Intel and TSMC reportedly in government talks over US-based chip plants

The Trump administration and semiconductor companies are said to be in talks over the construction of new chip plants in the US, as the US government seeks to reduce reliance on Asian factories for critical technology.

The reports initially surfaced in The Wall Street Journal (subscription required) and have since circulated around the world.

The main developments are that Intel is said to be in talks with the US Department of Defense on the construction of a "commercial foundry" that would strengthen production and supply of microelectronics and related technology on the US domestic market.

In addition, Taiwan Semiconductor Manufacturing Co (TSMC) is reportedly in talks with the US Department of Commerce about building a US factory, although a final decision has apparently not yet been made.

Furthermore, the WSJ report suggested that US officials are talking to Samsung Electronics, which has a chip factory in Austin, Texas, about expanding its contract-manufacturing operations in the US.

According to Reuters, Intel has confirmed the talks. It seems that Bob Swan, CEO of Intel, wrote to the Department of Defense and expressed the company's willingness to build a commercial chip factory in partnership with the Pentagon.

TSMC indicated it is "actively evaluating all the suitable locations, including in the US." The company is also said to have been in talks with its customer Apple on the construction of a chip factory in the US.

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Certainly, any efforts by the Trump administration to reduce reliance on Asian markets for the supply of key technology would come as little surprise. However, it would be no easy feat to undo years of investment in overseas supply chains.

Meanwhile, the Semiconductor Industry Association (SIA) said last week that worldwide sales of semiconductors totaled $104.6 billion during the first quarter of 2020. Although this was 3.6% lower sequentially, sales increased 6.9% compared to the first quarter of 2019. However, John Neuffer, SIA president and CEO, said that the available sales data "has not yet fully captured the impacts of the COVID-19 health crisis," and that the ongoing uncertainty for the industry "is likely to persist in the months ahead."

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— Anne Morris, contributing editor, special to Light Reading

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