Semiconductor diplomacy flourishes, US companies 'spend money' to diversify supply chains

Semiconductor companies like Intel and Micron Technology are planning to spend billions of dollars building chip factories outside the United States, diversifying their supply chains amid ongoing tensions between the world's two largest economies.

A 17 billion euro investment plan to build a semiconductor plant in Germany is the largest investment in the country since World War II.

Intel CEO Pat Gelsinger recently flew to Wroclaw (Poland) to announce plans to build a $4.6 billion chip facility in a town over 1,000 years old, marking a record investment by an American company in this country.

Meanwhile, Micron is also close to reaching an agreement to set up a semiconductor packaging facility in India worth at least $1 billion.

The US is trying to strengthen its key supply chains outside of China to block the "rise" of the world's second-largest economy. To achieve this goal, Washington is promoting the construction of advanced semiconductor facilities at home or in "friendly" countries.

On the business side, they seek to take advantage of subsidies from foreign governments as countries race to attract semiconductor investment to ensure domestic chip supply chains and create jobs for their people.

The imbalance in chip supply and demand during the Covid-19 pandemic has had a strong negative impact on the automotive and consumer electronics sectors, further exposing the weaknesses of this industry.

Previously, FT reported that Intel expected to receive nearly 7 billion euros (compared to the proposed 10 billion euros) in subsidies from the German government for its plan to build a semiconductor complex in the east of the country.

“The good news is that many companies are now deciding to make major investments in the semiconductor sector in Germany,” said Chancellor Olaf Scholz. “If these plans are implemented, investors will flock to our country.”

On June 16, Micron announced an additional $600 million investment in its existing packaging facility in central China, despite Beijing's recent ban on the use of the company's chips in critical domestic infrastructure.

(According to Bloomberg)

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