IBM says U.S. chip dependence on foreign supply is a national risk

The United States must stop relying on other countries for chips, according to IBM vice chairman Gary Cohn. Speaking on Yahoo Finance’s Opening Bid, Cohn said, “The United States, as we know, has to become a chip manufacturer. We cannot be dependent on the rest of the world for chips.”

He served as National Economic Council director during Trump’s presidency and now warns that the country’s tech future is in danger if it keeps outsourcing chip production.

Cohn’s warning comes right after Nvidia announced a $5 billion investment in Intel. As part of the deal, the two companies will co-design chips for data centers and personal computers. This investment also makes Nvidia one of Intel’s largest shareholders.

Intel has been losing ground in the global chip industry, and this partnership might help the company recover. But it also reveals how fragile America’s chip supply chain really is. Right now, Intel is the only U.S. company making top-tier chips. That’s it. No backup.

U.S. government invests in Intel while Big Tech signs global AI chip deal

In late August, the U.S. government agreed to put $8.9 billion into Intel, getting a 9.9% ownership in return. This move was meant to boost domestic chip production, especially since the global market is becoming more competitive.

Cohn called the Nvidia-Intel partnership “some good,” but said the real issue is much bigger: America needs to build its own chip infrastructure and stop waiting on imports.

He brought up how badly the country struggled during the COVID pandemic. “We understood that without chips being imported to the United States, our economy, our manufacturing economy [would] shut down,” he said.

That situation exposed a national weakness. Now, the federal government is using policies like the CHIPS Act, signed into law in 2022 under President Biden, to encourage more chip factories at home.

But Cohn made it clear that the government’s job isn’t to pick favorites. “To be able to defend ourselves, to be able to build military equipment, we need to be in the chip manufacturing business here,” he said.

This comes while the U.S. and UK signed a $42 billion agreement called the Tech Prosperity Deal, which is expected to boost AI chip demand in the UK. Microsoft, Google, Nvidia, and OpenAI are all involved.

Cohn also said the AI boom will need massive data centers, most of which still don’t exist. He expects them to be ready in three to five years. He’s convinced AI is just getting started. Tools like AI agents only “solve a specific AI problem” today, but that will change. IBM is preparing for that next step.

The company believes AI will expand into something much bigger, connected systems, working together, powered by quantum computing. “Where I believe this is going, where IBM believes is going … to an enterprise-wide solution where all of these AI programs … will work together,” he said.

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