Intel to Invest at Least $20 Billion in New Chip Factories in Ohio

Intel has selected Ohio for a new chip manufacturing complex valued at at least $ 20 billion, furthering efforts to increase production of computer chips in the US as users grapple with a protracted shortage of key components.

Intel said Friday that the new site near Columbus will initially have two chip factories and will directly employ 3,000 people, while creating 7,000 short-term construction jobs and thousands of permanent positions on suppliers and partners.

Patrick Gelsinger, who became Intel’s chief executive last year, has sharply increased the company’s investment in manufacturing to help reduce US dependence on foreign chip makers while lobbying Congress to pass incentives aimed at boosting domestic chip production. He said Intel hoped to invest $ 100 billion a decade to build eight factories on the Ohio campus, adding that if Congress approved a spending package known as the CHIPS Act, it would combine the scope and speed of expansion with the expected federal grant.

“We’re putting our chips on the table,” Mr. Gelsinger said at a White House event on Friday. “But with the Chips Act, the project will get bigger and faster.”

President Biden, who has been actively pushing for legislation, argued that the CHIPS Act and US investments by Intel and other chip makers are crucial to the economy, national security and economic competition.

“China is doing everything possible to capture the global market,” he said.

Intel’s move has far-reaching geopolitical implications, as well as significance for the supply chain. The chips, which act as the brains of computers and many other devices, are mostly manufactured in Taiwan, on which China has made regional claims. During epidemics, they were also in short supply due to high demand and coronavirus-related disruptions in production and labor supply, raising questions about how to ensure continuous chip pipelines.

This is Intel’s first step into a new state of production in more than 40 years. The Silicon Valley-based company has US factories in Oregon, New Mexico and Arizona. Last March, Mr. Gelsinger chose an existing complex near Phoenix for the 20 billion expansion, which is now underway.

But Mr. Gelsinger also stressed that the complex process of making chips requires a new location to provide additional talent, water, electrical power and other resources. Intel has combed the country for sites, encouraging states to compete for one of the largest economic development awards in recent memory.

The suburb of New Albany, east of Columbus, is the site chosen for the new plant, in an area known for cheap land and housing. The nearest Ohio State University is a major source of graduates with engineering degrees who may be recruited by Intel. Columbus is also located in the center for receiving supplies and shipping of finished chips.

Construction of the first two factories is expected to begin later this year and production will begin by 2025, Intel said. Site, which Mr. Gelsinger was called the catalyst for the new “Silicon Heartland”, which is over 1,000 acres and is expected to be the largest economic development project in Ohio’s history.

“Intel’s new features will be transformative for our state, creating thousands of well-paying jobs in the production of strategically important semiconductors in Ohio,” Ohio Governor Mike Dwayne said in a statement.

Mr. Gelsinger, a 30-year-old Intel veteran who became chief of software maker VMware in 2012, returned to the chip maker last year and became chief executive as a shortage of semiconductors began to hamper carmakers and other companies.

The root of the shortage was partly epidemic, but another long-term factor was the migration of chip manufacturing to Asian countries that subsidize companies that make factories there. The United States accounts for about 12 percent of global chip production, up from 37 percent in 1990. Europe’s share fell from 40 percent to 9 percent during that period.

Many of the advanced chips come from a Taiwanese semiconductor manufacturing company, whose proximity to China worries Pentagon officials.

A law passed by the Senate with bilateral support last June would provide $ 52 billion in subsidies to the chip industry, including grants to companies building new US factories. Since then the package has been embroiled in a House tussle over the priorities of the Biden administration, although Mr. Gelsinger and others have said they hope it will pass next month.

In Europe, Mr. Gelsinger has lobbied officials for a similar package of subsidies that could help build a large new Intel factory there, with an estimated cost comparable to the US expansion.

Ohio has no prior chip production presence. Dan Hutcheson, an analyst at VLSI Research, said the current chip presents challenges in moving to a state without factories, such as obtaining permits and persuading suppliers of gas, chemicals and manufacturing machines to set up nearby offices. Having plants in more states, on the other hand, provides lobbying leverage in Washington, he said.

Intel is not the only company expanding US production. TSMC began construction last year on a $ 12 billion complex about 50 miles from Intel’s site near Phoenix. Samsung Electronics has selected Taylor, Texas for a $ 17 billion factory to be built in 2022.

Mr. Gelsinger’s strategy is partly based on the claim that Intel could compete with TSMC and Samsung in the production of chips for other companies. For most of its existence, Intel has only built microprocessors and other chips that it designs and sells on its own.

The strategy is risky, as Intel lags behind its Asian rivals in packing more circuitry on each slice of silicone, increasing the capabilities of devices such as smartphones and computers. Mr. Gelsinger said Intel has been on track to move forward for many years, but it will not be easy, as those companies continue to develop their own innovations.

Intel “is catching up, but they’re not catching up,” Mr. Said Hutchison.

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