MICROCHIPSWestern Self-Sufficiency in Computer Chips Is Just Not Going to Happen
The global nature of chipmaking will not bow to American nostalgia. The US may persuade TSMC and Samsung to open more facilities in the States, but absolute sovereignty is gone. The departure of Intel’s last true believer underscores that sobering truth.
American microchip giant Intel is looking for a new CEO following Pat Gelsinger’s shock resignation. This represents more than just a corporate shake-up. It’s the end of an era in which one company could totally control a strategically vital American technology.
Under Intel’s roof is the entire process for making computer chips – from research to design to complex fabrication. For much of the late 20th century, this made the Californian company a paragon of American ingenuity.
Gelsinger has been a lifer at Intel. He rose to chief technology officer in the 2000s before leaving for a decade to run Dell’s data storage to cloud computing business, EMC.
His return as CEO in 2021 was seen as messianic. He promised the return of America’s chipset manufacturing supremacy from rivals like Taiwan Semiconductor Manufacturing Company (TSMC).
His vision involved funnelling billions of dollars into expanding chip-making factories in New Mexico and Oregon, and building plants in Ohio and Germany. To help enable this, the federal government committed US$7.9 billion (£6.2 billion) in subsidies as part of President Joe Biden’s Chips Act 2022.
Three years later, the company is in crisis. The board gave Gelsinger a choice: retire or be removed, so he chose the former.
Intel’s Strategic Importance
The US government has always nurtured the nation’s industry in semiconductors, the tiny chips found inside laptops and smartphones. As far back as the late 1950s it was paying 30 times the market rate for transistors for missile computers to California-based Fairchild Semiconductor, whose senior executives would later found Intel.
Semiconductors remain the lifeblood of the military, from hypersonic missiles to AI-powered defence systems. Yet the most advanced ones are predominantly fabricated by TSMC in Taiwan, including for American F-35 fighter jets.
China, of course, wants control of the island nation with which it used to be united. Whoever controls Taiwan’s semiconductor capabilities, according to a US congressional commission back in 2022, will have “the upper hand in every domain of warfare” – not to mention an industry at the heart of global commerce and society.
To complicate matters, major American semiconductor companies like Nvidia, AMD and Qualcomm own no factories, and all rely heavily for chip-making on TSMC/Taiwan, as well as Samsung/South Korea. The US has duly induced TSMC and Samsung to build plants respectively in Arizona and Texas.