Intel Flexing Chip Manufacturing to Minimize Export-control Issues

By Agam Shah

October 25, 2022

A bill that released close to $50 billion to boost chip production in the U.S. was met with euphoria among chipmakers. But that joy was short-lived when the U.S. this month banned shipment of advanced chips to China.

The export controls are meant to choke China’s computing progress by denying access to U.S.-origin chip design software, silicon and semiconductor manufacturing equipment. Nvidia, which has a strong presence in China, said the export controls would affect its GPU business as it wouldn’t be able to ship its A100 and H100 GPUs to the market.

The export controls complement the U.S. government’s efforts to strengthen the domestic semiconductor ecosystem via the US CHIPS and Science Act of 2022. The bill opens up $39 billion in funding for companies like Intel, TSMC and Texas Instruments to open fabs on U.S. soil. About $11 billion will go to boost the R&D, education, and workforce development programs in the semiconductor sector and academia.

Intel executives at last month’s Innovation show acknowledged Chinese companies were important customers, and that it was building a manufacturing strategy to be geographically diverse. That plan will help it continue to serve customers in China.

The global expansion will help the company quickly adjust to geopolitical shifts, and continue the supply of chips without violating local regulations and restrictions. The regional supply chains will also act as failsafe to avoid chip shortages, and ensure multiple sources for materials and tools critical to chip manufacturing.

The U.S., EU and China view chips as an important pillar to advance economies in an increasingly digital world. The shortages exposed weaknesses in the global semiconductor supply chain with manufacturing largely concentrated in China, Taiwan and Korea. The prices of chips went up, and low-cost chips like power-management circuits led to U.S. and EU car companies shutting down production lines.

The chip shortage prompted the U.S. and EU to strengthen the regional chip supply chains. The U.S. passed the CHIPS and Science Act, and the European Commission is proposed its own CHIPS Act to stabilize the local semiconductor ecosystem. China and the EU have invested heavily in developing sovereign chips based on the open-source RISC-V architecture, which will cut reliance on proprietary Arm and U.S.-based x86 architecture.

Intel has restructured its manufacturing around geographic hubs in strategic areas. In September, Intel broke ground on $20 billion factories in Ohio, which CEO Pat Gelsinger called “Silicon Heartland.” The company is investing close to 17 billion euros for new factories in Magdeburg, Germany, which has been dubbed “Silicon Junction.” The company is also spending $7 billion for a new test and assembly facility in Malaysia, and is upgrading manufacturing facilities in Israel. India has been wooing Intel to open a factory, but the company has rebuffed offers.

The scope of Intel’s geographically distributed manufacturing was illustrated by a representative at the Intel Foundry Services booth at the Innovation show last month. Researchers or companies will be able to use Intel’s services to get chips made in its regional facilities while bypassing issues like export restrictions. Intel will adapt within the regional framework governing the design and deployment of chips.

For example, the European Processor Initiative – which is funded by the European Commission and is designing RISC-V architecture – will be able to get a chip made at Intel’s factory in Europe. Participants in the EPI, like SiPearl, have expressed interest in using advanced chip manufacturing facilities on European soil as the chips can be delivered quickly.

Intel is helping in the creation of a made-in-Europe chip, which boosts the company’s chances to receive factory subsidies from the European Commission’s EU Chips Act. Intel is already helping Barcelona Supercomputing Centre – which is a part of the European Processor Initiative – design chips based on RISC-V.

The export restrictions on China, which were announced shortly after Intel’s Innovation show, are wide-ranging, and executives at chip companies told HPCwire that there is a lot of confusion around the policies, and they are still scratching their heads on how it will apply to their operations.

But the manufacturing-specific limitations are clear: companies can’t export chips to China that are more advanced than 16nm or 14nm chips with 3D structures, 18nm DRAM chips, and NAND flash chips with more than 128 layers.

Beyond the limitations, Intel could work with Chinese organizations low-end chips out of their Asia facilities. But Intel may not be a manufacturing option for Chinese companies, who are making RISC-V CPU designs that require factories using U.S. technologies. The Chinese Academy of Sciences is developing a RISC-V server chip code-named XiangShan. Chinese cloud provider Alibaba is also backing the development of RISC-V chips.

Gelsinger is betting its long-term foundry strategy, called Integrated Device Manufacturing (IDM) 2.0, will be judged on the technological merits. The export restrictions could change with a new party in power after the 2024 U.S. election, and Gelsinger isn’t considering short-term distractions.

“We need to manage our cash carefully, but we are investing for the long term. That is our strategy for building the process technologies – for unquestioned leadership, five nodes and four years, as we’ve called it. We’re building the capacity to ramp those technologies,” Gelsinger said at a press conference during Innovation.

Signals of Intel’s geographic separation of manufacturing can be seen with a new consortium on chip production and design for U.S. national security applications.

The USMAG (United States Military, Aerospace and Government) Alliance, which was announced on Tuesday and is led by Intel Foundry Services, is designed to create processes that “meet the stringent design and production requirements” for U.S. military, aerospace and government customers, the chipmaker said in a release.

The alliance points to a larger effort to create political inroads to get more foundry business from U.S. customers. The program could be a pathway for similar programs it creates in Europe and China.

Header graphic: A photo from November 2021 shows employees working at Intel’s D1X factory in Hillsboro, Oregon. (Credit: Walden Kirsch/Intel Corporation)

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