Intel VP: CHIPS Act Will Accelerate Semiconductor Manufacturing In The U.S.

“Thirty years ago, 81 percent of the world’s semiconductors were manufactured in either Europe or the United States. Today, that number is 12 percent and 9 percent respectively,” said Intel executive Al Thompson.

Intel’s Al Thompson

Al Thompson was feeling good this week as a bipartisan vote in the U.S. Senate approved comprehensive legislation to enhance the nation’s semiconductor sector.

As Intel Corp.’s vice president of government relations, Thompson is responsible for leading the firm’s lobbying efforts across the nation.

On Wednesday, lawmakers greenlighted the CHIPS Act, a $280 billion spending package intended to enhance spending on American chipmaking amid supply chain constraints and boost technological competitiveness. The House of Representatives could pass the measure as early as this week and President Joe Biden had pledged to sign the bill.

[RELATED: US SENATE PASSES CHIPS ACT, MOVING CLOSER TO WIN FOR US CHIPMAKERS]

Proponents say CHIPS will provide incentives to compete with China, boost domestic semiconductor production and help ease supply chain shortages of chips.

In an interview with CRN, Thompson praised the Senate and rejected claims by critics that the measure is corporate welfare.

“In this case, it’s not [corporate welfare],” he said. “Thirty years ago, 81 percent of the world’s semiconductors were manufactured in either Europe or the United States. Today, that number is 12 percent and 9 percent respectively. Why? Because Taiwan, South Korea, and eventually China, decided to make major strategic investments in incentives to attract companies to manufacture semiconductors in that part of the world.”

What does passage of the CHIPS Act mean for solution providers?

The passage means that it‘ll be cost competitive to do semiconductor manufacturing investment in the United States. The average cost to build a semiconductor facility, which we call fabs or fabrication facilities, cost $10 billion to $12 billion. I would say if we did that in Taiwan or South Korea, it’s about a $9 billion investment and in China, its closer to $4 billion.

Given the Semiconductor Industry Association has reported global semiconductor industry sales totaled nearly $556 billion last year, aren’t the incentives in the CHIPS Act just a rounding error?

It will help because we’ve never done it before. And it‘s not an insignificant amount of money. I know [what you’re saying] in terms of the grand scheme. But…the way the law will allow for projects to be funded it’s a significant amount of money to start basically driving that investment back here. The other part of the law that‘s also helpful is the investment tax credit. So that’s another option that can be considered to sustain investment and I would almost argue, the United States has a lot of advantages in terms of geographical stability and a great education system.

What impact will CHIPS have on the overall economy?

Intel has announced within the last year and a half that we‘re going to do $43.5 billion in manufacturing investments. That’s $20 billion in Ohio, $20 billion in Arizona, and $3.5 billion in New Mexico. That basically creates about 7,000 direct jobs. For every one job we create directly, we create seven indirect jobs. So, from an economic stimulus standpoint, it’s significant and we will have the ability to make advanced semiconductors in the United States and Intel does that. The other thing that will come with it is the ecosystem to support the facilities. The amount of private capital is also going to be significant.