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Intel and TSMC in talks about building US chip foundries

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According to reports, the US government is in discussions with at least two major semiconductor companies about the possibility of establishing chipmaking factories on American soil, potentially reducing dependence on Asian manufacturing.

The Wall Street Journal (WSJ) has reported that Intel and Taiwan Semiconductor Manufacturing Co. are in discussions with White House officials about building semiconductor foundries in the US.

The US government and some tech companies have been attempting to reduce dependence on chipmaking factories based in China and other East Asian countries. Concerns about this dependence have escalated in recent years amid the US-China trade war and national security concerns, as well as severe disruption to global supply chains caused by the Covid-19 pandemic. The pandemic has escalated diplomatic tensions between the US and China, with leaders on both sides issuing provocative comments about the origins and handling of the coronavirus outbreak.

The WSJ and Reuters obtained a letter sent from Intel CEO Bob Swan to the US Department of Defence (DoD) in late March which said that the company is willing to build a facility in partnership with the Pentagon “given the uncertainty created by the current geopolitical situation”. The letter added: “We currently think it is in the best interest of the US and of Intel to explore how Intel could operate a commercial US foundry to supply a broad range of microelectronics.”

Although Intel already has some US operations, it only makes chips for its own products. The proposed facility would be a foundry which other companies could use to manufacture chips for their products.

An Intel spokesperson confirmed to Reuters that the company is in discussions with the DoD regarding improving domestic sources for microelectronics and related technology. “Intel is well positioned to work with the US government to operate a US-owned commercial foundry and supply a broad range of secure microelectronics,” they said.

Reports also claim that TSMC – which has always operated on a foundry model – has been in talks with the DoD and Department of Commerce officials, as well as Apple, about the possibility of building a semiconductor factory in the US. TSMC indicated that it is actively considering locations for new factories, including in the US, although it has “no concrete plan” in place yet.

TSMC has an impressive roster of clients which include Apple, Qualcomm, Nvidia, AMD, HiSilicon, as well as companies which already have their own chipmaking operations, such as Intel.

The WSJ also reported that some US officials have been in discussions with Samsung about the possibility of expanding its existing contract-manufacturing operations in the US (it has one chipmaking factory in Austin, Texas) to begin producing more advanced chips.

There are many obstacles to pass before Intel or TSMC agree to build new chipmaking facilities in the US. A chipmaking plant would be likely to cost billions of dollars to build and the companies may demand government subsidies or other incentives in order to go ahead.

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