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Semiconductor factories are the oil reserves of the 21st century, Intel CEO says

December 2, 2021, 11:49 AM UTC

Good morning.

My assignment at Brainstorm Tech yesterday was to interview Intel CEO Pat Gelsinger, who is a man on a mission. And it’s a mission not just to turn around the most iconic company in Silicon Valley, but also to address what may be the greatest geopolitical vulnerability that the U.S. faces today. As Gelsinger told the group, where semiconductors are made is as important for the 21st century economy as where oil reserves were located was to the 20th. And right now, the bulk of them are made in Taiwan, which is 100 miles off the Chinese mainland and considered by Beijing as part of its territory.

The internal challenge Gelsinger faces is big enough on its own. The company has fallen behind its competitors, and in Gelsinger’s view, has underinvested in technology. He is spending tens of billions of dollars to turn that around, building new fabs in the U.S. and Europe, and opening them up to manufacture for outside designers. That’s a business in which Samsung and Taiwan Semiconductor have years of experience. Catching up with them won’t be easy.

Then there’s the geopolitical challenge. Gelsinger is unapologetic about asking the U.S. and EU governments for help. He says both Samsung and TSMC benefit from large government subsidies, and Chinese chip companies get even more. But the CHIPS act is stuck in Congress, and Gelsinger is spending a good chunk of his time trying to unstick it. The bill provides support to all three companies—Samsung, TSMC and Intel—for building fabs in the U.S., but Gelsinger believes Intel, as a U.S. company, deserves an extra advantage.

I asked Gelsinger how long it will take for us to know whether his bold strategy to reposition Intel is succeeding. He said two to three years. There are lots of reasons to hope he succeeds.

Separately, I participated in a luncheon discussion that raised the question: Will “impact investing”—investing in companies that have a positive social impact—eventually become just good investing, much as “stakeholder capitalism” will eventually become just good management? Steve Ellis, co-managing partner of TPG’s The Rise Fund and Lo Toney, founding managing partner at Plexo Capital, both agreed. “At some point, this does become just good investing,” said Ellis. “When, I don’t know.”

More from the conference here. More news below.

Alan Murray
@alansmurray

alan.murray@fortune.com

TOP NEWS

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GSK treatment 

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The Future 50 

Fortune's Future 50 list is live this morning. You can explore the companies who made the grade here, and then walk through the trends that are shaping fast growing companies—and how the returns on previous years' lists have fared since. Fortune

Will Moderna's run continue? 

After exploring the list, take some time to dive into Rey Mashayekhi's magazine piece on Moderna's turbo-powered, pandemic-fueled run—and whether the company, now essentially a one-product business, can continue that run. Rey writes: "The big question for investors now: Is most of Moderna’s upside already priced in, or is it still early days for what could become one of the world’s leading health care companies?" Fortune

AROUND THE WATER COOLER

From Square to...Block? 

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Amsterdam's SPAC boom 

Despite Shell's departure for London, Amsterdam is having a roaring year of IPOs—the city's AEX index is up 27%, more than double that of the FTSE 100, and was home to 40% of this year's European listings. Bloomberg

China's real estate wealth 

"China is a nation of savers, and real estate is where the country stashes its money," writes Fortune's Yvonne Lau. But after an incredible real estate boom,  she writes that Beijing is trying to wean the country off its property debt, and the country's housing prices are suddenly starting to tick downwards. The collapse of Evergrande, the real estate giant, has only increased the jitters. Fortune

Supply chain crisis

Canada's British Columbia has been hit hard by disaster after disaster this year: droughts, fires, and now floods—which threaten to cut the port of Vancouver off from much of the country. But the compounding natural disasters snarling the supply chain are merely a sign of what's to come, writes Kat Eschner. Fortune

This edition of CEO Daily was edited by Katherine Dunn.

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