Intel Fab Expansion in China Allegedly Discouraged by White House

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One of Intel's best hopes to quickly bring online semiconductor manufacturing capacity has seemingly bit the dust. Citing sources close to the situation, Bloomberg reports that the White House "strongly discouraged" an Intel-proposed plan to add manufacturing capacity. The issue? The factory is located in Chengdu, China. Despite the well-known ongoing shortages in the semiconductor industry, it seems there are some political lines that are not to be crossed.

The Biden Administration is reported to have shown a strong negative sentiment towards any sort of semiconductor investment within China's borders. The reasons for that would be many, and security concerns are certainly one of them. 

However, there's also the matter of China's increasing investment in semiconductor technologies. The country famously included "semiconductor sufficiency" in its 14th five-year plan (2021-2026). Besides heavily investing in state-sponsored semiconductor electronics companies and increasing internal chip output to more than 1 billion a day, China has also been strongly pursuing intellectual property registrations - which do include patents related to semiconductor manufacturing

China also controls most of the rare metal production in the entire planet: 55% of global rare earth mining output is China's, and 85% of all rare earth minerals have to go through the country in one way or another throughout their semiconductor manufacturing process. It's a delicate situation, let's say.

The ongoing trade war between the countries does nothing to reduce the tension here. And since at least part of Intel's investment in capacity expansion is being funded by the U.S. government itself, it's understandable that other "solutions" would better be located in the U.S. or Europe.

“Intel and the Biden administration share a goal to address the ongoing industrywide shortage of microchips, and we have explored a number of approaches with the U.S. government,” Intel said in a statement to Bloomberg. Bloomberg notes Intel said it currently has “no plans” to increase production in China after meeting with government officials, and that it will pursue “other solutions.” 

That Intel even proposed a solution in China may be a testament to how advantageous it would be compared to other, less politically sensitive options. It's reported that the factory expansion would be complete by the end of 2022, and the investment would almost certainly see faster returns in China compared to any U.S. or Europe-based option. And remember: Intel went in with a plan.

It seems some additional relief for the stifled semiconductor industry may have been postponed just slightly longer, at least until Intel brings in a more appealing solution. Until then, shortages will likely continue to be a part of the marketplace.

Francisco Pires
Freelance News Writer

Francisco Pires is a freelance news writer for Tom's Hardware with a soft side for quantum computing.

  • DonQuixoteIII
    When there is mistrust on both sides, things will not go well. The US has supposedly back-doored many things, from HP Laser printers to Cisco routers. China has supposedly back-doored Huawei kit. Given the political tensions, it is clear that the interests of the State outweigh the interest of business entities Adams be damned, the politics will re-make the marketplace.

    Actually, in the long run this will be an advantage as we will end up with two aggressive entities, each trying to out-compete the other, for real. IFF the markets do ever converge, there will be a leveling of the playing field such as the world has never seen.
  • hotaru251
    TBH why the fk would you do this?

    after the ARM china was stolen why would any company actually trust the place anymore until laws are in palce to punish those who steal entire companies????
  • PapaCrazy
    Intel is battling to defend themselves against China's FinFET copyright scam, but they want to build a new fab there? Absolutely senseless. China is gutting our industries one IP theft at a time, I'm disgusted with their lack of ethics, but I'm even more disgusted with American industry's lack of spine.
  • Endymio
    Given that the only source on this is an anonymous contact to a Bloomberg reporter, I'd take this reporting with a grain of salt. I would imagine Intel's decision to not move forward with expanding China production was theirs and theirs alone, and had nothing to do with any WH meeting.
  • InvalidError
    Between the power shortages in China, the real-estate debt crisis, China whipping up resentment against foreign corporations and making their life miserable in general, it would make more sense to look into bailing out of China like many other foreign companies are in the process of than invest more over there.
  • PapaCrazy
    traxxmy said:
    As an asian, i am disgusted at American arrogant like they are the only one that can invent and the world owe them. Talk about ethics like how America can even phone tap their own allies or going to place where they do not belong to. Now i see made in america, i try to avoid as much as i could. Luckily here there is not much made in america stuff as America is not a manufacturing powerhouse like it use to and i glad it come to this

    Don't group China in with the entire Asian continent. They are as likely to steal from Korea or Japan as they are from the US.

    Here, you can give PRC's 'great firewall' a run for its money: