Chipmakers, Congress play $52b ‘chicken game’

The global semiconductor industry has gone from imploring the US government to hand out corporate welfare, to threatening the cancellation of investments should the money not come through. They’re desperate moves that belie the tenuous economics upon which an American chip revival is being built, and Congress’s willingness to risk credibility to gain political points.
Intel Corp pulled the plug on the groundbreaking for its own Ohio factory to protest Congress’s slow passage of a bill that would provide $52 billion of incentives to chipmakers, the company told Bloomberg News, and CNBC, and the Wall Street Journal, and the Washington Post. And just about anybody who’d listen.
The Creating Helpful Incentives to Produce Semiconductors for America Act — the CHIPS Act — was passed as part of a national defense bill 18 months ago, but didn’t actually include funding. Separate bills — the Senate’s USICA and the House’s Competes Act — would appropriate funds for the measures outlined in CHIPS. But these two bills don’t match up, so lawmakers are trying to hash out a compromise that would get the money flowing.
“I am just baffled, frustrated, anxious, to see this come across the line,” Intel CEO Pat Gelsinger told CNBC, explaining his decision to nix the Ohio ceremony. “In absence of certainty of getting that across the line, it just didn’t seem prudent for us to be barreling as aggressively ahead, and to send a clear message to Congress: We. Need. This. Done.”
Gelsinger returned to take the helm at Intel in February 2021, and has spent significant time lobbying for financial aid. America’s biggest chip company dropped the ball on technology development during his absence, trailing Taiwan Semiconductor Manufacturing Co and Samsung Electronics Co, and now he wants US taxpayers to help foot the bill to catch up. Fortunately for the semiconductor sector, there’s bipartisan support for writing fat checks if it can make American chipmaking great again — and keep the US ahead of China.
There’s also moves afoot to cut tariffs imposed on China under President Donald Trump, with incumbent Joe Biden possibly announcing a rollback of duties as early as this week in a bid to fight inflation, Bloomberg News reported. The move may be reciprocated by Beijing, but that’s not certain. Semiconductors, electric vehicles and various electronics products are among items that could be affected.
Intel isn’t alone in basing its investment plans on promised governmental largesse. TSMC is currently building a factory in Arizona that’s predicated on US incentives. The Hsinchu, Taiwan-based company — the world’s largest custom chipmaker — has remained tight-lipped on whether it’ll use all the land it has available to make as many as four more fabs. Samsung last year announced it would spend up to $17 billion on a new facility in Texas.
Yet one of the most significant developments so far is news that Taiwan’s GlobalWafers Co will build a $5 billion plant in Texas for the silicon wafers upon which semiconductors are made, the first such new facility on US soil in more than 20 years.But GlobalWafers, too, has indicated that its plans only work when those welfare checks roll in. “If the Chips Act is not passed, we have to pivot to South Korea,” President Mark England told the Wall Street Journal.
South Korea, home to Samsung and memory-chip player SK Hynix Inc, is much cheaper than the US, England noted. In fact, almost any other nation in the world is more economically viable then the US.

—Bloomberg