Asian supply chain hit by COVID, Intel considers establishing semiconductor plant in US

Intel and a Taiwanese company are talking to the Trump administration about building new semiconductor plants in the United States amid concern about counting on suppliers in Asia for chips found in a multitude of electronics.

A spokesman for Intel, the largest American chip maker, said Sunday that the business is in discussions with the Defense Department about bettering domestic technology sources. Spokesman William Moss said Santa Clara, California-based Intel is well-positioned to utilize the government “to use a U.S.-owned commercial foundry.”

Taiwan Semiconductor Manufacturing Co. is available to building a plant outside of Taiwan and has talked with the Commerce Department, a spokeswoman said.

“We are actively evaluating all of the suitable locations, including in the U.S., but there is no concrete plan yet,” said the TSMC spokeswoman, Nina Kao.

The discussions were first reported by The Wall Street Journal, which said TSMC can be talking with Apple Inc., among its biggest customers, about building a plant in the U.S.

The newspaper said the coronavirus pandemic has heightened worries about global supply chains, and that U.S. officials are particularly worried about the growing reliance on Taiwan, the self-ruled island that's claimed by China.

Intel CEO Bob Swan said in a letter last month to two Pentagon officials that strengthening U.S. production “is more important than ever, given the uncertainty created by the current geopolitical environment.” He said it would be in the very best interests of the United States and Intel to explore the way the company could build a plant.

Concern about relying so heavily on chips from Taiwan, South Korea and China started even before the coronavirus outbreak.

The Pentagon and the federal government Accountability Office issued reports on the problem this past year. The GAO said that when U.S. companies shift procedures overseas it could mean lower prices for components and technology found in weapons systems. However, having global sources “can also make it harder for (the Pentagon) to get what it requires if, for example, other countries cut off U.S. usage of critical supplies,” the GAO said in a written report last September.