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Intel CEO Warns Fab Investments Might Move to Europe if Congress Fails to Act

Pat Gelsinger
(Image credit: Intel)

Intel has made it clear that its expansion plans in the US partially hinge on government subsidies. Speaking live with the Washington Post earlier this week, Intel CEO Pat Gelsinger made it clear that if the US Innovation and Competition Act (or USICA) isn't approved on the floor of Congress, the company will be seeking greener pastures across the Atlantic - namely in Europe, where the EU has been aggressively moving to increase local leading-edge chip manufacturing.

"We've made super clear to McConnell, to the Democrats, to the Republicans, that if this doesn't pass, I will change my plans," Gelsinger said. "The Europeans have moved forward very aggressively, and they're ready to give us the incentives that allow us to move forward," he said, likely referring to the Silicon Junction initiative, which saw the EU open up its strings to a cool $43 billion in support for local manufacturing capabilities.

The measure is currently languishing on the Congress floor due to differences in opinion between Republicans and Democrats. The USICA bill would allocate up to $52 billion in incentives for semiconductor initiatives on US soil, and saw the creation of the Semiconductors in America Coalition (SIAC) lobbying group.

The point of contention mostly lies in that Democrats could attempt to approve it as part of a broader reconciliation package that would allow Medicare to negotiate prices with drug manufacturers, which would help control prescription drug prices while putting a cap on insulin prices.

Senate Minority Leader Mitch McConnell, in a tweet, didn't mince words on whether USICA would pass on the floor:

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Following the turmoil in approving the bill, Intel has already (and indefinitely) delayed the groundbreaking ceremony for its planned Ohio fab from its planned July 22nd date.

Besides creating 3,000 Intel jobs, 7,000 construction jobs, and tens of thousands of indirect local long-term jobs, Intel had committed to investing $100 million in partnerships with local educational organizations.

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Intel's plan for Ohio involves a Mega Site, whose investment is expected to reach a fat $100 billion. Intel's timelines indicate that the company would be looking to manufacture chips within its Angstrom era of electronics, namely under the planned Intel 25A and Intel 18A nodes (which will be among the most advanced manufacturing technologies in 2025).

The fast-approaching deadline for USICA to successfully cross the Congress floor - which enters its recess in August - prompted Secretary of Commerce Gina Raimondo to lead a classified briefing with senators on Wednesday. The purpose of the meeting: to stress the dire need to pass the $52 billion-worth bill in a geopolitical environment where China grows increasingly relevant in the high-tech space.

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“The message is, ‘Time’s up,’” Secretary of Commerce Gina Raimondo told CNN after the briefing. “It’s time to make it happen."

Francisco Pires
Freelance News Writer

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

  • -Fran-
    The quicker it gets approved, the more loopholes there will be unspotted (potentially). Business 101 xD

    Unnecessary pressure for sure. The USA wants local manufacturing capacity given the global political climate, so they'll give the incentives anyway. Ah, right; who cares. Easy money to be made from the tax payers.

    Regards.
    Reply
  • cirdecus
    I don't really think democrats care much about the cliff we're headed off with local chip manufacturing. They're focused on the election and if they can't get unrelated political promises met, they'll let Intel go. They could care less about the future of the country.
    Reply
  • TechLurker
    Maybe the US should instead just invite over TSMC or even Samsung to open a secondary-level plant if Intel doesn't want to play. After all, TSMC is opening one in Arizona with or without the CHIPS Act, and the right incentives from a different state can open up one for Samsung too. Both could probably then compete for lucrative government contracts, which mandate a US-based production facility.
    Reply
  • sivaseemakurthi
    Even Asian govts wants chip manufacturing in their countries. Intel has better options to consider if this doesn't work out.
    Reply
  • kjfatl
    Given the current makeup of the US congress, I don't expect the bill to pass until January. 2023. The US senate passed the bill with something like 99 out of 100 votes. The house sees this as a must-pass bill, so they are trying to attach a few hundred billion dollars of non-related spending to it.
    The democrats only have about a 7-vote majority in the house. It is expected that they will lose control of the house in this fall's election, and it is quite possible that they will lose a few votes in the senate as well.
    Reply
  • purple_dragon
    Frankly, good riddance. Why should tax payers foot the bill of new fabs when these companies are worth tens of billions of dollars and the CEO's are payed millions. All congress should do is tariff the snot out of any chip imports if these companies don't open fabs in the U.S. I'm all for capitalism but not subsidized capitalism.
    Reply
  • Giroro
    Intel acts like Congress has no choice but to lay down and give them unlimited money. Who do they think they are, the NFL?

    I propose an alternate idea: Void all of Intel's patents in the US, and instead subsidize 100 other local companies to come in and steal intel's designs. It works to get fabs built in China, so why not get in on that action?
    Reply
  • thestryker
    Should these companies get taxpayer money? Nope, but it's ignorant to expect any company to expand in a place that isn't going to give them subsidies they can get elsewhere. The explosion in SEA coincided with government subsidies and Europe isn't messing around offering large subsidies now. Relative to the federal budget this funding is basically nothing. All I'd really like to see is some sort of guarantees that the money goes towards US expansion/jobs and nothing else.
    Reply
  • jkflipflop98
    It's a sad day for our country when our "leaders" can't get together to create American jobs. This is a no-brainer here.
    Reply
  • Chung Leong
    Venn diagram of European countries suitable for a fab and European countries ready to kick dirt in America's face:

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    Reply