Can Intel Become the Chip Champion the US Needs? (ft.com) 48
"Hindsight is 20/20," says Ann Kelleher, head of technology development at Intel and the executive charged with restoring the US chipmaker's manufacturing processes. "It's very easy to look back and say, 'If something different was done...'" Intel is today at another crucial juncture. If, as planned, the company finally produces chips made with EUV in large volume later this year, it will be an important step on the road back. Nowhere will progress be watched more anxiously than in Washington, where the Biden administration is facing an imminent decision about how much financial backing to throw behind the company. Last year's US Chips Act committed $52bn in direct subsidies to support semiconductor manufacturing and boost research and development, along with an estimated $24bn worth of tax credits over the next eight years. The law was designed to reverse a slide that has taken the US share of chip production to 12 per cent, from 37 per cent in 1990. The centrepiece of that plan is to bring leading-edge manufacturing back to the US. For better or worse, that leaves Washington with little choice but to bet heavily on Intel, despite it being the laggard in one of the tech world's most important races. Yet falling behind in advanced chip production is not the only problem hanging over Intel.
Big shifts in its customers' needs -- such as the rise of artificial intelligence -- are threatening to sideline its traditional PC and server chips. Its attempt to go into direct competition with TSMC by becoming a so-called chip foundry, manufacturing chips on behalf of other companies, represents the biggest change to its business since it abandoned its original memory chips for processors nearly 40 years ago. To make things even harder, a yawning financial hole has opened up under the company at just the moment it is trying to make up for years of under-investment with a surge in capital spending. The depth of the reversal, which the company says is caused by a temporary inventory correction, shocked Wall Street in January, when Intel warned its revenue would tumble 40 per cent in the first three months of this year. The setbacks mean that a central piece of US industrial policy is now riding on one of the most difficult and complex tech turnrounds ever attempted. As the US Department of Commerce begins to weigh how to distribute the Chips Act subsidies, deciding how fiercely to back Intel will be a central question.: