Putting our chips on the table
One of the most profound lessons of the COVID-19 pandemic is to not take access to technology for granted. Education, business, medicine, transportation, defense and infrastructure all increasingly rely on cloud computing, wireless networks, broadband, AI and other digital technologies.
Semiconductors, today sourced primarily from overseas, are the brains powering these essential technologies, and the backbone of U.S. economic competitiveness and national security. They underpin vital technologies, from cellphones to satellites, from smart grids to advanced industrial and defense equipment. Last year, semiconductor supply was interrupted when demand growth coincided with pandemic-related disruptions to global supply chains, shuttering manufacturing lines in key industries and slowing delivery of essential products.
A future shortage could have a devastating economic impact ― or worse, compromise our national defense. Our country’s share of global semiconductor manufacturing has declined from 37 percent in 1990 to 12 percent today. The only way to address this economic and national security risk ― and spur the creation of American jobs ― is to increase domestic semiconductor manufacturing capacity. The need is urgent and requires the private sector and government to cooperate.
Last month, Intel “put its chips on the table.” Without any presumption of incentives, we announced a $20 billion investment to expand our manufacturing capacity, starting with two new chip production plants (called “fabs”) in Arizona, which will create over 3,000 permanent high-tech, high-wage jobs, over 3,000 construction jobs and 15,000 local long-term jobs. We’re not just building capacity for our own products; we also opened our fab doors wide, creating a new business, Intel Foundry Services, to provide manufacturing capacity based in the U.S. and Europe to other companies and governments.
Through this commitment, Intel bucked a long-term trend towards outsourcing manufacturing to third parties, especially those in Asia; however, we’re confident it’s the right decision. Our experience ― and that of many companies ― shows that we need enough new, global semiconductor manufacturing capacity to avoid depending on any single country or company for these crucial products.
Semiconductors are the fifth-largest U.S. export sector, supporting a quarter million domestic jobs directly and over a million indirectly, but there is room to grow the industry further as U.S. companies capture more of the domestic and global demand. To do so, we need a partner and we hope the federal government will become that partner.
Other nations’ governments have aggressively promoted the development of semiconductor manufacturing. That’s why a major program of federal government incentives for the U.S. semiconductor industry is essential. In the process, we can grow our economy, strengthen our national security and our supply chains and cultivate the skills required to renew this strategically important engineering and innovation ecosystem.
Fabs aren’t cheap, but investing in them creates good domestic jobs, supports innovation for years to come and helps to mitigate dependence on overseas suppliers ― including for sensitive national security applications. This goal of keeping our country safe, prosperous, innovative and self-sustaining in an important industry is one that can unite political leaders of all stripes.
President Biden’s American Jobs Plan proposes important investments to upgrade our nation’s infrastructure, including $50 billion in necessary semiconductor manufacturing investments. His plan recognizes that investment today will lead to increased technological research and development, innovation, job creation, sustainable supply chains and advanced manufacturing for tomorrow. We believe this program can help restore U.S. semiconductor manufacturing leadership, a worthy moonshot for our nation.
In a polarized environment, Democrats and Republicans have found rare agreement on the importance of smart investments in domestic semiconductor manufacturing. Both parties agree that revitalizing our digital infrastructure is critical to not only address short term needs and prevent future shortages, but to keep America competitive and prosperous in an increasingly digital world.
Right now, our country is at a crossroads, given the lead time necessary to create new manufacturing infrastructure and scale it. The decisions we make now will determine whether we remain the world’s leader in semiconductor manufacturing for another generation. We have a lot of ground to make up, but it’s not too late. In fact, there is reason for optimism.
The global pandemic has accelerated a digital transformation that was already well underway. Every aspect of our digital lives runs on semiconductors. There are few if any investments that can be made that are more essential to the American way of life, technological leadership, advancing U.S. national security, addressing persistent trade imbalances and creating American jobs. In short, there is an opportunity to deliver a bipartisan win. We should seize it.
Pat Gelsinger is CEO of Intel.