Intel CEO sees making own chips as a matter of national security

Intel CEO Pat Gelsinger is putting the pressure on the U.S. government to help subsidize chip manufacturing, insisting the current reliance on plants in Taiwan and Korea as “geopolitically unstable.”

Why it matters: There is bipartisan support for funding the domestic semiconductor industry, but Congress has yet to sign the check. The Senate has passed the CHIPS Act that includes $52 billion in semiconductor investment, but it has yet to pass the House.

“If the world becomes dependent on one location, that’s not politically stable, right,” Gelsinger told “Axios on HBO.”

While chips are designed by several companies in the United States, including rivals Qualcomm, AMD and Nvidia, most companies rely on TSM (Taiwan). Taiwan’s Semiconductor Manufacturing Co., or Korea’s Samsung, to manufacture its chips.

This was not the case previously, as the United States accounted for more than a third of the semiconductor industry, but now only 12% of this industry is located in the United States due to cheap labor in other countries, as the cost of production was a major factor in this transformation.

“We can’t be 30% or 40% more expensive than Asia,” Gelsinger said, in an argument clearly aimed at Congress. “So help us close that gap so that we can build bigger and faster on U.S. soil.”

Gelsinger explained that Intel could afford the manufacturing effort without US government money, but said it could get bigger and faster with that funding.

“We’re investing $20 billion in capital this year. So we are gonna be spending our cash flows to build labs and fabs,” Gelsinger said. “But we also– are looking for and– seeking subsidies– and support from governments.”

Gelsinger considers this step important to enable the United States to control its own digital future.

Even $52 billion is just a down payment on what will be needed over the next several years for Intel and the U.S. to catch up. “I believe there will need to be a CHIPS Act 2, maybe a CHIPS Act 3 to fully realize this moonshot,” Gelsinger said.