AMERICA LOST ITS LEAD ON CHIP INDUSTRIES

America well known, California based company called Santa Clara, which has been the largest manufacturer of chips for the past 30 years is in danger. An important decision taken by Intel Corp has suddenly ended the era of chip-making companies in the America.

Intel Corp has decided that it will take into consideration the outsourcing manufacturer, and this decision has put into trouble the working of many semiconductor industries in the America.

This decision could have an impact on global trade and geopolitics. If we look at the history of these companies we would find that most of the America-based chip-making companies had sold their plants years ago, and chips were being made by other firms mostly in Asia.

Intel justifies its decision saying that it has resulted in the production of better semiconductors. This step has effected the companies as they are now struggling to keep up with the 7-nanometer production process.

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The chief executive officer Bob Swan said that the decision taken by the Intel of outsourcing has impacted badly on the company as the company’s share has declined by 16% on Friday. This is continuing since march after the stock declined after the outburst of COVID-19 pandemic.

Chris Caso, an analyst at Raymond James has called it a misstep which has resulted in the failure of a company, which had a great performance for the past 30 years.

They also says that this has ended the Intel’s computing dominance. Swan says that it is not important where a semiconductor is made.

He points out that domestic chip production has become an important business for China, and some of the US politicians and national – security experts have considered the idea of outsourcing and considering chips from other nations to be a big mistake.

John Cornyn, a senate Republican said that the nation is vulnerable when US lawmakers talked about the funding and tax credits of about $25 billion to support domestic semiconductor making companies.

Intel’s Xeon chips drive computers and data centers which in turn support the nuclear power station’s design, spacecraft, and jets simultaneously helping the government to understand intelligence and other important information.

These processors are mostly made in Oregon, Arizona, and New Mexico. If at all Intel decides to outsource the work, it would be given in the hands of Taiwan Semiconductor Manufacturing Co., which primarily focuses on the production of semiconductors.

The company is located in Hsinchu, a city closest to China. Susquehanna analyst Chris Rolland has written in one of his research papers that, Intel’s decision of outsourcing has no chance of surpassing TSMC at least for the upcoming five years.

He has also said that Intel should sell its companies to TSMC, however it looks unlikely. It is observed that Intel has spent billions of dollars updating its factories. As Intel was the most famous chip-making company, it attracted many experienced engineers and scientists.

Everything has changed after the production of smartphones and other devices. Intel started producing mobile chips, but it never focused on giving the best in this area.

It mainly gave priority in the existing PC and server chip businesses. After the smartphones started being sold in a bulk, the phone makers bought processors from other companies like Qualcomm Inc. Or they designed their own processor, like Apple Inc. And TSMC factories started producing these extensively.

TSMC now produces more than a billion of chips every year which is far more than than the production of Intel.

It has not only helped the Taiwanese company to improve its industries but also helped TSMC ‘s engineers to perform better than their Intel counterparts. Swan claims that Intel still produces the best semiconductors, although the manufacturing time is a bit longer.

But, Intel has really put in danger its future by opening doors to outsourcing. It has endangered the best and the last leading producer of semiconductors in the US.