Intel boss presses Congress for manufacturing subsidies

Gelsinger also confirms he's ended multi-billion share-buyback scheme


Intel CEO Pat Gelsinger on Wednesday urged US Congress yet again to pass $52 billion in funding swiftly to boost America's semiconductor industry – and said Wall Street's negative response to his costly manufacturing expansion plan is proof Intel is worthy of the subsidies.

Gelsinger made his comments alongside the CEOs of memory vendor Micron and semiconductor equipment maker LAM Research during a US Senate Committee hearing that largely focused on the pros and cons of passing subsidies for chipmakers. While the Senate and House of Representatives have each passed a version of the spending legislation, they have yet to reconcile the bills' differences.

"We've already wasted several quarters since the Senate acted last year, and now it's time for us to move forward rapidly," Gelsinger said of the Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act during the hearing of the Senate Committee on Commerce, Science, and Transportation.

Senator Tammy Baldwin (D-WI) said Congress is making progress on the semiconductor spending bill but didn't provide a timeline. "Congress is on the brink of putting together a conference committee to advance the variously named competition bill. And I hope that we will do our jobs without delay," she said.

The semiconductor CEOs and pro-subsidy committee members reiterated the reasons for using US taxpayer dollars to aid with a domestic expansion of semiconductor manufacturing: fighting against future chip shortages and inflation; reducing reliance on chipmakers in Asia, where around 80 percent of chipmaking happens now; hedging against future geopolitical instability, particularly in light of concerns about Chinese aggression against Taiwan; and growing US manufacturing jobs.

But the CEOs of Intel, Micron and LAM Research also faced pointed questions about their spending plans and whether they deserved to receive subsidies. They were also asked about doing business in China as well as their commitments to environmental sustainability and diversity.

A few times, Gelsinger emphasized that Intel is "putting our chips on the table" by spending tens of billions of dollars in creating new manufacturing plants over the next several years. He pointed out that the plan is coming at a great cost to the company, and it hasn't made investors happy.

"I've lowered our profitability by 600 basis points this year. I've made the company free cash flow negative for the first time in three decades. I've doubled our capital investments, all to the howls of Wall Street," he said about the negative Wall Street response to Intel's investor meeting last month.

Without the funding, Intel would continue to build out new fabs in Arizona and Ohio, Gelsinger said, but the expansion would take longer, and it wouldn't be as comprehensive.

"The CHIPS Act is intended, from my perspective, to enable me to go bigger and faster than the bold commitments that we have already made that have recieved very negative response from Wall Street," he said. "We want to do more and faster. This is all about restoring US [competition], bringing back this mantle from Asia on a critical industry, not only for our economy but also our national security."

Understandable support

Sanjay Mehrotra, the CEO of Micron, echoed his support for the CHIPS for America Act but also urged Congress to pass refundable tax credits for the industry that he said would help the US be more competitive versus subsidies and tax incentives offered in fab-rich Asia.

"Timing is of the essence. Other countries are moving forward. We need to catch up in this area to get a level playing field," he said.

Timing is of the essence. Other countries are moving forward. We need to catch up in this area to get a level playing field

Senator Rick Scott (R-FL) was among the few who expressed deep skepticism of the chip subsidies and asked what the return on investment would be for taxpayers. "I feel like we're fiduciaries for the American taxpayer. They give us their dollars. They want to make sure those dollars are spent well," he said.

Gelsinger pointed to the job-creating potential of new fabs and said every job created by Intel, on average, creates "greater than ten other jobs," adding "These are seen as some of the most lucrative, job-creating, tax-producing, industry- and community-creating jobs in America."

Scott asked how Intel would respond if China invaded Taiwan, where most chipmaking is concentrated, and Gelsinger said those fears are why Congress should pass the CHIPS for America Act now.

"The concerns that I have around the geopolitical situation drive the passion and urgency to build this industry in the US," Gelsinger said. "This is a core reason why we are here. We have allowed this industry to shift to Asia. It is time for us to get it back onto American soil."

