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US ‘CHIPS’ Act was turning point in China competition, Intel CEO says

File photo of Intel office. (Photo by Randy L. Rasmussen, The Oregonian/TNS, Released)
January 23, 2023

The U.S. and China have been competing over the global supply chain of semiconductors and computer chips, but Intel CEO Pat Gelsinger said in a recent interview that the U.S. passage of the Creating Helpful Incentives to Produce Semiconductors (CHIPS and Science) Act would be a turning point in this competition between the U.S. and China.

Speaking with Fox News host Maria Bartiromo on the sidelines of the World Economic Forum in Davos, Switzerland on Tuesday, Gelsinger described his company’s plans to expand its U.S. investment in chip production, while crediting the CHIPS Act for creating incentives for those investments.

As he spoke, Gelsinger stressed the importance of the semiconductor supply chain to shaping geopolitics. He said that where the oil reserves are has defined geopolitics for the past five decades and now “where the technology supply chains and semiconductors are located will defined geopolitics for the next five.”

During their interview, Bartiromo noted that Taiwan remains a global leader in the computer chip industry, but that its position could change if China were to try to seize control of the island.

“We are all worried about the potential for, you know, the China Communist Party to go into Taiwan and disrupt world production,” Bartiromo said. “How are you dealing with that?”

Gelsinger said Intel was “very active” in getting the CHIPS Act passed in Congress, and he said its passage has enabled the company to move forward with “massive investments” to create chip production factories in the U.S.

The CHIPS Act is a spending and economic incentives bill worth about $280 billion, that directs U.S. taxpayer money to invest in science and technology. The act, which passed in August, provides more than $52 billion in direct investments for semiconductor manufacturing and research, along with a 25 percent advanced manufacturing investment tax credit.

Intel recently broke ground on a new chip production facility in Arizona.

Gelsinger said that at the height of western computer chip manufacturing, the U.S. and Europe were responsible for about 80 percent of the manufacturing base, while Asia represented about 20 percent. He said in recent years, that situation has flipped, to where Asian countries hold about 80 percent of the manufacturing base and the U.S. and Europe hold about 20 percent.

“We need to rebalance those supply chains,” Gelsinger said.

The Intel CEO said he believes the CHIPS Act will provide for that rebalancing.

“The CHIPS Act, to me, was a turning point,” Gelsinger said. “Right? We saw that this is the most significant legislation in industrial policy since World War II.”

Gelsinger said that the U.S. Chips Act makes “a clear statement that ‘oh, we are going to win back the semiconductor industry, we are going to be manufacturing it.’” He also noted that the European Union has its own version of the CHIPS Act, which will also pull some of the manufacturing base away from Asia and into Europe.