Intel, Micron CEOs to make case for U.S. semiconductor subsides: testimony

The Intel logo is shown at E3, the world's largest video game industry convention in Los Angeles
FILE PHOTO: The Intel logo is shown at E3, the world's largest video game industry convention in Los Angeles, California, U.S. June 12, 2018. REUTERS/Mike Blake

March 22, 2022

By David Shepardson

WASHINGTON (Reuters) – The chief executives of Intel and Micron will make the case Wednesday for U.S. government subsidies to boost semiconductor manufacturing before the U.S. Senate Commerce Committee.

Intel Chief Executive Officer Pat Gelsinger will tell the committee “there is an urgent need for the federal government to incentivize more private sector investment in the United States to enable a resilient and innovative semiconductor ecosystem,” previously unreported testimony viewed by Reuters says.

Micron Chief Executive Officer Sanjay Mehrotra says in his written testimony that approving $52 billion for chips “will kick start investment in workforce development, R&D, innovation, and expansion of manufacturing in the near term.”

A persistent industry-wide shortage of chips has disrupted production in the automotive and electronics industries, forcing some firms to scale back production.

Both the Senate and House have passed versions of legislation approving $52 billion in chip subsidies in provisions known as the CHIPS Act but differ on other provisions aimed at boosting U.S. competitiveness with China.

Commerce Secretary Gina Raimondo met with senators on Tuesday and urged quick action on chips.

“The situation now in America is urgent,” Raimondo said. “We have to decrease our dependence on other countries including Taiwan on chips and the way to do that is to make more chips in America.”

Mehrotra will also call on Congress to pass “the refundable investment tax credit … to create a long-term incentive that would invigorate domestic manufacturing in the semiconductor industry.”

Micron has announced plans to invest more than $150 billion globally over the next decade in leading-edge memory manufacturing and R&D and is considering building U.S. new fabs.

Building those new fabs in the United States “require close coordination with federal and state policies to ensure the economic viability of our operations,” Mehrotra’s testimony says, adding “we anticipate that a significant amount of federal funding will be required to make a mega-fab viable.”

Intel recently announced plans to invest $20 billion in Ohio to build two new mega fabs that could grow to eight mega fabs

and $100 billion “assuming support from the CHIPS Act,” Gelsinger’s testimony says.

Lam Research Chief Executive Officer Tim Archer, who heads the semiconductor manufacturing equipment company, will tell lawmakers new U.S. fabs “will depend on semiconductor manufacturing equipment and materials.”

Archer says a Commerce Department grant program should be able to “provide incentives across the entire value chain” and support an “all-of-ecosystem approach.”

PACCAR Chief Executive Officer Preston Feight will tell the committee the trucking manufacturing industry has been forced at times to pay brokers “20 to 30 times” the contract costs to get chips.

Feight’s testimony suggests “companies requesting CHIPS Act funding be required to meet the needs of American critical businesses, including truck manufacturers, before they are approved to receive U.S. taxpayer dollars.”

(Reporting by David Shepardson, Editing by Franklin Paul, Bernard Orr)