Talks focusing on diversifying supply chain in time of coronavirus, other global concerns, WSJ says
Intel, Taiwan Semiconductor Manufacturing Co. (TSMC), and Samsung reportedly are talking with U.S. government officials about building semiconductor foundries in the United States, an idea that was already being considered over the past several years but has now been accelerated in light of the COVID-19 pandemic.
The Lowdown: According to a report in The Wall Street Journal, Intel CEO Bob Swan, referencing the “uncertainty created by the current geopolitical situation,” told the Department of Defense in an April 28 letter that the chipmaker would consider partnering with the DoD to build a commercial foundry in the United States that would make not only Intel processors but also those from other vendors.
The Details: The semiconductor industry relies heavily on China and other Asian countries for its manufacturing and supply chain. Concerns about security, along with recent trade tension between China and the Trump administration, have fueled calls to increase chip production capabilities in the United States. The coronavirus outbreak, which started in China, impacted the global semiconductor market not only in the supply chain but also in worldwide demand.
Intel has chip fabrication facilities all over the world, including one in China and several in the United States. It makes its own processors, but in recent years has also run a foundry operation manufacturing chips for other vendors. TSMC makes processors for Apple devices and is talking with Apple and the U.S. government about establishing a manufacturing site in the United States. Samsung also is a contract manufacturer.
The Impact: The rapid global spread of COVID-19 has energized existing U.S. concerns about globalization. Building more chip fabs in the United States would diversify the supply chain, bring more jobs into the country, and give OEMs’ partners greater certainty about product availability. How concrete these discussions are and how fast the manufacturing facilities and related supply-chain infrastructures could be spun up are still unclear.
The Buzz: “We currently think it is in the best interest of the United States and of Intel to explore how Intel could operate a commercial U.S. foundry to supply a broad range of microelectronics,” Swan wrote in his letter.
“We are actively evaluating all the suitable locations, including in the U.S., but there is no concrete plan yet,” TSMC spokeswoman Nina Kao told Reuters.