President Joe Biden called on Congress to pass the CHIPS Act, a law that would provide chipmakers with $52 billion in subsidies to advance semiconductor manufacturing in the United States, during his State of the Union speech Tuesday.
Biden lauded Intel Chief Executive Pat Gelsinger, who last month announced a $20 billion investment for two new chip fabrication facilities, or fabs, that the company will build just west of Columbus, Ohio. Intel plans to spend $100 billion to build the Ohio "megafab" over the next decade, with an eventual total of eight fabs, but the speed of that investment will depend on the US subsidy, Gelsinger has said.
"Intel's CEO, Pat Gelsinger, who is here tonight, told me they are ready to increase their investment from $20 billion to $100 billion. That would be one of the biggest investments in manufacturing in American history," Biden said. "And all they're waiting for is for you to pass this bill. ... Send it to my desk. I'll sign it."
The Senate passed a bill funding the CHIPS Act in 2021, and the House of Representatives followed suit in February, but the differences in the bills haven't been ironed out in committee and the subsidy hasn't arrived despite some bipartisan support. The funding would help the US compete with government help in Taiwan and South Korea, where leading chipmakers Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung have the bulk of their operations. The US subsidies would knock about $3 billion off the $10 billion price tag for a new fab, a subsidy level Intel says matches those in Asia.
Chipmakers and politicians want to boost chipmaking in the US to help restore the country's manufacturing prowess. The US share of chip manufacturing slid from 37% in 1990 to 12% today, and processors are crucial not just to mobile phones, internet companies and PCs. They also are essential to automobiles, washing machines and just about anything with a battery or power cord.
With a global chip shortage keeping everything from cars to Sony PlayStations out of consumers' hands and contributing to inflationary price increases, there are significant tailwinds to help persuade politicians to fund new chip work. Boosting US chip manufacturing should make supply chains more resilient to protect against political and technical problems.
Intel's new fabs in Ohio won't come online until 2025, though. And even massive subsidies won't mean the US can match the Asian manufacturing clout. The Boston Consulting Group expects it would take $900 billion to $1.23 trillion in spending to create self-sufficient semiconductor supply chains worldwide. For just the US, it's $350 billion to $420 billion.
Intel's spending, while mammoth, still trails that of Samsung and TSMC, which in recent years surpassed Intel in chipmaking leadership. Intel's plan to reclaim its chip technology lead by 2025 hinges on several major challenges, including rapidly advancing its manufacturing and launching a very different business making chips for others, not just its own designs.
Ohio, while far from Intel's main operations in Silicon Valley, Oregon and Arizona, is notable. Given that Ohio is a key electoral battleground, it's no surprise Biden opened up the White House for Intel's announcement and touted it again during Tuesday's high-profile speech.
Ohio also is close to automakers whose products Intel hopes to help modernize. In February, Intel launched a new automotive division for its Intel Foundry Service to manufacture others' chips.
'Hold social media platforms accountable'
In another part of his address, Biden called for stronger privacy protections on social media and a ban on advertising targeted to children. "We must hold social media platforms accountable for the national experiment they're conducting on our children for profit," he said in prepared remarks.
The president singled out Frances Haugen , a former product manager at Facebook who leaked internal corporate documents that in part formed the basis of a Wall Street Journal series that found the company ignored research about how its Instagram photo platform can harm teen girls.
"Thank you," Biden said to Haugen, who was in attendance. "Thank you for the courage you showed."