With a global semiconductor shortage impacting thousands of industries, the world's largest chipmaker Intel pitched a quick fix - expand production in China.

The company hoped to use its factory in Chengdu, China, to manufacture silicon wafers by the end of 2022. But, the company is also trying to get billions in incentives and assistance from the US government as part of the $52 billion CHIPS Act.

Bloomberg reports that Intel told the White House about its idea and was "strongly discouraged" by Biden officials. It now no longer plans to expand in China.

Current incentive packages do not come with specific stipulations about China. Some lawmakers have said that CHIPS funding should include guardrails to ensure companies don't take the money - designed to increase US semiconductor sovereignty - and then expand in China. Congress has yet to pass CHIPS, despite the Senate passing the wider US Innovation and Competition Act five months ago.

“Intel and the Biden administration share a goal to address the ongoing industrywide shortage of microchips, and we have explored a number of approaches with the US government,” Intel said in a statement.

“Our focus is on the significant ongoing expansion of our existing semiconductor manufacturing operations and our plans to invest tens of billions of dollars in new wafer fabrication plants in the US and Europe.”

The company is also seeking tens of billions of dollars in incentives in Europe, with the EU also trying to improve domestic production.