Chip shortage: White House rejects Intel’s production plans in China

The US chip manufacturer Intel wanted to increase production in the short term and counter the chip crisis by using a Chinese factory for the production of silicon wafers. Production at the factory in Chengdu, China, could have started at the end of next year. However, the White House turned down the idea because of security concerns, reports Bloomberg with reference to persons familiar with the considerations.

Intel and other chipmakers await the passage of the CHIPS bill, which includes $ 52 billion in funding for domestic research and manufacturing. The aim of the measure is to be able to compete with China, to prevent longer-term supply bottlenecks and to reduce dependence on vulnerable supply chains. However, the money should not be paid out unconditionally, according to some Republicans who want to prevent an increase in the presence in China.

Pat Gelsinger, CEO of Intel, is trying to cope with the increased public and state control of the chip industry. At least one Intel production facility was certified as a “Trusted Foundry” by the US Department of Defense in August and is thus able to produce semiconductors for the military. The business has become an important battlefield in the increasing rivalry between the US and China and companies from Asia have to overcome more and more obstacles, the Intel boss added.

China is the largest consumer of semiconductors. For logistical reasons and to keep Beijing happy, Intel works in China alongside other chip manufacturers. The country also serves as an assembly center for most of the electronics used worldwide. However, China is confronted with long-term restrictions by the US government, which are trying to prevent the export of state-of-the-art semiconductors, for example.

The White House is currently considering restricting certain strategic investments in China. National Security Advisor Jake Sullivan said the government is considering an outbound investment screening mechanism and is working with allies to resolve it. A White House official said the government is “very focused on preventing China from using US technology, expertise and investment in current development,” it said in the report Further.

After consulting with the Biden administration, Intel is not planning to start production in China, but is open to other solutions to meet the demand for semiconductors, and is planning to build a so-called mega-fab in the USA. The chip shortage is currently becoming a major political issue as companies have to shut down or stop production due to a lack of semiconductors, and consequently jobs are also affected. This also applies to the automotive industry in Germany. In some industries, explained the Intel boss, the shortage of chips will continue for years.


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