHIPS Act will encourage future domestic investment by helping American manufacturing companies compete with heavily subsidized foreign companies. Without government incentives, we cannot make the scale of investment we want and that is required to avoid future chip shortages.
We are encouraged to see the Commerce Department, leaders of both parties in Congress and the Biden Administration recognize the urgency of funding the bipartisan CHIPS Act. Other countries are moving quickly, so must the U.S. Intel looks forward to working with our federal partners to help maintain America’s position as the world’s top technological innovator.
Bruce Andrews is a corporate vice president and chief government affairs officer at Intel Corporation.