Commerce Secretary Gina Raimondo listens as President Joe Biden participates virtually in a meeting on Creating Useful Incentives for Semiconductor Manufacturing (CHIPS) for America at the White House on July 25, 2022.
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Intel has been hit hard lately, losing 60% of its value this year as it struggles to find its way into the booming artificial intelligence market while aggressively building fabs in the US. The company is reaching out to Commerce Secretary Gina Raimondo for help.
In a recent meeting with Raimondo, Intel CEO Pat Gelsinger expressed his frustration with the heavy reliance on American companies Taiwan Semiconductor Manufacturingthe world’s largest contract chipmaker.
Raimondo followed that with meetings with a handful of public market investors to reinforce the importance of U.S. chipmaking given the growing geopolitical risk surrounding Taiwan, according to people familiar with the matter who asked not to be identified because the discussions were private. . Raimondo’s goal was to urge shareholders in companies like Nvidia and Apple to recognize the economic benefits of having a U.S. foundry that can produce AI chips, the people said.
Intel currently builds factories in four US states as it seeks to become more of a foundry business, making chips for other suppliers. Earlier this year, Intel received up to $8.5 billion in CHIPS Act funding from the Biden administration and could receive an additional $11 billion in loans from the legislation, which was passed in 2022.
None of the funds have been distributed yet. A senior government official told CNBC that disbursements are expected by the end of the year.
It’s an increasingly important initiative for Intel, which is crumbling the microprocessor market. In addition to losing core PC and data center market share to others Advanced gadgetsIntel is hardly on the map in AI, where Nvidia is dominant.
Intel’s foundry effort has been delayed by delays, according to sources with knowledge of the matter. TSMC also builds a foundry in Arizona and has faced similar problems.
The US Commerce Department declined to comment, as did an Intel spokesman.
Intel’s board of directors is meeting this week to discuss the company’s restructuring plans, including the possible spin-off of its design business from its foundry, according to people with knowledge of the matter. Intel CFO David Zinsner told investors on a conference call last week that the business split made sense.
“What I can predict is that we will create more separation between these two businesses,” Zinsner said. “It’s important for customers to see that separation.”
In its earnings report last month, Intel reported profit and revenue that trailed analysts’ estimates and said it was cutting 15 percent of its workforce. After the report, the stock had its worst day in 50 years, falling to its lowest level in more than a decade.
Nvidia makes almost all of its cutting-edge chips at TSMC, which is also a major manufacturer for AMD, Apple, Amazon. Google and Broadcom. Concerns have been growing for years that China could invade Taiwan, posing a huge risk to the US chip industry.
Nvidia CEO Jensen Huang spoke at the Goldman Sachs Communicopia conference on Wednesday and was asked about the geopolitical risk associated with Taiwan and what he would do if something were to happen.
“In case we need to switch from one fab to another, we have the ability to do that,” Huang said, speaking to Goldman Sachs CEO David Solomon. “We won’t be able to have the same level of performance or cost, but we will be able to provide the supply.”
CLOCK: Intel near lowest level since 2010
