Davos 2024: Intel CEO Says Chips Act Is Critical for the Future

No questions on Chairman Powell. No questions on Chairman Powell at all. Talk to me about de-globalization. How compatible is de-globalization with the chip industry in its modern form? Well, ever since we started this journey of, you know, bringing the U.S. chips and the EU Chips Act to place, it was all about building resilient supply chains. And we said for something so critical, and I ask all the time, you know, what aspect of your life is not becoming more digital? Well, everything is. And everything digital runs on semiconductors. And through COVID, we saw the fragility of our supply chains. You know, we're one port, one island. And because of that, we said we need a balanced supply chain for the world. And that's what we're off to do, is to rebuild the Americas and the European supply chain for semiconductors. So, hey, we're all better off, right? We have better jobs, we have better national security, better economic, and we're ready for a turbulent world. And with two wars active today and, you know, different countries and, you know, different political and geopolitical concerns, this is critical for the future. Let's talk about the Chips Act. Can you just walk our audience through, particularly the audience outside of the United States, what that is, how big it is, and whether you've actually received anything from it yet? Yeah. So, the Chips Act, $52 billion. Some of that was capital offsets. Some of that was long-term R&D. You know, and it was paralleled by the EU Chips Act, right? It was about 45 billion euros. So, very similar constructs. And what it was saying, huh, we never voted to get rid of this industry, this critical industry for the future, but Asian economies voted to get it. And as a result, we're no longer competitive in US and in Europe. So, let's create a leveling, you know, and long-term incentives to invest in this industry. And that's what the Chips Act is doing. And, you know, Commerce set up their department. DG Comp for the EU Commission is now underway. And we have projects in the US and projects in Europe to take advantage of that. And they're in the latter stages, right? And as I say, boy, you know, I'm ready. I'm building factories today. You know, let's go. Can you quantify, though, to John's point, how much Intel is receiving from the Chips Act? Can you quantify how much cheaper it really would make manufacturing in the US for you? Well, you know, what we said is, and, you know, industry analysis, like the Semiconductor Industry Association in the US, similar studies done by BCG and others, have said it's 30 to 40% cheaper to build in Asia, right? Because of, you know, taxes, tariffs, incentives, labor, you know, the supply chains, and the Chips Act is designed to close that gap. So, if you're building a $20 billion facility, you're 30 to 40% uncompetitive without some of these economic capabilities being put in place. And that's what the US and European Chips Act are doing, bringing those so that when we make enormous, and these facilities, you know, and the one we're doing in Germany, you know, it's well over 30 billion euros. This is huge. And I can't be uncompetitive to that degree and expect to compete in the world market effectively. There's a question when you talk about supply chains of a foundry that you're building, and who's going to be building their chips with you, right? It's not just about your chips anymore. Have you had any real conversations with the Amazons of the world, with the Apples of the world, with NVIDIA, about manufacturing some of their chips? Yeah, we've had lots of conversations with them, and we've started to close design wins with different ones. And for the most part, it's not the industry practice for them to say their name, because they already have relationships with others in that regard, and they somewhat view it as competitive intelligence as well. You know, but as we've announced, we now have, you know, three major foundry customers for our most advanced process technology. We've now announced multiple advanced packaging customers as well. And my earnings call is next week, and we'll be updating on both of those as we come up on the earnings call. So we're making good, solid progress for industry engagement. We have tens of chips, test chips as they're called, you know, that'll be going into the factories in the next few months here from different potential customers as well. I'll say momentum is building for us to become that Western foundry for the world. The political attention this industry has gotten over the last few years has been phenomenal. I remember when Rex Tillerson got the job at the State Department coming off the back of his work at Exxon, and it was a view that he was the ultimate diplomat because he had to deal with governments all around the world. And I now think of people in your industry as the ultimate diplomats. Have you had to become a politician over the last few years? Well, my day job is running Intel. And, you know, with that, making sure we rebuild our process leadership, our product engineering, rebuilding our customer relationships. But I've had to spend a lot more time in Brussels and in the Capitol Hill, right, on these topics than I certainly would have envisioned, right, when I took the job. But it's been fulfilling as well because I think we've created the two most significant pieces of industrial policy since World War II. We've accomplished that in the last couple of years. And I think fundamentally, we are rebuilding the supply chains of the West. I'm proud of that. Well, you talk about Europe and you mentioned building in the U.S. and you threw Europe in. And I kept wondering, where's the European Chips Act, right? How much cheaper is it to develop in the U.S. now than the Europe? How much does the Europe lack that competitive edge that it might have had? The gaps between U.S. and Asia and Europe and Asia are similar, right? And this 30 to 40 percent is sort of a good thumb in the air, you know, for that competitiveness. And we're not trying to say it's U.S. versus Europe. It's U.S. and Europe to be competitive with Asia. Because if we were here in 1990, 80 percent was built in U.S. and Europe. Now it's 20 percent. But Europe doesn't have a Chips Act. So I'm wondering. Oh, it does. You know, the EU Chips Act. Does it compensate you enough? Absolutely. You know, we feel good with that and our proposals for Poland and Germany. You know, the two big projects that we've announced will soon be going through the DG Comp process. I just met with Commissioner Vestager last week, you know, and we discussed those proposals coming forward from Germany, bringing it forward and Poland bringing it forward. So, you know, we're expecting those to come to fruition quickly and get the big, you know, Magdeburg project underway and the big project underway. We're quite excited. And it builds on what we're doing already in Ireland, right, which is making good progress and what we're already doing in Israel.