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Intel’s $20bn Chip Investment Could Mean Much Less Chinese Manufacturing

Intel’s $20 billion investment in building its own chip plants in Arizona could bring a huge percentage of manufacturing out of China and back in the US.

After revealing the core processor company would invest billions in two fabrication plants, Intel CEO Pat Gelsinger told BBC having majority of supply coming out of Asia just isn’t sustainable anymore.

“Having 80 percent of all supply in Asia simply isn’t a palatable manner for the world to have its view of the most critical technology,” Gelsinger said.

“Every aspect of humanity is becoming more digital, and when it becomes digital, it runs on semiconductors. And the world needs a more balanced supply chain to accomplish that. We’re stepping in.”

Intel’s bid to move manufacturing back onshore in the US is backed by the government, which has long supported reinforcing supply chains for key industries in America.

The Biden administration is working to reduce US dependence on Chinese manufacturing.

Before Taiwan became the manufacturing hub in 1987, the US accounted for 40 per cent of all global chip manufacturing.

Now, only around 10 per cent of total chip production is in the US and it relies on importing 73 per cent from the US and 7 per cent from China.

Intel’s aggressive spending strategy will also see it open a new branch of the company called Intel Foundry Services.

Intel says it intends on opening more factories in Europe, US and beyond.

Gelsinger announced the plans and revealed it was part of a new ‘IDM 2.0’ strategy to expand Intel’s manufacturing and reach.

Gelsinger said the strategy will give Intel “a unique ability to have leadership products, with the leadership supply chain and leadership cost structure across every portion of our business.”

“We are off to the races, we’re going to be at parity and then to move to sustained leadership, over time,” he added.

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