US: Semiconductor companies criticize subsidies that favor Intel

Deepak Gupta July 19, 2022
Updated 2022/07/19 at 12:39 PM

With the sharp shortage of chips that the tech industry felt during the pandemic and that it still feels today, there has never been so much need to increase the amount of components manufactured. And, in this sense, we have seen several measures, in Europe, America and Asia, to strengthen this sector, and many of these measures involve the construction of new factories.

The United States, for example, has a new proposal for the Chip Act, but now semiconductor companies are questioning state subsidies, in order to determine the benefits that the giant Intel would receive in relation to the others.

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US chip law may favor Intel

According to the most recent information, semiconductor companies are now questioning the unequal advantages Intel could receive under the proposed US Chip Act. The criticism and discontent of these companies relate to the project that should allocate an amount of 52 billion dollars in subsidies and tax credits for investment in this sector, but which will favor Intel.

This project mainly aims to boost the chip industry in the US, as a way to compete and make the country less dependent on China in this segment. The vote on the project, according to US Senate leader Chuck Schumer, could take place as early as this Tuesday (19).

The concern of semiconductor companies is that the project will benefit the manufacturer led by Pat Gelsinger. This is because Intel manufactures its own chips, in partnership with other companies, such as Texas Instruments and Micron Technology. As such, the Californian brand will use the money from this subsidy to build new factories and further distance itself from its competition in the country.

Intel

Names like AMD, Qualcomm and Nvidia also produce their own chips, however they rely on other manufacturers to produce them.

Last Friday (15) the Semiconductor Industry Association, representative of semiconductor companies, said in a statement that it asked senators to pass a separate version of the Fabs Act, which guarantees support in the production of the design of these chips. According to the entity:

We are encouraged that the legislation is progressing and we continue to support the enactment of $52 billion in Chip Act investments and a Fabs Act investment tax credit for manufacturing and design.

Information indicates that some workers from companies competing with Intel are opposed to these projects if they do not include design work. These sources also explain how Intel can benefit from these subsidies, noting that "Intel can get $20 billion under the Chip Act and another $5 billion or $10 billion under the Fabs Act. So 30 billion euros goes to our direct competitor and we don't get a cent? This will cause problems in the market".

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