Intel and Micron pushing hard for US government subsidies

The CEOs of Intel and Micron appeared before a US Senate committee urging Congress to offer financial incentives to chip makers when passing the [tortured acronym alert] CHIPS for America act. Intel CEO Pat Gelsinger believes the bill is critical to protecting the future of the US semiconductor industry.

Gelsinger (via Reuters) said the passage of the Useful Incentives to Produce Semiconductors (CHIPS) for America Act is vital to securing the future of US chip manufacturing. Gelsinger cited the importance of reducing dependence on chipmakers in Asia and protecting supply chains, as well as acting as a hedge against global geopolitical instability. Continuing tensions between China and Taiwan were cited as the main reason why the bill must pass.

Gelsinger was joined by Micron CEO Sanjay Mehrotra. He supported the CHIPS for America Act, saying it will: “initiate investment in workforce development, R&D, innovation and manufacturing expansion in the short term.”

The micron is set to invest more than US$ 150 billion the next decade, increasing its commitment to research, development and manufacturing. Intel previously announced its plan to invest $20 billion at two factories in Ohio. Gelsinger said, however, that the investment could reach $100 billion “assuming the support of the CHIPS Act.”

Intel and Micron CEOs were joined by Lam Research CEO Tim Archer. He said further investments in the plant “will depend on semiconductor manufacturing equipment and materials.” These are the products your company supplies.

Chip shortages have also affected automakers. Paccar CEO Preston Feight said the truck manufacturing industry was forced at times to pay brokers “20 to 30 times” the contract costs to obtain chips. Paccar is one of the largest truck manufacturers in the world and is the parent company of Kenworth, among others.

All the testimony is obviously aimed at securing subsidies and incentives to bring more manufacturing to the US. Not everyone supports the measures, including Vermont Senator Bernie Sanders, who believes that the act equates to corporate well-being. It is easy to understand this point of view. A cynic might say that decades of profit maximization have led to where the US finds itself. It is simply cheaper to manufacture abroad.

Now that geopolitical tensions are rising and supply chain bottlenecks have become painfully apparent, companies are looking to the US government to at least live up to the generous incentives offered of foreign governments.

The debate continues.

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