Intel to Construct $20 Billion Fabrication Facility in Midwest to Ease Chip Scarcity – CBS San Francisco

SANTA CLARA (AP) — Silicon Valley chipmaker Intel said Friday it will invest $20 billion to build a new factory in Ohio in a bid to alleviate the world’s shortage of chips that make everything from power phones to cars to home appliances, while signaling the giant company’s commitment to manufacturing key technology products in the United States

The move could also create a new technology hub in central Ohio as related companies that support chip manufacturing open new facilities and bring expertise to the region.

Intel rendering shows early plans for two new Intel processor factories in Licking County, Ohio. (Intel via AP)

Intel said two planned factories or factories will support its own line of processors, as well as its new “Foundry” business, which will build chips designed by other companies. Existing chip manufacturing plants produce a large number of custom chips, mainly in Asia. The business is currently dominated by Taiwan Semiconductor Manufacturing Co., TSMC for short.

The future production site should meet several requirements, Intel CEO Patrick Gelsinger said during a White House event. Chips made there would not only ease the pressure on the supply chain, he said, but also strengthen U.S. national security while bringing more tech jobs to the region.

The two factories, located on a 1,000-acre site in Licking County, east of Columbus, are expected to create 3,000 corporate jobs – many of them highly skilled – and 7,000 construction jobs. The facility will support tens of thousands of additional jobs for suppliers and partners, Intel and local and state officials said Friday.

“A semiconductor fab is not like other fabs,” said Gelsinger, a former Intel executive who returned to the company as CEO in 2021. “It’s more like a small town that supports a vibrant community of services, suppliers and ancillary businesses. You can think of it as a magnet for the entire tech industry.”

President Joe Biden used Intel’s Ohio announcement to push ahead with a $52 billion bill awaiting House approval that would invest in the chip sector and help drive more manufacturing in the US

“We will invest in America,” Biden said in the White House. “We invest in American workers. We’re going to stamp everything we can ‘Made in America’, especially these computer chips.”

Construction is scheduled to begin later this year, and production is scheduled to go into operation at the end of 2025. The company is also investing an additional $100 million in an education pipeline to create jobs for the facility. Total investments could top $100 billion over the decade, with six additional factories, Gelsinger said.

Intel said one of the products it will make in Ohio is the Intel 18A, “one of the most advanced chips ever made,” according to Forrester analyst Glenn O’Donnell. These are likely to be used in the high-end computers popular with video game enthusiasts and required for the data centers of tech giants like Amazon and Microsoft.

Gelsinger said he expects the Ohio site to also supply specialized chips for cars — a priority for US consumers and officials — and other products like mobile devices.

Intel’s Ohio location could help take some of the pressure off the company’s other production lines.

However, manufacturing more computer chips in the U.S. won’t fully protect the industry from disruptions and supply chain bottlenecks, as chips are still sent to Asia for assembly and packaging, said Nina Turner, research analyst at IDC.

After years of heavy reliance on Asia for computer chip manufacturing, the US and Europe’s vulnerability to shortages of crucial components became apparent as they began to emerge economically from the pandemic.

According to the Semiconductor Industry Association, the US share of the global chip manufacturing market has declined from 37% in 1990 to 12% today, and shortages have become a potential risk.

Chip shortages have hampered US automakers’ ability to produce vehicles, and last year Toyota overtook General Motors as the country’s top-selling automaker for the first time.

The US and Europe are aggressively pushing to build chip manufacturing capacity and reduce reliance on manufacturers now primarily based in Asia. Semiconductor companies have also sought to diversify their operations to avoid shortages caused by problems — such as natural disasters or pandemics — in a particular region.

Several chipmakers have signaled interest in expanding their American operations over the past year if the US government is able to facilitate the construction of chip factories. Samsung said in November it plans to build a $17 billion factory outside of Austin, Texas.

As Biden alluded, lawmakers have called on House and Senate leaders to fully fund a bill to address the semiconductor chip shortage. They want Congress to fully fund the $52 billion CHIPS for America Act, which allows government investment in semiconductor fabs.

The chip shortage has not only disrupted the US economy, but also creates a vulnerability in the country’s defense system, as eight out of 10 chips are made in Asia, lawmakers say.

Intel executives made it clear Friday that the size of the Ohio complex will depend on the passage of federal subsidies proposed by the Biden administration and Ohio lawmakers.

“The scale and pace of Intel’s expansion in Ohio,” according to a statement from Keyvan Esfarjani, Intel’s senior vice president of manufacturing, “will depend heavily on funding from the CHIPS Act.”

The Intel project is the largest single private sector investment in Ohio history, comparable to a 1977 agreement that brought Honda to central Ohio, where it now employs more than 14,000 people.

“Intel’s new facilities will transform our state and create thousands of high-paying jobs in Ohio that manufacture strategically important semiconductors,” Ohio Gov. Mike DeWine said in a statement.

Ohio pitched 40 other states for the project, DeWine said. Heads of state pledged to work with the company to provide a skilled workforce that includes everything from a two-year community college education to advanced degrees.

Intel, based in Santa Clara, California, last year announced plans to spend $20 billion on two new factories in Arizona. The company is also arguing for European subsidies to build a major plant somewhere in the European Union, and last month announced it would invest $7.1 billion to expand its decades-old manufacturing operation in Malaysia, which employs about 10% of the world’s workforce of the company are employed.

Intel also has plants in Ireland, Israel, Vietnam and China.

According to a market analysis by Gartner Inc., Intel is the world’s second largest semiconductor manufacturer with sales of 73.1 billion US dollars last year, behind South Korean world market leader Samsung Electronics with 76 billion US dollars.

Central Ohio, long known for its predominantly banking and insurance workforce, has added high-tech jobs in recent years, with Amazon, Facebook and Google all building data centers in the region.

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