The Us Lost Its Lead In Semiconductors. It May Never Regain It

Intel, the prominent US microchip company, is searching for a new CEO after Pat Gelsingers unexpected resignation. This marks more than just a corporate change it signals the end of an era where a single company could dominate a crucial American technology.

Intel has historically controlled the entire process of producing computer chips - from research and design to intricate fabrication. For much of the late 20th century, this made the company a symbol of American innovation.

Gelsinger, a long-time Intel employee, rose to the position of chief technology officer in the 2000s before leaving for a decade to lead Dells data storage and cloud computing division, EMC.

His return as CEO in 2021 was seen as a pivotal moment. Gelsinger promised to restore Americas chip manufacturing leadership, challenging rivals like Taiwan Semiconductor Manufacturing Company TSMC.

His plan included investing billions of dollars into expanding chip factories in New Mexico and Oregon, and building new ones in Ohio and Germany. The US government also supported his vision, providing 7.9 billion in subsidies under President Joe Bidens 2022 Chips Act.

However, just three years later, Intel faces a crisis. The board gave Gelsinger a stark choice retire or be removed. He chose to retire.

The US government has long supported the semiconductor industry, which produces the tiny chips used in devices like smartphones and laptops. As far back as the late 1950s, the government paid above-market rates for transistors for military missile computers to Californias Fairchild Semiconductor, whose executives later founded Intel.

Semiconductors are crucial for military systems, from hypersonic missiles to AI-driven defense technology. Yet, the most advanced chips are primarily manufactured by TSMC in Taiwan, which supplies parts for American military equipment, such as F-35 fighter jets.

China, with its ambitions to control Taiwan, sees the islands semiconductor industry as a strategic asset. According to a US congressional commission in 2022, controlling Taiwans semiconductor industry would provide a significant advantage in warfare and in global commerce.

Compounding the issue, many major US semiconductor firms, including Nvidia, AMD, and Qualcomm, do not have their own factories and depend heavily on TSMC and Samsung for chip production. To address this, the US has encouraged TSMC and Samsung to establish plants in Arizona and Texas. Yet, as the last fully integrated US semiconductor maker, Intel remains critical to Americas strategy to bring chip production back to the country.