US Needs More Chips Funding as AI Fuels Demand, Raimondo Says

Mackenzie Hawkins and Ian King, Bloomberg News

Gina Raimondo, US commerce secretary, speaks during the SelectUSA Investment Summit in National Harbor, Maryland, US, on Tuesday, May 2, 2023. The summit is to establish new connections and opportunities to grow through investing in the US, according to the organizers. , Bloomberg

(Bloomberg) -- Commerce Secretary Gina Raimondo said that the US will need continued investments in semiconductor manufacturing to regain global leadership and meet demand from artificial intelligence technologies.

“I suspect there will have to be — whether you call it Chips Two or something else — continued investment if we want to lead the world,” Raimondo said during a virtual appearance at an Intel Corp. event Wednesday. “We fell pretty far. We took our eye off the ball.”

She pointed to the computing demands of artificial intelligence, adding that she has spoken with OpenAI Chief Executive Officer Sam Altman, who’s working to secure US government approval for a massive venture to boost global manufacturing of AI chips.

“When I talk to him or other customers in the industry, the volume of chips that they project they need is mind boggling,” she said.

Read More: OpenAI’s Altman Seeks US Blessing to Raise Billions for AI Chips

The 2022 Chips Act set aside $39 billion in direct grants, plus loans and loan guarantees worth $75 billion, to revitalize domestic semiconductor production. The Commerce Department is in the process of allocating that money among hundreds of applicants, and has announced three awards so far to the American subsidiary of BAE Systems Plc, Microchip Technology Inc. and GlobalFoundries Inc.

Intel, which has announced plans for a $20 billion plant in Ohio and $20 billion expansion in Arizona, is in talks for more than $10 billion in grant and loan incentives, Bloomberg reported last week.

Read More: Intel in Talks for Over $10 Billion in Chips Act Incentives

Intel CEO Pat Gelsinger said Wednesday that an award announcement is coming “very soon.” Raimondo didn’t comment on the timing of Intel’s award in her remarks, but called the firm “an American champion company,” adding that Intel “has a very huge role to play in this revitalization.”

Intel on Wednesday announced that it has landed Microsoft Corp. as a customer for its made-to-order chip business, marking a key win for Gelsinger’s ambitious turnaround effort.

Read More: Microsoft Will Use Intel to Manufacture Home-Grown Processor

While the American chipmaker once dominated the industry, in recent years it has fallen behind Asian rivals Taiwan Semiconductor Manufacturing Co. and South Korea’s Samsung Electronics Co. Gelsinger has been one of the leading industry voices lobbying for US government support, and the firm has said its investment plans are contingent on that funding.

(Updates to add full Raimondo quote in fourth paragraph, Intel-Microsoft deal in penultimate paragraph.)