Intel CEO says Biden wants chip factories ‘bigger’ and ‘sooner’

Intel Corp. CEO Pat Gelsinger said Thursday that President Biden is pushing him to get new federally funded chip factories up and running faster, amid reports of delays and creeping costs in Washington’s flagship initiative to revitalize U.S. high-tech manufacturing.

“He wants it bigger, he wants it sooner,” Gelsinger said at The Washington Post’s Futurist Summit of President Biden’s wishes for the Intel projects. He added that Commerce Secretary Gina Raimondo “now has sales targets for me.”

The Biden administration announced Wednesday that Intel will receive $8.5 billion in grants and $11 billion in loans to help it reshore some of its computer-chip production from overseas, making the Santa Clara, Calif.-based chip titan the biggest winner of Washington’s $52 billion bet on an American industrial renaissance.

Semiconductors — colloquially called “chips” — are the brains inside all computing devices, from smartphones to supercomputers to the control systems for smart missiles. U.S. officials have been alarmed that the industry’s center of gravity has shifted to China and other lower-cost nations in East Asia, calling the development a security risk for the United States. Biden has vowed to bring the industry back.

Gelsinger called the package of grants and other supports for U.S. chipmakers “the most important piece of industrial policy since World War II,” saying that the program was necessary if the United States is to compete with international rivals.

Gelsinger said that the timeline for Intel’s new Ohio factory is still “within the range,” after a report from the company to Ohio officials this month showed the date for the facility to become operational had slipped from an early estimate of 2025 to 2027 or later.

“We’ve gone through a pretty harsh economic cycle, and the semiconductor industry has been hit a bit harder,” he said. “If you go to Columbus … we have thousands of construction workers on the site today.”

Gelsinger said he’s had “many conversations” with OpenAI CEO Sam Altman about building up the supply chain for AI chips and that he expects to produce them at Intel’s Ohio facility.

“Sam, I hope to have many of these algorithms running on the chips that we’re manufacturing in what we announced yesterday,” Gelsinger said.

Anna Makanju, OpenAI’s vice president of global affairs, said at the summit Thursday that the company was considering a number of potential chip investment partners after news broke that Altman was talking with investors in the United Arab Emirates.

“We are talking to lots of people to try to understand who is positioned to make these kinds of investments,” Makanju said. “But we obviously always stay close to the U.S. government on this.”

She said that even with the Biden administration’s investments in the sector, there still may be a continued global chips shortage, as companies around the world scramble for them to power advanced AI systems.

“The demand is really going to skyrocket,” she said, “and it’s not clear that the supply is going to meet it.”

After decades of laissez-faire economic policy, the idea of a strong national industrial policy led by Washington has become fashionable again as U.S. officials debate how to stem China’s technological rise. Chips have been a prime example in a sector where letting market forces work unfettered has not produced the results that the U.S. government seeks. U.S. chipmakers, Intel included, have largely offshored their production, driven by profit maximization.

Stefanie Tompkins, director of the Pentagon’s Defense Advanced Research Projects Agency, or DARPA, said at the summit that there was a need for government-led technology investments in areas where profitability could not be guaranteed for the private sector.

“In the commercial world, obviously there’s a lot of money going into technology development, but it is always going to be aligned primarily with a business motive. You have to be able to make money,” she said. “The kinds of things that DARPA and other government organizations tend to think about, we are often thinking about the problems that don’t align in that space.”

Gelsinger also said he believed government leadership was required to give U.S. industry the right financial incentives.

“None of our policies in the U.S. encourage long-term capital investments,” he said. “We’re on quarterly profit cycles … if you’re only measured on a 90-day shot clock, that’s what you get.”

He added: “I do believe that there’s fundamental rethinking required for these long industrial capital investment cycles, and making sure our financial and industrial policy support the R&D. And clearly Intel stumbled. We had multiple generations of nontechnical leaders that didn’t have this vision of manufacturing, and product innovation, and what was required.”