Andrew Harnik/AP Photo
President Joe Biden places a hand on the shoulder of Intel CEO Patrick Gelsinger, right, as he takes the podium to speak about Intel’s plans to invest in semiconductor manufacturing in the United States, January 21, 2022, in Washington.
Patrick Gelsinger, the new CEO of Intel, announced late last week that the giant chip manufacturer would invest as much as $100 billion over the next decade in a new semiconductor facility near Columbus, Ohio. The company has committed an initial $20 billion to start work on two new factories that will provide 3,000 permanent jobs plus 7,000 construction jobs.
This announcement marks a big shift in Intel’s global strategy. Under its longtime CEO Andy Grove, Intel was one of the first to shift chip production to China, taking advantage of billions of dollars in Chinese government subsidies and its cheap labor. Intel opened its first Beijing office in 1986.
But today Intel is singing a different tune. Intel, still with lots of investment in China, had to walk back its suggestion that suppliers cease doing business in Xinjiang, where Uyghurs are repressed, and apologize to the Chinese government.
Why Intel’s change of heart? One reason is the supply chain mess and the resulting semiconductor shortage. Another is the fact that Intel has been falling behind some of its competitors. But the biggest reason is China.
Intel’s move is part of what’s becoming a reshoring wave in the semiconductor industry. But much of that is U.S. production by foreign corporations. Taiwan’s TSMC is building a $12 billion complex near Phoenix. And Samsung has construction set to begin this year on a $17 billion factory in Taylor, Texas.
None of this, however, is a substitute for U.S. production by U.S. firms. Gelsinger is also a big booster of the administration’s proposed CHIPS Act, which would add $52 billion in U.S. government subsidy for semiconductors made in America. That act has been included as part of Sen. Chuck Schumer’s bipartisan U.S. Innovation and Competition Act (USICA).
But the House has refused to act on USICA, mainly because Schumer’s bill, which passed the Senate 68-32 in June, included several sweetheart provisions for global business, including a two-year tariff holiday for PPE imported from China, and a proposed free-trade deal with Taiwan, the world’s leading supplier of semiconductors.
Schumer’s bipartisan bill also rejected a key labor standards provision proposed by Sens. Brown and Portman. Negotiations are continuing and compromise legislation is expected to pass both houses by the end of February.
It can’t come too soon. Spurred by the supply chain crisis, the arrogance of China, and the leadership of the Biden administration in breaking with predecessors and committing the sin of economic planning, industrial policy is at last coming to America.
