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The US government has rejected the proposing plan of Intel to use a Chinese factory to manufacture silicon chips. Intel had been seeking federal assistance from the United States to increase current production output and additional research within the US. The chip manufacturer also proposed to use a factory based in Chengdu to have something set up and running by late 2022. Bloomberg reported that the Biden administration has strongly discouraged the use of the Chinese factory and it looks as though Intel will be complying with the government’s wishes. However, the plans were discussed in private by anonymous individuals that have asked to not be identified. A representative for the company claimed that the administration is much focused on preventing China from using US technologies, know-how, and investment to develop state-of-the-art capabilities.

Intel has since stated that other solutions that will also help us meet the high demand for semiconductors are essential to innovation and the economy. The company said, “Intel and the Biden administration share a goal to address the ongoing industry-wide shortage of microchips, and we have explored a number of approaches with the U.S. government. Our focus is on the significant ongoing expansion of our existing semiconductor manufacturing operations and our plans to invest tens of billions of dollars in new wafer fabrication plants in the US and Europe”. The CEO of semiconductor design firm Arm, Simon Segars said, “It is likely that we’re going to have a hard time snagging in-demand techs such as PS5 consoles and Nvidia GeForce graphics cards for the foreseeable future with the current silicon shortage expected to last into 2023 by some industry experts”.

Segars added, “Supply and demand are the most extreme it has ever been. If you haven’t bought all your devices yet, you might be disappointed. It has never been like this before”. He also warned the chip shortage may go on beyond Christmas 2022, with the wait for some silicon sitting at 60 weeks. It would have been beneficial to lessen the pressure on the current market, with companies scrambling for available chips to such a degree that some customers likely won’t get served until 2023. This affects everything from cars, to smart home tech, and is especially bad for high-demand products like game consoles and PC hardware in the run-up to Christmas. The US government has every right to be cautious regarding overseas manufacturing in China, but the lack of a solution to the problem we’re facing still stings.