Pat Gelsinger on the Future of U.S. Chipmaking

Former Intel Corp CEO Pat Gelsinger has emphasized that America’s strategy to regain its position in the semiconductor industry requires more than just large financial investments—it also needs to restore essential innovation within the country.

What Happened: In a recent interview, Gelsinger pointed out that Taiwan Semiconductor Manufacturing Co. (TSMC) has announced a substantial commitment of $100 billion to enhance chip production in the U.S., which he views as a positive development. However, he believes it is ultimately not enough, as reported by the Financial Times.

Gelsinger remarked, "If you don't have R&D in the U.S., you will not have semiconductor leadership in the U.S.," stressing that most of TSMC's research and development work is still conducted in Taiwan with no plans announced to shift these operations stateside.

He is now a partner at deep-tech venture capital firm Playground Global and noted that former President Donald Trump's tariff policies have had a slight positive effect, pushing companies like TSMC to invest more resources in the United States.

Nevertheless, Gelsinger cautioned that without moving core research and design facilities back to the U.S., the country remains reliant on foreign expertise. "Unless you’re designing the next-generation transistor technology in the U.S., you do not have leadership in the U.S.," he added.

Why It Matters: The efforts from both the Biden and Trump administrations have focused on reducing U.S. reliance on foreign chip supply chains.

While TSMC's rapid expansion in the U.S. has been partly influenced by geopolitical considerations, securing supply chains, and meeting customer expectations, it also brings significant risks for Taiwan. Experts caution that Taipei must prepare for consequences beyond its so-called ‘Silicon Shield’ amid increasing threats from China.

The Taiwanese government is vigilantly reviewing TSMC's international operations, stipulating that any foreign joint ventures must receive official approval.

Recently, it has been reported that TSMC has suggested a joint venture with U.S. chip designers such as Nvidia Corp., Advanced Micro Devices (AMD), and Broadcom Inc. to manage Intel’s manufacturing plants.

During the same interview, Gelsinger refrained from discussing potential conflicts with Intel’s board regarding the company's direction, indicating that he had sensed a loss of confidence before achieving his five-year plan. "I wasn't finished with the five-plus years when the board made a directional change," he mentioned.

Intel’s new CEO, Lip-Bu Tan, is reported to be planning significant changes within the company, which may include staff reductions to address what he perceives as an inefficient management structure.

Price Action: TSMC’s stock saw a slight decrease of 0.40% in after-hours trading, priced at $172.81. Earlier, the stock had closed at $173.50, marking a drop of 4.09% during the regular trading session. Year-to-date, TSMC’s shares have experienced a decline of 13.93%, according to market data.

An analysis of market trends shows that TSMC has an 82.36% growth rating. For a full comparison of TSMC with other companies, additional resources are available.

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