Next US Domino to Fall: Intel Discussing Moving Processor Manufacturing "Off-Shore"

Wasn't sure where to put this one: it concerns the economic policy of one of the stalwart US tech companies, HOWEVER, with what we've seen with supply chain disruptions from COVID and now the brinkmanship with China, this to me feels like a major political issue.

I read a story today that Intel, the world's leading processor company by market share, (I believe this includes both personal computer and enterprise/data center chips), is contemplating outsourcing all processor manufacturing outside the United States.

Think long and hard about the implications of this. The US has a number of edges on other global powers in economic prestige: control of the Petro-$, control of the most prestigious and widely-followed equity market indices (Wall Street) in the world, of course the leading military supplier /and/ buyer, and technology, and on top of that, leading global producer of software and /some/ computer hardware (see below).

You may or man not have realized it, but already large chunks of the semi-conductor, microprocessor, and data storage manufacturing infrastructure is concentrated all over Asia. China has secured a good amount of the fabrication and creation of hardware for mobile phones and tablets. South Korea is another huge player (Samsung). in both mobile and pc/server industry. Other developing countries are rapidly beginning to host hardware companies that might be leaving China, for political and economic reasons.

Guess what Asian company already hosts a large chunk of processor production for traditional PC and server markets? China you might think. Wrong (and in some historical contextual way, a little right). It's Taiwan. And guess the leading contender where Intel is considering moving their processor fab plants to?

Many of these processors are made at facilities in Oregon, Arizona and New Mexico. If Intel outsources this work, it would likely be done by Taiwan Semiconductor Manufacturing Co., which focuses on production and is currently the world leader. It’s based in Hsinchu, one of the closest Taiwanese cities to China, which considers the Asian island a rogue province rather than an independent country.

They are kicking around the thought of moving their manufacturing operations to Taiwan. Yes, that minuscule island country right off the coast of China. The one that is always in the news as a source of tension between US and China. The place that many analysts believe China is poised to military invade at some point soon.

There is so much to unpack with this story.

Think above about where much of the computer hardware technology is created today, particularly the mobile and consumer-focused sectors. Now, imagine if ALL processor hardware, including chips like Intel Xeon which is a major workhorse for US and really global tech and business enterprises, is produced by and large mostly in Asia. Go into many data centers around the globe,and you will see that little sticker 'Intel Inside' plastered on all the computer racks in the building.

Consider, as noted in the linked article, what an exodus from US would do to tech jobs at Intel plants, around the West Coast and Pacific North West. Gone, vaporized, nada. Those states would take big hits economically.

This is really just small potatoes from national context and US perspective. Think about the next COVID, or the next typoon that wreaks havoc on key Asian cities where computer hardware is made (2011 flooding that hit Thailand, driving up hard drive prices). These events already disrupt US tech and business operations, and I have seen this first hand. Imagine now that a Black Swan event takes out processor manufacture in Taiwan, natural disaster, war, terrorism. Where does that leave the US companies needing to build server-grade machines??

That leads into the political arena. Taiwan is so close to China, so vulnerable, it'd be very easy for China to either try to capture or just plain annihilate the processor fab plants there.

Maybe now folks are getting a sense of why such a small, tiny island country so far away is always so prominent in geo-political issues. Everyone is so concerned with China infiltrating mobile and tablet platforms, at the firmware/device level. Just wait until the control all or 90+% of the worlds processor production. "All your data belongs to us"

If you are a US citizen, think long and hard about what you've seen with supply shortages from COVID, or from other disruptive events in Asia-Pacific. If you work in the tech sector, this should really make you think about where things are heading. Without a leading edge in technology production, the US is VULNERABLE, vulnerable economically, vulnerable militarily (even US military uses a lot of commercial grade processors for various systems).

This is a bad idea, from the US perspective, particularly with how tensions with China are ramping up.

But hey, it's no big deal right? All our other stuff is made "off shore", why not one more item?

"The Capitalists will sell us the rope with which we will hang them.”
- attributed to V. Lenin, USSR

Also, please note I didn't put this into the Mud Pit, so kindly refrain from....slinging political mud. This concerns ALL US citizens, irrespective of party affiliation, and without question both D and R politicians have been complicit in getting us to where we're at now, where decades of technological R&D, advancements, competitive advantages, are being siphoned off (the "great big sucking sound" Ross Perot used to talk about, for those of you old enough to remember).

Also of interest to me: the timing of this news, and relation (or coincidence) of US-China diplomatic ties degrading. This story just happens to come up a few days after China's Houston consulate is shut down, in large part due to ongoing espionage at that site? IDK maybe totally unrelated, Houston is more energy-sector than tech focused. But it lends some perspective to US/China relations.

China is right out and Taiwan may be both due to CFIUS .
Unless Intel is ready to give up on all of it's lucrative contracts with the US government .

Wouldn't that boost AMD to the top ?

a reply to: SleeperHasAwakened

Does China still own the majority of the world's Rare Earth Mines...? The place(s) wheere the raw materials for Computers come from?

They wont win any US gov contracts this way.

originally posted by: Gothmog
China is right out and Taiwan may be both due to CFIUS .
Unless Intel is ready to give up on all of it's lucrative contracts with the US government .

Wouldn't that boost AMD to the top ?