Back to basics

Senator Baldwin said while she is supportive of the bill, she pointed to concerns about the historically large shareholder buybacks done by Intel and asked the spending plans of Intel, Micron and LAM Research.

"As a supporter of the CHIPS Act, I want to ensure that the federal government gets a proper return on its investment, namely an increase in the domestic semiconductor manufacturing base," she said.

Gelsinger said he ceased Intel's stock buyback purchase program "immediately" upon his return to the company and reiterated Intel's "radical increase" in capital expenditures.

Mehrotra did not mention his view of shareholder buybacks but emphasized that the company is the "global leader" for DRAM and NAND technologies because of its massive investments.

"We have done so by making billions and billions and tens of billions — more than that — in investments over the course of the last few years in leading edge R&D and investments in manufacturing," he said.

Tim Archer, CEO of LAM Research, said his company spends about 90 per cent of its research and development in the US and that it will continue to invest in future development.

"Our priority for the future is just to continue to invest to accelerate innovation in support of the domestic and global semiconductor manufacturing industry in order to try to alleviate many of the global shortages that we've seen in chips that are affecting so many different industries," he opined. ®

Broader topics


Other stories you might like

  • Despite 'key' partnership with AWS, Meta taps up Microsoft Azure for AI work
    Someone got Zuck'd

    Meta’s AI business unit set up shop in Microsoft Azure this week and announced a strategic partnership it says will advance PyTorch development on the public cloud.

    The deal [PDF] will see Mark Zuckerberg’s umbrella company deploy machine-learning workloads on thousands of Nvidia GPUs running in Azure. While a win for Microsoft, the partnership calls in to question just how strong Meta’s commitment to Amazon Web Services (AWS) really is.

    Back in those long-gone days of December, Meta named AWS as its “key long-term strategic cloud provider." As part of that, Meta promised that if it bought any companies that used AWS, it would continue to support their use of Amazon's cloud, rather than force them off into its own private datacenters. The pact also included a vow to expand Meta’s consumption of Amazon’s cloud-based compute, storage, database, and security services.

    Continue reading
  • Atos pushes out HPC cloud services based on Nimbix tech
    Moore's Law got you down? Throw everything at the problem! Quantum, AI, cloud...

    IT services biz Atos has introduced a suite of cloud-based high-performance computing (HPC) services, based around technology gained from its purchase of cloud provider Nimbix last year.

    The Nimbix Supercomputing Suite is described by Atos as a set of flexible and secure HPC solutions available as a service. It includes access to HPC, AI, and quantum computing resources, according to the services company.

    In addition to the existing Nimbix HPC products, the updated portfolio includes a new federated supercomputing-as-a-service platform and a dedicated bare-metal service based on Atos BullSequana supercomputer hardware.

    Continue reading
  • In record year for vulnerabilities, Microsoft actually had fewer
    Occasional gaping hole and overprivileged users still blight the Beast of Redmond

    Despite a record number of publicly disclosed security flaws in 2021, Microsoft managed to improve its stats, according to research from BeyondTrust.

    Figures from the National Vulnerability Database (NVD) of the US National Institute of Standards and Technology (NIST) show last year broke all records for security vulnerabilities. By December, according to pentester Redscan, 18,439 were recorded. That's an average of more than 50 flaws a day.

    However just 1,212 vulnerabilities were reported in Microsoft products last year, said BeyondTrust, a 5 percent drop on the previous year. In addition, critical vulnerabilities in the software (those with a CVSS score of 9 or more) plunged 47 percent, with the drop in Windows Server specifically down 50 percent. There was bad news for Internet Explorer and Edge vulnerabilities, though: they were up 280 percent on the prior year, with 349 flaws spotted in 2021.

