Intel’s CEO Threatens to Expand in Europe if Congress Doesn’t Act

Pat Gelsinger, CEO of Intel, warned Tuesday that if Congress fails to pass $52 billion in government subsidies promised under the CHIPS Act, he may expand chip manufacturing in Europe instead of the United States.

At the Aspen Ideas Festival, Gelsinger remarked, “The rest of the world is moving rapidly despite the inability of Congress to get this finished.”

It was only in 2021 that Congress finally gave CHIPS the funding it needed as part of the National Defense Authorization Act. Attempts by the House and Senate to overcome differences on a broader package of policies to help the United States’ tech industry compete with China have left the money for subsidies stalled.

A shortage of government funding forced Intel to postpone the groundbreaking ceremony for a new $20 billion facility in Ohio, the company announced last week. He stated Tuesday, “I hate the idea of announcing a delay,” Gelsinger said.  Although Intel “would end up investing a lot more in Europe as a result,” he cautioned. A new $18 billion plant in Germany will be built as part of a $35 billion expansion of the chipmaker’s European operations.

According to Gelsinger, the CHIPS Act’s subsidies, which are limited to $3 billion per site, would help the United States “approximately competitive with other regions of the world.” There were no “handouts” in the industry, he claimed.

There are also calls from other semiconductor companies to support American chip manufacturers.

The construction of a $12 billion facility in Arizona by Taiwan Semiconductor Manufacturing Corporation will necessitate the U.S. government to subsidize the gap in operating expenses between Taiwan and the United States.

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Taiwanese chipmaker GlobalWafer launched a new $5 billion facility in Texas on Monday. Despite this, Commerce Secretary Gina Raimondo told CNBC that the contract “will go away” if Congress does not approve subsidies for the project.

Government leaders in Taiwan are urging Congress to approve financing for the island nation. For the most part, this is because TSMC has already commenced construction in Arizona. Ming-Hsin Kung, a minister on Taiwan’s National Development Council, told the Washington Post on Tuesday that the Chips Act is expected to pass the Congress.

East Asian chipmakers “all believe they need to put more manufacturing in the U.S.” Gelsinger stated. There is no rivalry between us and TMSC or Samsung.” ‘We are not competing with TMSC or Samsung. We are competing with Taiwan and Japan and Korea,” he declared.

According to the European Chips Act, the European Union allocated $46 billion in support for chip manufacturing in February. Intel’s new factory in Germany will receive $7.3 billion of that money.

A $4.5 billion fund set up by the Japanese government to boost the country’s semiconductor industry would finance 40% of the cost of a new TSMC factory in Kumamoto.

As a matter of national security, according to Gelsinger, the United States must invest in chip manufacturing, transferring production away from East Asia. As he spoke, he said, “This is the future of geopolitics.”

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