The FT reports that hedge fund investor Third Point wants Intel to divest its microchip manufacturing business. Today Intel both designs and manufactures chips, but is increasingly falling behind new chip manufacturers in Taiwan and Korea.
Why should we care about arcane maneuvering in the chip industry?
Two points to take note of:
- The design and manufacture of advanced semiconductor chips are an important front in the ongoing tech/trade war between China and the US. Even were Intel to divest, the immediate geopolitical consequences may be mild. The cutting edge manufacturers are still located in allies like Korea and Taiwan, allowing the US to use political pressure to block access for Chinese companies, forcing them to rely on technologically inferior domestic chip manufacturers.
In the longer term however, China’s efforts to bootstrap its own semiconductor industry will probably bear fruit. This could make the US vulnerable to disruptions, for example in the event of an invasion of Taiwan.
- Markets reacted positively to the prospect of Intel divesting itself of manufacturing, pointing to tensions between the respective approaches of corporate America and Congress over China. Even as geopolitical competition becomes a bi-partisan norm, parts of American industry continue to see a future in China. Apple has kept manufacturing there, while the financial industry is desperate to get a foothold.
The fact that this tension has resolved itself almost entirely in favor of the state’s new belligerent policy suggests a shift in the relationship with capital. At a minimum, we may need to reconsider the familiar narrative of unlimited corporate power – at least when it comes to aspects of geopolitics.
What could be an explanation? As this insightful piece on Brexit argued, as ‘national capital’ is increasingly foreign owned, its interests may diverge from the more parochial interests of the state. Does the transformation of conservative parties downwards, into vehicles for parochial nationalism, have a causal parallel in the upwards dissipation of ‘national capital’ into a global network?