    Continue reading
  • ServiceNow takes aim at procurement pain points
    Purchasing teams are a bit like help desks – always being asked to answer dumb or inappropriate questions

    ServiceNow's efforts to expand into more industries will soon include a Procurement Service Management product.

    This is not a dedicated application – ServiceNow has occasionally flirted with templates for its platform that come very close to being apps. Instead it stays close to the company's core of providing workflows that put the right jobs in the right hands, and make sure they get done. In this case, it will do so by tickling ERP and dedicated procurement applications, using tech ServiceNow acquired along with a company called Gekkobrain in 2021.

    The company believes it can play to its strengths with procurements via a single, centralized buying team.

    Continue reading
  • HPE, Cerebras build AI supercomputer for scientific research
    Wafer madness hits the LRZ in HPE Superdome supercomputer wrapper

    HPE and Cerebras Systems have built a new AI supercomputer in Munich, Germany, pairing a HPE Superdome Flex with the AI accelerator technology from Cerebras for use by the scientific and engineering community.

    The new system, created for the Leibniz Supercomputing Center (LRZ) in Munich, is being deployed to meet the current and expected future compute needs of researchers, including larger deep learning neural network models and the emergence of multi-modal problems that involve multiple data types such as images and speech, according to Laura Schulz, LRZ's head of Strategic Developments and Partnerships.

    "We're seeing an increase in large data volumes coming at us that need more and more processing, and models that are taking months to train, we want to be able to speed that up," Schulz said.

    Continue reading
  • We have bigger targets than beating Oracle, say open source DB pioneers
    Advocates for MySQL and PostgreSQL see broader future for movement they helped create

    MySQL pioneer Peter Zaitsev, an early employee of MySQL AB under the original open source database author Michael "Monty" Widenius, once found it easy to identify the enemy.

    "In the early days of MySQL AB, we were there to get Oracle's ass. Our CEO Mårten Mickos was always telling us how we were going to get out there and replace all those Oracle database installations," Zaitsev told The Register.

    Speaking at Percona Live, the open source database event hosted by the services company Zaitsev founded in 2006 and runs as chief exec, he said that situation had changed since Oracle ended up owning MySQL in 2010. This was as a consequence of its acquisition that year of Sun Microsystems, which had bought MySQL AB just two years earlier.

    Continue reading
  • Beijing needs the ability to 'destroy' Starlink, say Chinese researchers
    Paper authors warn Elon Musk's 2,400 machines could be used offensively

    An egghead at the Beijing Institute of Tracking and Telecommunications, writing in a peer-reviewed domestic journal, has advocated for Chinese military capability to take out Starlink satellites on the grounds of national security.

    According to the South China Morning Post, lead author Ren Yuanzhen and colleagues advocated in Modern Defence Technology not only for China to develop anti-satellite capabilities, but also to have a surveillance system that could monitor and track all satellites in Starlink's constellation.

    "A combination of soft and hard kill methods should be adopted to make some Starlink satellites lose their functions and destroy the constellation's operating system," the Chinese boffins reportedly said, estimating that data transmission speeds of stealth fighter jets and US military drones could increase by a factor of 100 through a Musk machine connection.

    Continue reading
  • How to explain what an API is – and why they matter
    Some of us have used them for decades, some are seeing them for the first time on marketing slides

    Systems Approach Explaining what an API is can be surprisingly difficult.

    It's striking to remember that they have been around for about as long as we've had programming languages, and that while the "API economy" might be a relatively recent term, APIs have been enabling innovation for decades. But how to best describe them to someone for whom application programming interfaces mean little or nothing?

    I like this short video from Martin Casado, embedded below, which starts with the analogy of building cars. In the very early days, car manufacturers were vertically integrated businesses, essentially starting from iron ore and coal to make steel all the way through to producing the parts and then the assembled vehicle. As the business matured and grew in size, car manufacturers were able to buy components built by others, and entire companies could be created around supplying just a single component, such as a spring.

    Continue reading

Biting the hand that feeds IT © 1998–2022