Highlights
On Intel. The WSJ Editorial Board writes that Trump’s national security objections to Intel CEO Lip-bu Tan is actually pretext for Trump to impose more control over the company. The editorial board draws comparisons between Trump’s opposition to Intel and Biden admin’s CHIPS Act, which imposed conditions in exchange for subsidies. They suggest that Trump’s own brand of industrial policy might be expected, forcing the US chipmaker to navigate troubled political waters.
A WSJ explanatory article explores Tan’s connections to China, which corroborate previous Sen. Tom Cotton’s objections to Tan.
Meanwhile, Reuters does a deep dive into Intel’s 18A node, which is reportedly at ~10% yield, a far cry from the 60-80% yield necessary to be commercially viable.
A different export control strategy. Kyle Chan and Ray Wang write in Foreign Policy arguing for a new approach to export controls. They argue that the US AI chips sold in China should be good enough to beat Huawei (and similar firms) out of the domestic market and limit domestic R&D, but bad enough to keep Chinese AI capabilities at bay. In this light, they argue that the H20 reversal was a step in the right decision.
The proponents for stricter chip controls often cite that Chinese domestic R&D push would likely continue regardless of export controls, given the strong political commitment, and that H20 AI chips are good (or at least good enough) at advancing Chinese AI capabilities.
Consolidating Chinese chip industry. The FT report that political efforts to consolidate the Chinese semiconductor industry are hitting roadblocks, citing a recent meeting between the NDRC and several key chip players earlier this year.
Table of Contents
The Editorial Board, “Industrial Policy and the Tragedy of Intel,” WSJ, 08/07/2025.
Robbie Whelan and Heather Somerville, “Five Things to Know About the Intel CEO’s Links to China,” WSJ, 08/08/2025.
Jeffrey Dastin and Max A. Cherney, “Intel struggles with key manufacturing process for next PC chip, sources say,” Reuters, 08/05/2025.
Kyle Chan and Ray Wang, “Leashing Chinese AI Needs Smart Chip Controls,” Foreign Policy, 08/04/2025.
Eleanor Olcott and Haohsiang Ko, “China hits roadblock in drive for ‘national champions’ in chip industry,” FT, 08/06/2025.
FT Reporters, “Inside the AI race: can data centres ever truly be green?,” FT, 08/07/2025.
Tran Thi Mong Tuyen, “Vietnam’s Strategic Ascent Up the Global Chip Supply Chain,” The Diplomat, 08/05/2025.
1.
The Editorial Board, “Industrial Policy and the Tragedy of Intel,” WSJ, 08/07/2025.
Is Intel finally discovering the wages of industrial policy? See President Trump’s demand Thursday that CEO Lip-Bu Tan resign. Mr. Trump likes to boss companies around, but Intel has made itself especially vulnerable owing to its dependence on federal largesse.
Evasions of U.S. sanctions and export controls deserve investigation. But national security and Mr. Tan’s alleged “conflicts” appear to be a pretext for Mr. Trump to impose more political control over the U.S. chip maker. The once great company has become a showcase for failed industrial policy after it lobbied for tens of billions of dollars in federal aid.
Former CEO Andy Grove liked to say that only the paranoid survive, but his successors may not have been paranoid enough. Intel passed up an opportunity to design chips for the iPhone and then was late to catch the AI wave. Now it’s struggling, as its mainstay PC and server chip businesses lose currency amid the AI boom.
So much for claims the Chips Act would boost jobs. The U.S. has lost 21,000 semiconductor manufacturing jobs in the last year. The shots at Mr. Tan may have more to do with frustration over failed industrial policy than national security. Republicans who helped Democrats pass the Chips Act are partly at fault.
The Biden Administration conditioned chip funds on companies advancing progressive social policy, including subsidized child care and paying union wages. Don’t be surprised if the Trump team seeks to attach its own conditions or pressure Intel’s board to oust Mr. Tan.
Meanwhile, Mr. Trump on Wednesday threatened 100% tariffs on imported chips, which will raise costs for U.S. companies, including auto makers and AI developers. Advantage China.
2.
Robbie Whelan and Heather Somerville, “Five Things to Know About the Intel CEO’s Links to China,” WSJ, 08/08/2025.
‘Nuclear explosive simulation’
Tan’s biggest China-related clash with U.S. officials came in July, when a software company called Cadence Design agreed to plead guilty to unlawfully selling its products to China’s National University of Defense Technology, a state-controlled research institution that develops many of China’s most important military systems.
Tan was CEO of Cadence from 2009 to 2021. Since 2015, the U.S. has banned the sale of American components to the university because of its alleged involvement in “nuclear explosive simulation” tests, among other combat-related activities.
‘Mr. Chip’
Long before Tan took over the helm of the beleaguered U.S. chip titan in March, he was one of the best-known technology investors in China. He founded investment firm Walden International in 1987 and started investing in Chinese electronics and manufacturing companies in the early 1990s.
