U.S. Chip Dependence and Strategic Investments: IBM and Nvidia-Intel Deal Highlight Supply Chain Risks

IBM has raised alarms about the U.S. reliance on foreign semiconductor supplies, labeling it a national security risk. Gary Cohn, former National Economic Council director under Trump, echoes this concern, warning that outsourcing chip production jeopardizes America's technological future. The urgency of these warnings is underscored by Nvidia's recent $5 billion investment in Intel, a deal that will see the two tech giants collaborate on chip designs for data centers and PCs.

Intel, once a dominant force in the global chip industry, has been struggling to maintain its competitive edge. The Nvidia partnership offers a lifeline, but it also exposes the fragility of the U.S. supply chain. With Intel as the sole American producer of cutting-edge chips, the lack of redundancy is a glaring vulnerability. The U.S. government has taken steps to address this, injecting $8.9 billion into Intel in late August for a 9.9% stake—a move aimed at bolstering domestic production.

Cohn acknowledges the Nvidia-Intel deal as a positive development but stresses the need for broader infrastructure investment. "We learned during COVID that without chip imports, our manufacturing economy grinds to a halt," he said. The pandemic laid bare the risks of over-reliance on global supply chains, prompting calls for self-sufficiency in critical technologies.