Trump attack on Intel's CEO could compound factory struggles

Economic Times

2 days ago

NYT News Service FILE -- Utility infrastructure under construction in Johnstown, Ohio, to support a planned Intel chip manufacturing plant, Jan. 3, 2025. Intel's challenges in Ohio highlight both the risks that federal and state officials took in financially backing Intel, and the struggles the Trump administration will face in trying to shift more semiconductor production from Asia to the U.S. (Brian Kaiser/The New York Times) At the end of July, Gov. Mike DeWine of Ohio said Intel's chief executive was "very, very optimistic" about the company's plans to build multibillion-dollar semiconductor factories in his state. Last week, President Donald Trump attacked the tech executive, and a Republican senator called for an investigation into delays surrounding Intel's massive construction project outside Columbus. Trump demanded Thursday that Lip-Bu Tan, Intel's new CEO, resign over his past ties to Chinese companies, adding to the woes of a company that DeWine and other senior figures in Ohio's Republican Party had said would help create a manufacturing boom and turn the state into a "Silicon Heartland."
To help build its Ohio factories, Intel received commitments worth roughly $1.5 billion in federal funding in recent years, as well as a $2 billion incentive package from the state. The project has been badly delayed, and the chipmaker said this year that the factories would not be operational until at least 2030. The company's challenges in Ohio highlight the risks that federal and state officials took when they financially backed Intel, a once-powerful force in chip manufacturing, an industry now dominated by the Taiwan Semiconductor Manufacturing Co.
Intel's situation is also indicative of the struggles the Trump administration will face as it tries -- through the pressure of tariffs and threats from the White House -- to shift the bulk of semiconductor production to the United States from Asia. When the Biden administration offered financial incentives through the CHIPS Act, Intel was one of the few American companies that it made sense to back. But whether by stick or carrot, forcing this transition could prove extraordinarily difficult, as the delays around the Ohio project demonstrate. "It's pretty obvious that Intel has failed to meet the commitments it made to the people of Ohio," Sen. Bernie Moreno, R-Ohio, wrote on social media Thursday. "Now we find out its new CEO is deeply conflicted with ties to the CCP," he said, referring to the Chinese Communist Party. "The CEO must immediately resign, the project completed, and a fraud investigation should be initiated by Ohio," Moreno added.
Semiconductor factories are extremely expensive and complicated to build. Intel has struggled to find enough customers to stay afloat as it poured money into construction. After posting an $18.8 billion loss in 2024 in its foundry division, the company ousted its CEO in December, cut 15,000 jobs and appeared to be exploring other strategies, including the possible sale of its manufacturing business to TSMC. Asked for comment, a spokesperson for Intel referred to its most recent earnings report from July, in which the company said it was committed to completing the project in Ohio but had slowed construction to match customer demand. Dan Tierney, press secretary for DeWine, said Friday that the governor remained optimistic about the project. "We expect chips to be made in that facility," Tierney said. He added that the company had already invested $7 billion in the construction project in Ohio, more than three times the amount of the state's incentive package, which involves some tax credits that have yet to be paid out. The incentive package is tied to job creation by the end of 2028, so the earliest that the state would attempt to claw back any money is 2029, Tierney said. As for the allegations against Tan, he said, DeWine is concerned about any allegation of involvement with the Chinese Communist Party that is detrimental to the national interest but is not rushing to judgment. "We don't have all the facts, and we will need to see what facts come out," Tierney said. The stakes are high for Intel and Ohio. Semiconductor chips, which are used in everything from cellphones to fighter jets, have recently become a particular focus for Trump, as they were for former President Joe Biden. Both presidents viewed domestic production as critical to national security, especially as more than 90% of the world's most advanced chips were produced in Taiwan, an island claimed by China. In 2022, under Biden, Congress passed a bill with bipartisan support that aimed to remedy that vulnerability by pouring billions of dollars into subsidies for semiconductor companies to build facilities in the United States. Intel, the only American-owned maker of advanced logic chips, was awarded up to $7.9 billion to build factories in the United States. (Only about $2 billion of that has been disbursed.) Trump has criticized the subsidy approach, arguing that tariffs are a more effective tool to bring manufacturing back to the United States. He threatened last week to impose a 100% duty on many imported chips. Tan, who took over Intel in March, has been hailed as a savior of the struggling American chipmaker. He is a longtime Silicon Valley investor who focused on semiconductor startups, even during eras when venture capital money seemed to be pouring into software and apps.
On July 28, a company that Tan once ran pleaded guilty to transferring technology that was under U.S. export controls to Chinese entities. Though the plea agreement with the Justice Department did not name Tan, Sen. Tom Cotton, R-Ark., wrote to the chair of Intel's board of directors Tuesday, raising questions about what Tan may have known about the illicit activity. In a statement Thursday, Tan, an American citizen who was born in Malaysia, said that "misinformation" was circulating about his past roles and that he fully shared "the president's commitment to advancing U.S. national and economic security." "I have always operated within the highest legal and ethical standards," Tan said. He added that he was engaging with the administration "to address the matters that have been raised and ensure they have the facts." The questions surrounding Tan could create yet another hurdle in the attempt to bring the manufacturing of advanced semiconductors to Ohio.
Sen. Jon Husted, R-Ohio, was among the lawmakers who supported public funding for the Intel semiconductor factory. He posted a message on social media saying the company had promised to "respond promptly" to Cotton's letter. "The facts have not changed: We need an American company to make American chips on American soil," Husted wrote. "Producing the world's most advanced high-tech chips in the U.S. is not just economic policy -- it's a national security imperative. Every day we are not doing that, we are putting our country at risk." Husted did not respond to a request for comment. State Sen. Bill DeMora, a Democrat representing Columbus, said Ohio Republicans were using Trump's attack on Tan to distract from the fact that they sank public money into a project that has stalled. DeMora, who has long called the project a boondoggle, said in an interview Friday that Ohio Republicans "did all this hoopla and pageantry" to hype the Intel project. "Now they want the Intel president to step down because he has ties to China," he said. "That's their excuse." He said construction had continued with a fraction of the workers the company had promised to hire. He predicted that the site would never become a semiconductor factory. "Intel is never going to make a chip there," he said. Elevate your knowledge and leadership skills at a cost cheaper than your daily tea. BlackRock returns, this time with Ambani. Will it be lucky second time?
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