Intel CEO Patrick Gelsinger called the company’s presence in China “very important” on a recent visit to Beijing, even as the U.S. tries to limit the sale of advanced chips and chipmaking equipment to the country.
China “is one of the world’s largest markets, and also one of Intel’s most important markets,” Gelsinger said on Wednesday, during a visit to Beijing for a sustainability summit, according to the South China Morning Post, citing Chinese media outlets.
During his visit, Gelsinger also met Chinese officials, including Commerce Minister Wang Wentao and Vice President Han Zheng. China’s commerce ministry said Wang and Gelsinger discussed the “security and stability of the global semiconductor industry chain.”
Intel declined to comment further on Gelsinger's statements in China.
Gelsinger’s visit follows trips from other chip CEOs, including Qualcomm CEO Christiano Amon and ASML Holdings CEO Peter Wennink, earlier this year.
China’s chip industry is trying to navigate an array of new restrictions from the U.S. and its allies as the Biden administration tries to preserve its technological edge in semiconductors.
Intel was a strong supporter of the U.S.’s CHIPS and Science Act, which provided $52 billion in subsidies for U.S.-based semiconductor manufacturing. Gelsinger argued that U.S. support was needed for projects like its $20 billion plant in Columbus, Ohio, even suggesting that it might move production to locations like Europe if the money wasn’t approved.
Yet the Act, passed last August, contains measures to prevent recipients of U.S. money from expanding production in China.
In late March, the U.S. Department of Commerce released draft rules that would bar CHIPS Act money recipients from expanding leading-edge chip manufacturing in “countries of concern,” including China. Companies also can’t expand the capacity of existing legacy facilities in China by more than 10%, and can only build new legacy facilities in China if they would predominantly serve the Chinese market.
“These guardrails will help ensure malign actors do not have access to the cutting-edge technology that can be used against America and our allies,” said Commerce Secretary Gina Raimondo at the time.
China’s foreign ministry said the proposed rules “gravely violate the law of the market economy and the principle of fair competition.”
The U.S. also slapped tough export controls on sales of chips and chipmaking equipment to China last October, and has encouraged allies like Japan and the Netherlands to also impose similar regulations.
China retaliation
Chinese officials may be starting to retaliate. On March 31, Chinese regulators launched a cybersecurity review of U.S. chip company Micron Technology, another vocal supporter of the CHIPS and Science Act.
Chinese officials hinted at these tensions during Gelsinger’s trip, with Vice President Han saying Wednesday that multinational companies had to “overcome difficulties and challenges” to encourage cooperation, according to Reuters citing Chinese state radio.
Intel earned 27% of its 2022 revenue from China, according to the company’s latest annual report.
Intel reported dismal earnings in late January, with a 20% drop in full-year revenue, bringing the U.S. chipmaker below Taiwanese rival Taiwan Semiconductor Manufacturing Corporation. The company is targeting $3 billion in cut costs by the end of the year, and announced pay cuts across the company, ranging from a 5% cut for mid-level managers to a 25% cut for Gelsinger.
Intel will announce first-quarter earnings on April 27. The company forecast a loss for the coming quarter in its last earnings report.