In 2001, Walden became an early investor in Semiconductor Manufacturing International Corp., or SMIC, China’s partially state-owned chip maker, and Tan served on its board until 2018. SMIC competes with global giants like Taiwan Semiconductor Manufacturing Co. to fabricate high-powered computer processors, many of which can be used to power artificial intelligence models and sophisticated military technology.
‘Military civil fusion’
In 2020, the Commerce Department, then led by Wilbur Ross, blacklisted SMIC and several other companies that Tan’s funds backed.
‘Enabling PRC surveillance’
In July 2023, Walden again ran afoul of China hawks in Washington when then-Rep. Mike Gallagher, a Republican from Wisconsin who chaired a House select committee examining U.S.-China business relations, criticized Tan’s investments in Chinese state-owned companies.
Committee of 100
Tan, who was born in what is now Malaysia and raised in Singapore, has a decadeslong affiliation with the Committee of 100, a group that says it advocates for the interests of Chinese-Americans.
3.
Jeffrey Dastin and Max A. Cherney, “Intel struggles with key manufacturing process for next PC chip, sources say,” Reuters, 08/05/2025.
The production process that Intel hoped would pave the way to winning manufacturing deals and restore its edge in churning out high-end, high-margin chips is facing a big hurdle on quality as it puts newer technologies to the test, two people briefed on the matter told Reuters.
For months, Intel has promised investors it would increase manufacturing using a process it calls 18A. It spent billions of dollars developing 18A, including the construction or upgrades of several factories, with the goal of challenging Taiwan's chipmaking heavyweight, TSMC. Intel wants to round out its business designing chips that it largely makes in-house and TSMC helps it produce, with a contract manufacturing business that can compete with this key supplier. But whether Intel revives advanced chip production in the U.S. and gets its contract foundry on solid footing depends on closing the technology gap with TSMC.
An immense yield increase would be a tall task by Panther Lake's fourth-quarter launch, the two people with knowledge of Intel's manufacturing operation said. But without such a jump, Intel may have to sell some chips at a lower profit margin or at a loss, the two sources briefed on test data said.
Intel's 18A process involved big manufacturing changes and introduced newer technologies all at once, such as a next-generation transistor design and a feature that would improve the delivery of energy to a chip. This created manufacturing risks due to the complexity of fabricating chips, three of the sources said.
One way chip manufacturers gauge progress is to measure the number of defects per area of a chip, which can vary based on a semiconductor's design. Relative to industry standards, the Panther Lake chips had about three times too many defects for Intel to start high-volume production, the two sources briefed on test data said.
As of late last year, only around 5% of the Panther Lake chips that Intel printed were up to its specifications, these sources said. This yield figure rose to around 10% by this summer, said one of the sources, who cautioned that Intel could claim a higher number if it counted chips that did not hit every performance target. Reuters could not establish the precise yield at present.
4.
Kyle Chan and Ray Wang, “Leashing Chinese AI Needs Smart Chip Controls,” Foreign Policy, 08/04/2025.
China's stunning achievements in AI have one glaring weak spot: access to compute—the raw processing power that fuels AI and relies on large volumes of advanced semiconductors. The United States currently has a tenfold advantage over China in total compute capacity, a gap that may only widen over time. U.S. tech firms are pouring billions of dollars into new data centers and can reap the benefits of the latest chip advancements from Nvidia and AMD or their own self-developed AI chips.
Huawei's domestically produced AI chips, known as the Ascend series, might seem like the obvious solution to China's compute challenges. But there's a catch: Chinese tech firms don't want to use Huawei's chips, which lag behind their foreign counterparts, for training their AI models. In 2024, Chinese companies bought around 1 million Nvidia H20 chips compared with an estimated shipment of 450,000 Huawei Ascend 910B chips.
However, this could all change if the United States makes the wrong decisions.
Huawei has been making significant progress at the level of AI computing systems. Huawei recently unveiled its CloudMatrix 384 system, made up of 384 of Huawei's latest 910C chips and a novel all-optical networking approach. According to SemiAnalysis, Huawei's new CloudMatrix system outperforms Nvidia's state-of-the-art GB200 NVL72 system on key dimensions, such as compute power (how fast the chip can process large volumes of data), memory bandwidth, and integrated networking.
As Huawei's AI systems continue to improve, U.S. export control policies must be carefully calibrated to avoid pushing China's AI industry too far. If China's domestic AI chips continue to improve, while U.S. chips available in China are further downgraded by export controls, there will be a crossover point where the performance of Chinese chips clearly exceeds that of American chips available in China.
The United States needs a more sophisticated approach to export controls. The reversal of the H20 chip ban by the Trump administration was a step in the right direction. At the same time, the White House's new AI action plan correctly recognizes that winning the AI race with China depends on making the U.S. tech stack, including its AI chips, the dominant platform for global AI development.
