White House urges TSMC, Intel to grow US-based chip production
The White House is in talks with major chip producers Intel and TSMC, in an attempt to try and get more processor production to take place within the United States, a move that could eventually lead to some of Apple's A-series chips being made within the country.
The Trump administration is keen to start the development of new chip foundries in the United States, to cut down on the reliance of facilities in Asia for critical technology, a report claims. The potential for supply chain disruption, as evidenced by issues created by the coronavirus pandemic, has prompted officials to try again at convincing firms to shift some manufacturing to the United States.
Administration officials are in talks with both Intel and TSMC, correspondence seen by the Wall Street Journal, about building new facilities within the United States. While Intel does already have some chip production based in the United States, the talks center around expanding US production for the company, while TSMC would be building its first chip factory.
Intel VP of policy and technical affairs Greg Slater reportedly said Intel is "very serious about this," with its plan involving the creation of a plant for advanced chips that are securely made for government use, as well as some other customers. "We think it's a good opportunity," said Slater, "the timing is better and the demand for this is greater than it has been in the past, even from the commercial side."
For TSMC, it has allegedly been in talks with officials in the Commerce and Defense departments, along with major client Apple, about potentially building a factory in the United States. While it would have similar aims as Intel for government and military chip production, the inclusion of Apple would seemingly suggest somewhere down the line TSMC believes the iPhone maker may want to use its regional facility.
"We are actively evaluating all the suitable locations, including in the U.S., but there is no concrete plan yet," a statement from TSMC about new facilities reads.
The US government has previously applied pressure on TSMC to create a facility in the country, specifically for sensitive components used by the military, such as in fighter jets and satellites. In January, TSMC, attempted to kill off speculation about a country, claiming at the time it had no short-term plans to shift production to the US.
Though best known for Apple's A-series chip production, TSMC has a number of clients across the industry, including a number of US-based tech firms. It has made chips for Qualcomm, Nvidia, Broadcom, AMD, and even Intel, so having a US-based facility may enable those other clients to design advanced chips for use by the US military.
The creation of a TSMC foundry in the US, as well as the talks with Apple on the subject, may be a step towards Apple moving some of its production to within the United States. On face value, it would also assist the Trump administration in achieving President Donald Trump's frequent demands for US companies to bring more manufacturing back to the country, rather than offshoring it to China and other major production hubs.
Even so, a US-based TSMC foundry would not immediately allow Apple to make iPhones in the United States. Apple would have to either make considerable changes to its existing and well-established supply chains to shift production away from Asia to the United States, or create new products that are made within the country, using an entirely separate supply chain from its currently-used processes.
Though the report centers around Intel and TSMC, there is also talk about Samsung, which has a chip factory in Austin, Texas. One source claims some officials are keen to assist Samsung in expanding its current contract-manufacturing operations to create more advanced chips, again for potential government use.
The Trump administration is keen to start the development of new chip foundries in the United States, to cut down on the reliance of facilities in Asia for critical technology, a report claims. The potential for supply chain disruption, as evidenced by issues created by the coronavirus pandemic, has prompted officials to try again at convincing firms to shift some manufacturing to the United States.
Administration officials are in talks with both Intel and TSMC, correspondence seen by the Wall Street Journal, about building new facilities within the United States. While Intel does already have some chip production based in the United States, the talks center around expanding US production for the company, while TSMC would be building its first chip factory.
Intel VP of policy and technical affairs Greg Slater reportedly said Intel is "very serious about this," with its plan involving the creation of a plant for advanced chips that are securely made for government use, as well as some other customers. "We think it's a good opportunity," said Slater, "the timing is better and the demand for this is greater than it has been in the past, even from the commercial side."
For TSMC, it has allegedly been in talks with officials in the Commerce and Defense departments, along with major client Apple, about potentially building a factory in the United States. While it would have similar aims as Intel for government and military chip production, the inclusion of Apple would seemingly suggest somewhere down the line TSMC believes the iPhone maker may want to use its regional facility.
"We are actively evaluating all the suitable locations, including in the U.S., but there is no concrete plan yet," a statement from TSMC about new facilities reads.
The US government has previously applied pressure on TSMC to create a facility in the country, specifically for sensitive components used by the military, such as in fighter jets and satellites. In January, TSMC, attempted to kill off speculation about a country, claiming at the time it had no short-term plans to shift production to the US.
