- President Joe Biden’s executive video conferencing on Monday with 19 companies, including Ford Motor Co F, General Motors Co GM, Intel Corp INTC, Alphabet Inc GOOG GOOGL and others to address the global chip crisis-induced production slowdown with auto manufacturing and other industries, and a possible technology overtaking by China prompted Intel to announce its chip production plans for car plants at its factories in the next six to nine months.
- Leaders from Samsung Electronics Co Ltd SSNLF, Dell Technologies Inc DELL, Micron Technology Inc MU, Northrop Grumman Corp NOC, Taiwan Semiconductor Manufacturing Co Ltd TSM, AT&T Inc T and Cummins Inc CMI planned to join the meeting.
- Biden stressed the importance of semiconductor and broadband expansion to consolidate infrastructure. He acknowledged the bipartisan support for semiconductor funding under the infrastructure plan. He had previously planned to incur $50 billion in semiconductor manufacturing and research under the $2.3 trillion infrastructure plan. The infrastructure package had attracted Republican opposition as it imposed higher taxation on companies.
- The global chip crisis was triggered by chip manufacturers’ preference for high margin smartphones and other consumer electronic devices, further accelerated by pandemic-induced remote working and entertainment at the cost of the low margin auto business. As a result, the automakers had to cut down on their production capacity. The crisis was estimated to endanger 1.3 million vehicle production.
- The meeting participants stressed upon better semiconductor supply chain management. The automakers sought higher transparency regarding the demand-supply schedule and capacity utilization. Chip manufacturers sought clarity regarding actual demand to avoid ghost orders.
- NVIDIA Corp NVDA admitted to looming supply constraints over the following months.
- Intel CEO Pat Gelsinger agreed to make some of its production capacity available to resolve the near-term crisis as a part of his broader plan to build its contract manufacturing business.
- U.S.’s share of global semiconductor manufacturing declined from 37% in 1990 to 12% due to government subsidies to global competitors, the Semiconductor Industry Association said.
- Price action: INTC shares traded higher by 0.07% at $65.45 in the premarket session on the last check Tuesday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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