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**JANUARY 24, 2022**
Kuttner on TAP
Patriotic CEOs?
Intel Corp., once a national champion, then a major partner of China,
recommits to making it in the USA.
Patrick Gelsinger, the new CEO of Intel, announced late last week that
the giant chip manufacturer would invest as much as $100 billion over
the next decade in a new semiconductor facility
near Columbus, Ohio. The company has committed an initial $20 billion to
start work on two new factories that will provide 3,000 permanent jobs
plus 7,000 construction jobs.
This announcement marks a big shift in Intel's global strategy. Under
its longtime CEO Andy Grove, Intel was one of the first to shift chip
production to China, taking advantage of billions of dollars in Chinese
government subsidies and its cheap labor. Intel opened its first Beijing
office
in 1986.
But today Intel is singing a different tune. Intel, still with lots of
investment in China, had to walk back its suggestion that suppliers
cease doing business in Xinjiang, where Uyghurs are repressed, and
apologize
to the Chinese government.
Why Intel's change of heart? One reason is the supply chain mess and
the resulting semiconductor shortage. Another is the fact that Intel has
been falling behind some of its competitors. But the biggest reason is
China.
Intel's move is part of what's becoming a reshoring wave in the
semiconductor industry. But much of that is U.S. production by foreign
corporations. Taiwan's TSMC is building a $12 billion complex near
Phoenix. And Samsung
has construction set to begin this year on a $17 billion factory in
Taylor, Texas.
None of this, however, is a substitute for U.S. production by U.S.
firms. Gelsinger is also a big booster of the administration's
proposed CHIPS Act, which would add $52 billion in U.S. government
subsidy for semiconductors made in America. That act has been included
as part of Sen. Chuck Schumer's bipartisan U.S. Innovation and
Competition Act (USICA).
But the House has refused to act on USICA, mainly because Schumer's
bill, which passed the Senate 68-32 in June, included several sweetheart
provisions for global business, including a two-year tariff holiday for
PPE imported from China, and a proposed free-trade deal with Taiwan, the
world's leading supplier of semiconductors.
Schumer's bipartisan bill also rejected a key labor standards
provision proposed by Sens. Brown and Portman. Negotiations are
continuing and compromise legislation is expected to pass both houses by
the end of February.
It can't come too soon. Spurred by the supply chain crisis, the
arrogance of China, and the leadership of the Biden administration in
breaking with predecessors and committing the sin of economic planning,
industrial policy is at last coming to America.
****
~ ROBERT KUTTNER
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**Robert Kuttner's latest book is**
The Stakes: 2020 and the Survival of American Democracy
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