U.S. Govt pushes Nvidia and Apple to use Intel’s foundries — Department of Commerce Secretary Raimondo makes appeal for US-based chip production

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 US Commerce Secretary Gina Raimondo.
Credit: Reagan Foundation

During a meeting with U.S. Department of Commerce Secretary Gina Raimondo, Intel CEO Pat Gelsinger expressed frustration with America’s reliance on TSMC to produce advanced chips. After this, Raimondo (via CNBC) went on private meetings with some public market investors, including shareholders of tech giants Nvidia and Apple, encouraging them to push their companies to use U.S. foundries to produce AI chips.

The discussions between the investors and the Secretary were not publicly revealed. Still, sources say that the latter highlighted the growing geopolitical risk around Taiwan, especially as China is eyeing to invade the de facto country. Aside from this, Washington is also investing more on the American semiconductor industry than the last 28 years combined, so the White House is likely keen on pushing American companies to use locally produced chips.

Intel is gunning to become one of the top players in the foundry business, aiming to go head-to-head with TSMC and Samsung. However, recent developments revealed that Intel Foundry Services (IFS) is struggling to gain traction, causing the company to lose $1.6 billion and practically making its stock price fall by 30% overnight. Because of this, Intel is reportedly considering spinning off its manufacturing division and other non-crucial business units, similar to how AMD spun off GlobalFoundries in 2008.

However, it’s also in the interest of the Biden administration that Intel succeeds, especially as it is one of the biggest recipients of funds under the CHIPS Act. Although sources say that the federal government is delaying the disbursement of CHIPS Act money to Team Blue until it can get its act together, it seems that the government still wants to see them succeed. Furthermore, while Raimondo did not mention Intel during the meetings, its status as one of the foremost chipmakers in the U.S. has likely been discussed privately.

Many leading American tech companies, like Nvidia, AMD, Apple, Amazon, and Google, design their chips but use foreign foundries like TSMC for their supply despite the distance and geopolitical risk brought about by its location.

However, Nvidia CEO Jensen Huang said during the Goldman Sachs conference that the GPU maker could shift its fab if needed. “In the event that we have to shift from one fab to another, we have the ability to do it. We won’t be able to get the same level of performance or cost, but we will be able to provide the supply.”

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