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Intel seeks governments aid to build semiconductors plants

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The Wall Street Journal (WSJ) reported on the 14th (local time) that Intel Chief Executive Officer Pat Gelsinger was traveling to the U.S. and France to seek government assistance in building semiconductor plants.

Last month, Intel CEO Pat Gelsinger and other company executives met with Joe Biden administration officials near the White House rooftop to discuss semiconductor investments.

As part of their upcoming tour, Intel executives hope to persuade other countries to invest in their own factories to help relieve the semiconductor shortage.

While Asia dominates the semiconductor industry, the United States is encouraging the construction of domestic semiconductor plants to compete with China, and Western European countries are also looking to secure their own supply chains amid a semiconductor shortage.

Pat Gelsinger, who took helm of Intel with the heavy responsibility of revitalizing it, is fighting hard around the world to deal with a semiconductor shortage this year.

Gelsinger’s turnaround plan may gain momentum with governments around the world willing to provide large-scale financial support in the face of semiconductor shortages.

In the second quarter of this year, Intel lost the top spot to Nvidia in terms of market capitalization, while Samsung Electronics lost its position as the world’s largest semiconductor company in terms of sales.

With up to $3 billion (about 3.49 trillion won) in funding for semiconductor equipment projects, the company aims to become the first to build a factory in the U.S.

According to Intel, semiconductor production costs in Asia are up to 40 percent lower than in Europe due to government subsidies.

Senator John Connin (Republican, Texas), one of the centrist members of the Senate who led the passage of President Biden’s $1 trillion infrastructure investment bill, is also in favor of subsidies.

Conin said he is “always skeptical of government attempts to control private companies,” but added that “China is playing a game that it hasn’t played before,” suggesting that subsidies can be considered to compete with China.

The Wall Street Journal reports that governments, particularly Asian ones, have long supported the semiconductor industry through various incentives, including tax credits. Therefore, the semiconductor industry’s center of gravity has shifted to Asia.

The two U.S. and European states, which controlled 80 percent of global semiconductor production in the 1990s, have seen their market dominance decline rapidly, with the U.S. contributing only 12 percent and Europe 9 percent respectively.

Within ten years, Gelsinger predicts that if Intel’s investment is expanded through government subsidies, the U.S. global semiconductor market share will reach 30 percent, and 20 percent for Europe.

Intel is also focusing on Asian governments.

It has proposed semiconductor plant construction projects to governments in China, Singapore, Vietnam, Malaysia, and India.

For MetaNews.

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Jonathan Hobbs is an Australian investor and author that trades on a variety of asset classes, including currencies, equities, and commodities. Jonathan’s experience as a macro trader leverages his unique writing style to combine important elements, such as technical analysis and news. The other elements that he brings into his unique writing styles are foundation analysis aimed at rational equilibrium values, evaluating the sizes and motivations of buyers and sellers, as well as identifying the needs of the buyers and sellers in the individual markets. Jonathan is committed to quality writing for new traders as well as veterans.

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