Doh. You beat me to it.

a reply to: SleeperHasAwakened

No one is going to run to USA since fking Area51. All companies knows what US military is doing since Cold War and screwing the allies. Hoarding fking tech. US deserves nothing til the people make the land of the free an actual land of free instead of land of the fee.

a reply to: lostbook

No. Australia does have significant reserves of rare earth metals. Cannot compete with the low cost labour in China to make any mining and processing operation cost effective at this time.

a reply to: SleeperHasAwakened

Big changes to come, maybe, dunno if they'd go that drastic albeit prior to 2020 I would say no way but given how the world has done a pole flip anything is possible now no matter how radical. I imagine Trump has a few words to say about it.

One thing I know for certain is if the Fab shutsdown in Oregon you can kiss Washington County good-bye. Tens of thousands of jobs and massive annual infusion of $$$ gone, poof. Course this won't happen overnight nor anytime soon however, Intel is known for making harsh blitzkrieg like moves on short notice. I was an Intel engineer for 18 years. Intel has a HUGE presence in China and shortly before I left I was training Chinese & India engineers on how to do my job. At my salary the corp greed monsters would hire a half-dozen Chinese engineers.

Just about every project I ever worked on (minus the secret one's) were eventually outsourced to China, India, Mexico, Israel, or Poland. Course, at the time I didn't much care as I was always reassigned to future projects 3-5 years out whereas current & past tech was most often outsourced along with all sustaining...up until a few years before I left for greener pastures. I seen the writing on the wall and knew the good 'ole days were never going to return.

this is still being politicized out of proportion just a bit.

www.intel.com...

only 4/15 of intel's "fabs" are even located in the USA.

Intel has 15 wafer fabs in production worldwide at 10 locations. Approximately half of our workforce handles production or production services.

Our fab production sites in the United States include:

Chandler, Arizona
Hudson, Massachusetts
Rio Rancho, New Mexico
Hillsboro, Oregon.
Fab production sites outside the United States include:

Leixlip, Ireland
Jerusalem, Israel
Kiryal Gat, Israel
Dalian, China.
We have one testing facility and one assembly development facility in the United States. The remainder assembly and test sites are outside the United States:

Shanghai, China
Chengdu, China
San Jose, Costa Rica
Kulim, Malaysia
Penang, Malaysia
Cavite, Philippines
Ho Chi Minh City, Vietnam

a reply to: akiros

Thank you for posting some facts. One of Intel's biggest fabs has been running out of Ireland for years

"Intel" (the company/corporation), doesn't really give anything to humanity, or a country. That they couldn't live without, in all "reality".

The world "lived successfully" before the "existing" of "Intel"... Humanity will continue without them.

That said? The U.S.A, needs to get a grip on these American "companies" that make these kind of threats!

originally posted by: lostbook
a reply to: SleeperHasAwakened

Does China still own the majority of the world's Rare Earth Mines...? The place(s) wheere the raw materials for Computers come from?

You beat me to it.

We're far passed them having leverage on micro chips, or the vast amount of production for that matter.

They could disrupt the whole world's supply chain by cutting us off of rare earth materials.

a reply to: TXRabbit

you're welcome =) I actually lurked for around 12 years before starting to post regularly today =)

asiatimes.com...

Swan’s demurral followed the announcement that Intel’s efforts to produce state-of-the-art 7-nanometer chips had hit a delay of one to two years. By that time Taiwan Semiconductor and Samsung will be fabricating 5-nanometer chips, with much higher transistor density and lower energy use. Intel’s 10-nanometer technology has just come into production, three years after target, and is already obsolete. Once the industry leader, Intel lacks the engineering expertise to stay ahead of Asian competition.

Intel’s share price crashed by 17% after Swan’s warning that Intel may “need to use somebody else’s process technology.” Texas Instruments invented the integrated circuit in 1958 and Intel became the world’s largest chip manufacturer in 1992. But fabrication of chips has migrated to Asia, especially Taiwan, and the US share of semiconductor production fell to just 12% last year, according to the Semiconductor Industry Association.

I can't help but feel like the article completely missed the point.

Intel suspended all US based server CPU production because they technologically fell behind and the factories they have lack the tooling to manufacture cutting edge CPUs. Basically management goofed while their competitors ate their lunch.

www.engadget.com...

Those factories are closing because they literally lack the ability to manufacture a modern product and keep up with the competition. Even worst, Intel admitted they were 2+ years behind the competition (Nvidia, AMD etc.)

TLDR : Intel Managerial incompetence resulted in useless factories and competition ate their lunch. Even if they kept the factories open they would be selling a US made CPU inferior to the competition.

Reads to me as if Intel is just making noise in the hope of shaking the money tree that Congress has planted.

A few free Billion should do the trick.

The Australian Government were done like a dinner several times on car manufacturing.

Same playbook, same game.

P

a reply to: CobaltCPD

Intel suspended all US based server CPU production

And I can tell you that is not true.
Period.

originally posted by: drewlander

originally posted by: Gothmog
China is right out and Taiwan may be both due to CFIUS .
Unless Intel is ready to give up on all of it's lucrative contracts with the US government .

Wouldn't that boost AMD to the top ?

Doh. You beat me to it.

That is Ok .
Bears repeating.

originally posted by: Gothmog
China is right out and Taiwan may be both due to CFIUS .
Unless Intel is ready to give up on all of it's lucrative contracts with the US government .

Wouldn't that boost AMD to the top ?

Yes, but the thing with this new small-nanometer fab plants, e.g. 7nm, they are popping up overseas. TSCM in Tiawan has or will have production for newer AMD chips.

When Global Foundries announced the suspension of 7 nm operations AMD executed a shift in plans transferring production of the 7 nm core dies to TSMC (Taiwan Semiconductor Corporation).