Intel removes reference to Xinjiang in annual letter to suppliers after Chinese backlash

US semiconductor giant Intel’s updated letter to suppliers posted on its website has deleted any mention of Xinjiang
Intel faced a public relations crisis in China when the letter was published in December, as it threatened to entangle the firm in human rights issues

Intel

Che Panin Beijing

Published: 6:30pm, 11 Jan 2022

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Semiconductor giant Intel Corp has removed any mention of Xinjiang from its annual letter to suppliers, weeks after the US company caused an uproar in China for asking its partners not to use labour or products from the autonomous region in the northwest of the country.

Intel last month faced a public relations crisis in the world’s second-largest economy and biggest semiconductor market because of that letter, which threatened to entangle the company in human rights issues in Xinjiang.

The letter, which was widely covered by local and international media on December 22, said Intel was “required to ensure that its supply chain does not use any labour, or source goods or services, from the Xinjiang region”. It cited several compliance codes.

The two paragraphs which referred to Xinjiang in that letter have been deleted from an updated version found on Intel’s website. News of the change was first reported by The Wall Street Journal on Monday.

Responding to a request for comment on Tuesday, Santa Clara, California-based Intel reiterated the same message it released weeks ago. “We will continue to ensure that our global sourcing complies with applicable laws and regulations in the US and in other jurisdictions where we operate,” the statement said.

The Chinese government has not yet made any official comment regarding Intel’s letter.

Intel’s China unit had apologised on December 23 in a statement posted on its social media account on WeChat. “We deeply regret that the letter caused many questions and concerns among our cherished Chinese partners,” the statement said. “We deeply apologise for any confusion caused to our respected Chinese clients, partners and the public.”

Intel China, which opened its first chip plant in the country in 2010, said its letter was intended to comply with US regulations, not to take a stance on Xinjiang.

The backlash against Intel reflects the predicament for foreign businesses operating in China, as they get caught in policy disputes between Beijing and governments in the West.

Intel said to put off takeover of GlobalFoundries’ chip plant in China

Intel, which also operates two assembly and test facilities in Chengdu, capital of southwestern Sichuan province, shelved plans to ramp up semiconductor production in China to help address the ongoing global chip shortage after it was rejected by the White House over security concerns, according to a Bloomberg report in November.

China, including Hong Kong, contributed US$20.26 billion to Intel’s total revenue in 2020, according to data provider Statista. Intel reported US$77.9 billion in revenue that same year, up 8 per cent from US$72 billion in 2019.

On December 23, US President Joe Biden signed into law the Uygur Forced Labour Prevention Act, a measure that will effectively ban all imports from Xinjiang. It is expected to have significant ramifications for US-China relations and global supply chains alike.

The new law creates a “rebuttable presumption” that all goods sourced wholly or in part in Xinjiang are tainted by the use of forced labour in their production – charges that Beijing denies. The ban will go into effect in June.