China invites Intel, AMD, and others to establish operations overseas

This move likely won't go over well with the U.S.

Screengrab via Intel

Following the damage done to Chinese telecommunications company Huawei by U.S. sanctions, the Chinese government is making a play for manufacturing security by welcoming foreign semiconductor manufacturers overseas.

China’s Ministry of Commerce will launch a division dubbed the “cross-border semiconductor work committee,” which will oversee conversations with Intel, AMD, ASML, and others in a bid to convince companies to set up shop in the country, according to Nikkei Asia.

Launching in the first half of the year, the committee will also consist of the Ministry of Industry and Information Technology and lab personnel from Tsinghua University. This committee will encourage companies from overseas to establish manufacturing facilities. The soon-to-be-established entity will work with local governments and put up the necessary funds, according to Nikkei Asia.

The news of the Chinese government’s efforts to secure its manufacturing security amid U.S. sanctions against its tech companies coincides with Intel and the U.S. government’s efforts to reestablish the U.S. as the No. 1 semiconductor manufacturer in the world.

Intel has been busy breaking ground on a $20 billion campus in Arizona and is preparing for another $20 billion campus in Ohio with the potential of expanding to a total $100 billion build-out including eight chip fabs on-site. To supplement this growth, the America COMPETES Act earmarks $52 billion in manufacturing and research funds—as well as an additional $45 billion to strengthen the supply chain—and is one step closer to President Biden’s desk after it passed through the House of Representatives earlier today.

Considering the ongoing trade war, there’s no surprise in China attempting to secure its manufacturing power. What’s more interesting is that many companies will likely take China up on its offer. Out of all Intel’s business in 2020, China accounted for over a quarter at 26 percent. Similarly, AMD has plenty of reasons to strengthen ties with China, according to Nikkei Asia.

“For many semiconductor companies, China is one of the largest growth markets in terms of sales, so they can’t ignore the wishes of the Chinese government,” one unnamed executive told Nikkei Asia.