Jul 26, 2022 - Technology

U.S., China gear up for chip-making race

Illustration of a US flag made of semiconductor chips.

Illustration: Shoshana Gordon/Axios

As the Senate finally moves this week toward a likely vote on funding domestic chip manufacturing in the U.S., the rest of the semiconductor world is charging ahead with big new deals and initiatives.

Driving the news: On Monday, Intel said that it has a deal to manufacture chips for Taiwanese smartphone-chip designer MediaTek. That marks Intel's first big customer for its effort to open up its factories to make chips based on others' designs.

Meanwhile, China is moving forward with plans to build 31 new chip factories by 2024, per the Wall Street Journal.

The big picture: Both China and the U.S. seek more supply chain resilience and less dependence on overseas sources that could be disrupted in the event of pandemic-style distribution snafus, international tensions or war.

Between the lines: China's focus is largely on older, more utilitarian chips, while Taiwan, the U.S. and South Korea lead the world in the most advanced chip-making processes. The largest player is Taiwan Semiconductor Manufacturing Co., which builds designs by many of the world's largest computer and phone makers.

Flashback: A shortage of certain kinds of industrial chips during the pandemic led to dramatic slowdowns in U.S. auto manufacturing capacity, reminding the world of how central the devices have become to the economy.

Back in Washington, proponents of the bipartisan chip-funding bill have promoted it both as a way for the U.S. to counter China's rise in this industry and as a booster for American self-reliance.

  • IBM is flying more than 60 executives to D.C. this week to meet with lawmakers to stress the importance of passing the legislation, IBM vice chairman Gary Cohn told reporters Monday.

Be smart: Chip-making remains a deeply interdependent global business, with each new generation of "fab" or factory requiring specialized equipment and materials sourced from around the world.

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