Intel will outsource manufacturing and that marks a big shift in the semiconductor industry. Even as the likes of Apple moved manufacturing out of the US long back, Intel has continued to be a manufacturer based in the US over the last 30 years by combining best designs with cutting-edge factories. All that stands to change with larger repercussions.

Most other chip companies shut or sold their US plants years ago. Many had moved their operations to Asian economies like Taiwan, China, Thailand and Vietnam. Now Intel’s factories struggle to keep up with the latest 7-nanometer production process. Some argue that sending chip making technical knowhow to Asia could be a dangerous error.

The problem is of security. Intel’s Xeon chips run computers and data centres that support the design of nuclear power stations and spacecraft. It also helps governments understand intelligence inputs and other crucial information. If Intel outsources this work, it would likely be done by Taiwan Semiconductors which is currently the world leader.

The rise of smart phones changed that as Qualcomm became a prominent chip maker. Intel still makes hundreds of millions of chips annually but it is Taiwan Semiconductor that makes more than a billion chips annually. It could mean the end of US technology leadership in the semiconductor space, the only property that still remained in the US.