Security Concerns Halt Progress... Intel Faces Dilemma Needing US Government Support
U.S. President Joe Biden is delivering a speech on the infrastructure budget bill that passed the House of Representatives the previous night, on the 6th (local time) at the White House State Dining Room. [Image source=Yonhap News]
[Asia Economy Reporter Minwoo Lee] Intel, a global semiconductor company, has abandoned its plan to expand production in China due to intervention by the U.S. government.
On the 13th (local time), Bloomberg, citing sources, reported that Intel's plan to increase semiconductor production in China was canceled for security reasons. As the semiconductor supply shortage worsened, Intel recently attempted to increase the production of silicon wafers, a semiconductor material, at its Chengdu plant in China, but the Biden administration intervened. This is interpreted as a result of the Biden administration's strong protectionist stance aimed at preventing the transfer of U.S. technology to China.
Recently, Intel has shown movements to target the Chinese market, the world's largest semiconductor consumer, by supporting 'Primarius Technology,' a Chinese semiconductor design software company, among other efforts by U.S. semiconductor companies.
According to the Wall Street Journal (WSJ), from 2017 to 2020, investment agreements in the Chinese semiconductor industry involving U.S.-based companies and investors doubled compared to the previous period, reaching 58 cases. Last year alone recorded a historic high of 20 cases.
In response, the White House has been wary of the possibility that Chinese semiconductor technology could advance as U.S. semiconductor companies increase investments in China. Furthermore, there are even moves to regulate strategic investments in China beyond the semiconductor industry. Jake Sullivan, the National Security Advisor, stated that the government is considering mechanisms for reviewing overseas investments. In the past, he mentioned that they are examining the impact of U.S. foreign investments that could harm national security or help competitors improve their technological capabilities.
According to the WSJ, the White House National Security Council (NSC) recently met with aides of Senators Bob Casey (Democrat) and John Cornyn (Republican), who jointly proposed legislation to regulate overseas transfers and investments in critical supply chains and technology industry resources to strategic competitors such as China and Russia, to discuss countermeasures.
Meanwhile, Intel is in a difficult position to ignore the White House's demands as it is hoping for U.S. government support. Currently, the semiconductor bill (CHIPS Act), which invests $52 billion (approximately 61.3 trillion KRW) in the semiconductor industry, has passed the Senate but has been pending in the House for several months.
In a statement released that day, Intel said, "We are open to other solutions that can help meet the high demand for semiconductors, which are essential for innovation and the economy," and added, "Intel and the Biden administration share a common goal of resolving the current semiconductor shortage affecting the entire industry."
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