Intel CEO Kissinger: Semiconductors are like oil, fabs must be built where we want

Chip giant Intel CEO Pat Gelsinger compared semiconductors to oil in an interview ahead of his testimony before the U.S. Senate on Wednesday, saying that boosting production in the U.S. could help. Avoid a global supply shortage crisis.

"For the past fifty years, oil reserves have determined geopolitical relationships," Kissinger said. "In a digital future, where fabs are built will become more important. Let's build them in Where we want to build new manufacturing centers in the U.S. and Europe."

Fabs are factories that make semiconductors, and the vast majority of chips are currently made in Asia. Semiconductors have also been in short supply during the Covid-19 pandemic, as production disruptions have clashed with a surge in demand for chips used in electronics, from smartphones to cars to washing machines.

Under Kissinger's leadership, Intel aggressively pushed for geographic diversification in chip manufacturing. In recent months, Intel has announced massive investments to build new fabs in the U.S. and Europe. Intel also started building two chip factories in Arizona last year.

Intel, an influential company in the early days of Silicon Valley, has also been urging the U.S. and European officials to support legislation that includes government funding to help boost semiconductor production.

The remarks came as Kissinger was preparing to testify before the U.S. Senate in support of a $52 billion subsidy program for the semiconductor industry. "We have put our chips on the table to help America regain its leadership in process technology and manufacturing," he said at a subsequent hearing. "We plan to break ground on our fab in Ohio this year, but there are many challenges, and Congress needs to find a way forward on the Chip Act before then. I hope that progress can be made more quickly.”

In addition to Kissinger, Micron CEO Sanjay Mehrotra, Lam Research Corp. CEO Tim Archer and PACCAR Inc. CEO Pereston R. Preston Feight also attended the hearing. The executives joined the U.S. government in urging Congress to act.

For months, the U.S. Senate and House of Representatives have been wrangling over how to combine their different versions of the Chip Act. The bill aims to enhance U.S. competitiveness in semiconductors and promote more domestic production of chips. However, the final plan is unlikely to be finalized before the end of May. Senate Majority Leader Chuck Schumer has taken procedural steps to begin negotiations with the House of Representatives.

Kissinger isn't the first to liken semiconductors to oil. But his remarks became even more remarkable as crude prices have risen sharply this year. "While the Russian-Ukrainian conflict is not at the heart of any semiconductor supply chain, it reinforces the geopolitical instability and urgency around building a geographically balanced (US, European and Asian) supply chain," he said. All digital products Both need semiconductor support, and we have to build the fab where we want it.”

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