A smart approach to export controls would focus on setting a performance threshold for AI chips that can be sold to China based on a window between U.S. and Chinese hardware capabilities. The performance threshold should be high enough to outperform China's domestic hardware options to ensure Chinese developers remain on U.S. platforms. At the same time, it should be low enough to maintain a significant performance gap with hardware systems available to American developers.
The overarching policy goal is clear: Ensure the United States continues to lead the world in AI. By constraining China's access to cutting-edge chips without pushing Chinese AI developers to make the leap to China's own domestic chips, the United States can use export controls to help make this a reality.
5.
Eleanor Olcott and Haohsiang Ko, “China hits roadblock in drive for ‘national champions’ in chip industry,” FT, 08/06/2025.
Beijing is facing obstacles in its push to consolidate China’s fragmented semiconductor industry into a handful of national champions that can compete against large US and European rivals.
China’s government convened a group of chip equipment makers this year to discuss a potential megamerger that would combine different technologies into a single state-backed giant, according to multiple people familiar with the talks.
The merger plan, led by the National Development and Reform Commission, is part of a broader policy shift aimed at streamlining China’s semiconductor sector, which Beijing sees as vital for strengthening its domestic chip industry amid continuing US export controls aimed at curbing the country’s high-tech ambitions.
However discussions between the chip manufacturing equipment groups have faltered following opposition from companies and investors over ownership structure and valuation, the people said. The NDRC did not respond to a request for comment.
While Beijing’s initiative has hit some roadblocks, a rise in dealmaking indicates some progress is being made to streamline the country’s semiconductor industry.
There have been 26 semiconductor acquisitions announced so far this year, according to data from financial information provider Wind. The most high-profile deal was a merger announced in May between Hygon, which designs central processing units for servers and data centres, and supercomputer maker Sugon.
Consolidation in the chip equipment space would help boost China’s bid to build a self-sufficient semiconductor supply chain and replace equipment from US groups such as Applied Materials and Lam Research, said Edison Lee, semiconductor analyst at Jefferies.
The state-led campaign has also attracted a wave of interest from companies outside the chip sector, with listed firms — from real estate developers to fungicide and knitting machinery manufacturers — announcing plans to acquire semiconductor assets.
6.
FT Reporters, “Inside the AI race: can data centres ever truly be green?,” FT, 08/07/2025.
From the deserts of the United Arab Emirates to the outskirts of Ireland’s capital, the energy demands of AI applications and training running through these centres are driving the surge of investment into fossil fuels.
This threatens to subvert global efforts to cut greenhouse gas emissions, which are the main driver of climate change. To limit rising temperatures, global emissions must fall by about half by 2030.
Tech companies point to their record as big investors in clean energy in an effort to deal with their emissions, but much of this is backed by green power credits.
This is a controversial form of investing in the build-out of clean energy because it is far from guaranteed to compensate for actual energy consumption.
Data centres’ climate problem goes well beyond new gas infrastructure. Just as relevant is the added pressure on existing electricity grids still in large part powered by coal, oil and gas.
Even as tech companies have become some of the world’s biggest investors in clean energy, their investments have not solved the conundrum of how to ensure stable supply during cloudy or windless times of the day.
Based on current deployment trends, the International Energy Agency expects greenhouse gases from data centre energy consumption to double in the next five years as a proportion of global emissions from burning fossil fuels. The rush for gas is also leading to a global supply crunch for new turbines.
7.
Tran Thi Mong Tuyen, “Vietnam’s Strategic Ascent Up the Global Chip Supply Chain,” The Diplomat, 08/05/2025.
In March of this year, the Vietnamese government officially approved the country’s first wafer fabrication plant, with a total investment of 12,800 billion VND ($500 million). Scheduled for completion before 2030, the project marks Vietnam’s first serious step into the high-value, technically demanding world of chip manufacturing. For years, Vietnam has been an emerging participant in the semiconductor supply chain, though its involvement so far remains mostly concentrated in lower rungs of the supply chain, such as packaging and testing.
Although the factory may initially focus on less advanced chips, it represents a move into the more complex and strategic phase of semiconductor fabrication in support of Vietnam’s long-term vision to become a global semiconductor hub by 2050. This transition comes at a moment when semiconductors have become central to global power. In 2024 alone, the global chip market was valued at over $627 billion, according to the World Semiconductor Trade Statistics. Chips today are central to military capability, economic competitiveness, and technological sovereignty.
In 2025 alone, the Ministry of Science and Technology led the drafting of nine major laws related to science, technology, innovation, and digital transformation. This is an unprecedented number, considering that in the previous five-year National Assembly terms, passing even one or two such laws was considered significant.
The Law on Science, Technology, and Innovation sets three priorities for the government: building and expanding national research infrastructure; creating a legal environment that encourages risk-taking and innovation; and introducing flexible funding mechanisms and protections to support researchers and institutions.
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Cover Photo by Slejven Djurakovic on Unsplash