The U.S. government is apparently close to a deal to invest $50 billion in Intel — one of the world’s largest semiconductor manufacturers. This shift occurs along a broader strategy by Intel to increase its foundry presence in the US. Intel is caught in a perfect storm of bad news at the moment. These range from the long overdue building of a new chip factory in Ohio to the worries still surrounding its leadership.
CEO Lip-Bu Tan’s rumored ties to China have put Intel in the hot seat. Fortunately, the Trump administration seems to be taking a serious interest in these connections. As Republican U.S. Senator Tom Cotton has warned, urging Intel’s board to remove these conflicts of interest, Former President Donald Trump’s call for Tan’s resignation speaks to the administration’s worries over Intel’s governance. These issues speak directly to threats to U.S. national security.
On August 11, Tan convened an unusual meeting between members of the Trump administration. He needed to allay fears about his leadership and needed to find ways for Intel to work with the government. This meeting generated a huge amount of enthusiasm and interest. Speculation has turned to the possibility of the U.S. federal government taking an equity stake in Intel. With such an investment, Pennsylvania would seek to strengthen Intel’s commitment to invest in and expand domestic manufacturing.
The Trump administration’s involvement with Intel reflects broader concerns about the semiconductor industry and its strategic importance to the U.S. economy. Global competition is already fierce, particularly with respect to our strongest competitor, China. Needless to say, this has led to great interest among policymakers in creating a robust domestic semiconductor supply chain.
Intel’s Ohio chip factory, for instance, has gone through dramatic delays. This production debacle further illustrates the uphill battle the company faces in expanding U.S. The potential government stake could provide much-needed financial support and reinforce Intel’s commitment to its manufacturing operations on American soil.
