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Trump, Intel, TSMC Plan US 'Self-Sufficiency' In Semiconductors As Coronavirus Gives Supply-Chain Scare

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Trump, Intel, TSMC Plan US 'Self-Sufficiency' In Semiconductors As Coronavirus Gives Supply-Chain Scare

President Donald Trump's administration is in talks with Intel Corporation (NASDAQ: INTC) and Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM) to ramp up chip production in the United States, the Wall Street Journal reported Friday.

What Happened

Intel CEO Greg Slater told the Journal that the company's plan is to operate a manufacturing facility that can provide advanced chips securely to both government and private entities.

"We're very serious about this...We think it's a good opportunity," Slater said. "The timing is better and the demand for this is greater than it has been in the past, even from the commercial side."

According to the Journal, TSMC has also been talking to relevant government departments and its biggest customer Apple Inc. (NASDAQ: AAPL) about making semiconductors in the U.S.

TSMC told the Journal that it was "evaluating...suitable locations" to open an overseas plant, but didn't have any "concrete plan yet."

Some U.S. officials also want Samsung Electronics Co. Ltd. (OTC: SSNLF) to expand its chip-making operations in the country further, as per the Journal. Samsung already makes some semiconductors in the U.S. at its facility in Austin, Texas.

Why It Matters

The talks about increasing semiconductor manufacturing in the U.S. comes at a time when the novel coronavirus (COVID-19) outbreak has trampled the global supply chain.

A majority of advanced chips are made in Asian countries, led by Taiwan and South Korea, and American companies have also invested in the supply-chain over the course of decades.

A Pentagon report last year referred to Taiwan as "a single point-of-failure" for the U.S.'s largest technology companies, as noted by the Journal.

Even if the talks progress, and the companies work with the government to bring more chip manufacturing to the U.S., it will likely take years for the trend to reverse.

Price Action

Intel shares closed 0.85% higher at $59.67 on Friday and inched slightly higher at $59.74 in the after-hours session.

TSMC closed 1.1% higher at $52.91 per share and traded eight cents higher in the after-hours.

 

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