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US semiconductor giant Intel said it would expand its chip packaging and testing base in Chengdu, in a show of commitment to the mainland market despite a recent call by a Beijing-backed cybersecurity group to review the company’s products.

In addition to enlarging packaging and testing capacity for server chips, the facility will also establish a “customer solutions centre to improve the efficiency of the local supply chain, increase support for Chinese customers and improve response time”, Intel China said on Monday on its WeChat account.

The Santa Clara, California-based company will inject US$300 million into its local entity, Intel Products (Chengdu), to support the expansion, according to a WeChat post published by the city’s Reform and Development Commission.

Launched in 2003, Intel’s Chengdu plant is responsible for the packaging and testing of more than half of the company’s laptop processors shipped worldwide. Packaging and testing is the final step in semiconductor manufacturing, ensuring the quality and reliability of a product.

The facility plays a critical role in Intel’s global supply chain, while Chengdu provides a “favourable” business environment that paves the way for the company’s “stable growth”, Intel CEO Patrick Gelsinger said during a visit there last year. Chengdu is the capital of China’s southwestern Sichuan province.

Intel CEO Pat Gelsinger has been frustrated with the U.S. government’s slow progress in providing Intel with its promised CHIPS Act funding. The New York Times shared recent interviews with Gelsinger and U.S. Secretary of Commerce Gina Raimondo about the CHIPS and Science Act.

The Biden-backed CHIPS Act represents $280 billion of funding for semiconductor manufacturing in the United States, giving the Commerce Dept. the ability to provide 10-figure grants and loans to companies like TSMC and Intel to supercharge a young U.S.-based chip industry. The Biden administration has promised Intel $8.5 billion in direct funding to build its new chipmaking fabs (plus $11 billion in loans and a 25% investment tax credit of up to $100 billion). Still, the company has not seen any of these funds so far.

Missing the funds is a problem for Intel, which is in turmoil due to $1.6 billion in losses in Q2 2024. Intel is cutting 15% of its workforce, representing 15,000 or more workers worldwide. Gelsinger has spent the past three months since the disastrous August earnings call restructuring his company and placating stockholders. He has become “frustrated” with the roadblocks the government has put in between Intel and its CHIPS Act funds.

“My simple message is, ‘Let’s get it finished,’” said Gelsinger in an interview. “There’s been renegotiations on both sides.” The U.S. government put some objectives between CHIPS Act recipients and their money, with milestones including completing building projects, securing customers, etc. “Obviously, with elections, you know, nigh in front of us, hey, we want this done,” said Gelsinger, with the possibility of a new presidential regime lighting a fire of urgency.

This reticence to give out CHIPS Act funding right away apparently stemmed from fears from the government that Intel specifically would not meet its promises. “[There is fear that] Intel is going to take chips money, build an empty shell of a factory and then never actually open it, because they don’t have customers,” said former Commerce Department official Caitlin Legacki.

Gelsinger’s tenure as CEO since 2021 has been marked by a desire to rebuild the company in a foundry-forward direction. One of the major forces behind lobbying for the CHIPS Act, Gelsinger also supercharged the Intel Foundry division, which, despite its extremely high costs, has been deemed crucial for Intel's long-term success. The foundry is set to be spun off into an independent subsidiary, with its overseas operations paused for the next two years while its U.S. facilities are prioritized.

According to reports from last month, Intel is set to receive its first round of CHIPS Act funds before the end of 2024. Gelsinger, as mentioned above, is anxious to receive funds before the election, and Qualcomm is reportedly waiting until the election to make a move on purchasing Intel assets.

Defense Minister José Mucio Monteiro Filho's criticism of the “ideological issues” that held up the purchase of 36 armored artillery vehicles from Israel once again sheds light on the ambiguous stance of President Luiz Inácio Lula da Silva's (PT) government. On the one hand, the Israeli purchase was barred on the grounds of not sponsoring war in the Middle East, but on the other hand, Brazil increased its imports of Russian origin by 75%. These revenues help Moscow finance its war machine against Ukraine. The Lula government's trade retaliation against Israel was the subject of protests and harsh criticism from the opposition in the Senate on Wednesday (9).

A survey by Gazeta do Povo, based on data from the Ministry of Development, Industry, Trade and Services, shows a jump in Brazilian imports from Russia. In 2021, R$5.6 billion in Russian products were imported, while in 2023, a year after the war, this figure exceeded R$10 billion, an increase of around 75%.

Russia, like Israel, is also at war, but for different reasons. Moscow decided to invade a neighboring country and annex its territory and population. Israel has been defending itself against large-scale terrorist attacks by Hamas, Hezbollah and the Houthi rebels, all trained and financed by Iran. “It's a double standard, all the more so because Russia invaded Ukraine. It violated a principle [of territorial integrity and political freedom of nations] that Itamaraty has historically always supposed to defend. [In the case of] Israel, we have to discuss whether it was committing a war crime or not, but Israel reacted to an attack it suffered: a terrorist attack by Hamas. So, yes, it's double standards [adopted by the Lula government],” says international relations professor Gunther Rudzit, from the Escola Superior de Propaganda e Marketing (ESPM).

Israel has been fighting a war against the terrorist group Hamas in the Gaza Strip for exactly one year. The conflict began after the extremist organization ordered a terrorist attack against Israel and claimed 1,200 victims. In Europe, on the other hand, the war was motivated by Russia. The country started a war in February 2022, when dictator Vladimir Putin ordered his troops to invade Ukraine. The Brazilian president, however, has adopted different tones to address the ongoing conflicts in the world. While he avoids criticizing Putin and has even made statements interpreted as support for the dictator, Lula has been critical of the Israeli counter-offensive and the damage caused to the Palestinian population living in Gaza.

On Tuesday (8), Múcio said that ideological tendencies on the part of the government had blocked Defense negotiations with Israel. “There has now been a competition, a tender, the people of Israel, have won. But, because of the war, Hamas, the political groups, we have this tender ready, but, for ideological reasons, we can't approve it,” he said.

Although he didn't give details of which tender he was referring to, the most recent case is linked to Elbit Systems, the Israeli company that won the tender to sell 36 howitzers - a type of armored artillery that fires at long range - to the Brazilian Army. Negotiations, however, have stalled.

This is not the first time, however, that Lula's administration has interfered in Defense Ministry negotiations. On Tuesday, while criticizing the Brazilian government's intervention in the purchase of Israeli howitzers, José Múcio Monteiro Filho also condemned the suspension of the sale of ammunition to Germany. “We have ammunition here in the Army that we don't use. Germany wanted to buy it. It's there, it's expensive to maintain this ammunition. We made a great deal. 'You're not going. Because if you don't, the Germans will send it to Ukraine, and Ukraine will use it against Russia and Russia will mess with our agreements,'” said the Defense Minister. The minister also didn't detail what the ammunition would be, but in January last year President Lula met with Múcio and commanders of the Armed Forces to study a request made by Germany: the country was asking for ammunition for the armored Gepard, of German origin.

Members of the Workers' Party (PT) and the government's top brass, including the president's special affairs advisor, Celso Amorim, have opposed the purchase of Israeli artillery. They believe that the deal could indirectly finance the war the country is facing against Hamas in the Gaza Strip. “This [the Elbit process] is also a political issue. You're buying sensitive equipment from a country accused of genocide by the International Court,” Amorim told O Globo. Despite occupying an advisory post, Amorim was Lula's foreign minister and is seen as the figure responsible for foreign policy in Lula's third term.