Though best known for Apple's A-series chip production, TSMC has a number of clients across the industry, including a number of US-based tech firms. It has made chips for Qualcomm, Nvidia, Broadcom, AMD, and even Intel, so having a US-based facility may enable those other clients to design advanced chips for use by the US military.
The creation of a TSMC foundry in the US, as well as the talks with Apple on the subject, may be a step towards Apple moving some of its production to within the United States. On face value, it would also assist the Trump administration in achieving President Donald Trump's frequent demands for US companies to bring more manufacturing back to the country, rather than offshoring it to China and other major production hubs.
Even so, a US-based TSMC foundry would not immediately allow Apple to make iPhones in the United States. Apple would have to either make considerable changes to its existing and well-established supply chains to shift production away from Asia to the United States, or create new products that are made within the country, using an entirely separate supply chain from its currently-used processes.
Though the report centers around Intel and TSMC, there is also talk about Samsung, which has a chip factory in Austin, Texas. One source claims some officials are keen to assist Samsung in expanding its current contract-manufacturing operations to create more advanced chips, again for potential government use.
Comments
Protectionism and economic populism may appeal to parts of the country that have lost significant manufacturing jobs, but this is not something I believe most tech multinationals would see as in the best interests of their shareholders and customers. Capitalism isn't a sentimental system. It's a system that maximizes shareholder value while delivering the best innovative products at the lowest possible prices. That's the stark reality and unless the US embraces 'state capitalism' (as the Chinese Communist Party as done) I don't see this happening. Not trying to make a political argument. Just an observation based on reality.
COVID19 just uncovered the fact that the West had many products, especially PPE, majority manufactured in China. That the supply chain failed for PPE is one of the reasons that the West is looking at incentives and regulations to change that. China didn't help this by having Chinese companies, operating around the world, buying up PPE; hence, shortages that wouldn't have occurred otherwise.
The U.S. Treasury is borrowing $3 Trillion to cover the various stimulus legislation. How does the Treasury borrow money? They sell U.S. Treasury notes, that’s how. Any guesses as to who has been buying most of those treasury notes the past few decades? Come on now, you should know this. It’s CHINA of course. China owns big chunk of our debt these days, second only to Japan as of 2019. The U.K. owns a lot of it too. And a lot of Arab sheiks own a bunch. When will we be labeled as a credit risk?
The problem was a massive spike in demand that could not be met.
One of the biggest problems was that many countries were not ready for this situation. Protocols were not really appropriate, stocks were not high enough etc.
I expect that to change radically as a result of what we've been through and as part of the solution we should see improvements across the board and countries will be accountable for their preparedness.
Expect to see regional manufacturing hubs with manufacturers able to switch their production lines from non-emergency use to emergency use in very short times. Expect to see warehouses spring up with far more supplies on hand than before. Expect more companies to improve tele work options. Expect field hospitals to pop-up and become fully operational at the drop of a hat.
Of course, these changes will have to be plumbed into some geographical framework to ensure that demands on varying supply chains can be met with agility.
The bulk of our needs can still be sourced in China if necessary as long as demand can be met while the system is under stress.
For that to happen, we have to make some big changes in how we do things but I'm sure we will learn.
We won't learn from what's happening now because we haven't learned from any of our previous mistakes.
The link is wrt strategic stockpiles, which were intended to provide a buffer until production could be ramped up, but the issue today is, that most of the production of PPE and pharmaceuticals is overseas, and worse, most is produced by an authoritarian adversary.
No, it doesn't make sense to continue a majority sourcing of critical items from China, like pharmaceuticals and PPE.
I do agree that there should be a diversity of manufacturing sites worldwide, and stockpiles of critical supplies should be dispersed among and within nations, to give much more resilience to the supply of these items in a crisis.
Certainly the cost of labour (for the manufacturing part) is a huge issue (the engineering for many tech products -- including nearly all of Apple's products -- is and has always been done largely in California), but also in some cases there is the matter of where the materials needed and the root-manufacturing skills are located that drives these decisions. In other cases, US companies are motivated by tax breaks that ought to be reserved only for companies that manufacture in the US but instead are given to companies that outsource.
The current call for more chip manufacturing in the US is motivated in part by security concerns (a portion of the customers that want chips made here would be ... the various agencies of the US government) but mostly by nationalism caused by the current administration's inability to get along with our traditional allies (but strangely get along very well with our well-established adversaries ...).