Intel getting help from Commerce Secretary Raimondo as part of effort to spur U.S. production

Intel has been badly beaten down of late, losing 60% of its value this year as it struggles to find its way in the booming artificial intelligence market while aggressively building out fabs in the U.S. The company is turning to Commerce Secretary Gina Raimondo for help.

In a recent meeting with Raimondo, Intel CEO Pat Gelsinger voiced frustration over the heavy reliance that U.S. companies have on Taiwan Semiconductor Manufacturing, the world’s largest contract chipmaker, according to people familiar with the matter who asked not to be named because the discussions were private.

Raimondo followed that up with meetings with a handful of public market investors to reinforce the importance of chip manufacturing in the U.S., given the growing geopolitical risk around Taiwan, the people said. Raimondo’s goal was to urge shareholders in companies like Nvidia and Apple to recognize the economic benefits of having a U.S. foundry that can produce AI chips, the people said.

Intel is currently building out plants in four U.S. states as it seeks to become more of a foundry business, manufacturing chips for other suppliers. Earlier this year, Intel was awarded up to $8.5 billion in CHIPS Act funding from the Biden administration and could receive an additional $11 billion in loans from the legislation, which was passed in 2022.

None of the funds have been distributed yet. A senior government official told CNBC disbursements are expected by the end of the year.

It’s an increasingly important initiative for Intel, which is getting trounced in the market for microprocessors. In addition to losing share in its core PC and data center market to the likes of Advanced Micro Devices, Intel is hardly on the map in AI, where Nvidia is dominant.

Intel’s foundry effort has been stunted by delays, according to sources with knowledge of the matter. TSMC is also building a foundry in Arizona and has faced similar issues.

The U.S. Commerce Department declined to comment, as did a spokesperson for Intel.

Intel’s board is meeting this week to discuss the company’s restructuring plans, including potentially splitting up its design business from its foundry, according to people with knowledge of the matter. Intel CFO David Zinsner told investors at a conference last week that splitting up the businesses made sense.

“What I can predict is we are going to create more separation between these two businesses,” Zinsner said. “It’s important for customers to see that separation.”

In its earnings report last month, Intel reported profit and revenue that trailed analysts’ estimates and said it was cutting 15% of its workforce. After the report, the stock had its worst day in 50 years, falling to its lowest in over a decade.

Nvidia manufactures nearly all of its cutting-edge chips at TSMC, which is also a major manufacturer for AMD, Apple, Amazon,. Google and Broadcom. Concerns have been rising for years that China could invade Taiwan, creating a massive risk for the U.S. chip industry.

Nvidia CEO Jensen Huang spoke at the Goldman Sachs Communicopia conference on Wednesday and was asked about the geopolitical risk tied to Taiwan and what he would do if something happened.

“In the event that we have to shift from one fab to another, we have the ability to do it,” Huang said, in conversation with Goldman Sachs CEO David Solomon. “We won’t be able to get the same level of performance or cost, but we will be able to provide the supply.”

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