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Monday, December 5, 2022

Intel is planning to invest at least $20 billion in new chip manufacturing facilities in Ohio

Intel has chosen Ohio as the site for a new chip manufacturing complex that is expected to cost at least $20 billion. The move is part of an attempt to enhance domestic production of computer chips at a time when consumers are grappling with a persistent scarcity of the critical components.

In a statement released Friday, Intel said the new location near Columbus will initially house two chip facilities and directly employ 3,000 workers, while also generating other employment in the construction industry and at adjacent companies.

After taking over as Intel’s chief executive in January of 2014, Patrick Gelsinger has rapidly increased the company’s investments in manufacturing in order to reduce the United States’ reliance on foreign chip makers, while also lobbying Congress to pass legislation aimed at increasing domestic chip production. His company, Intel, has said that it may invest up to $100 billion over a decade on its next U.S. manufacturing campus, with the magnitude and pace of the expansion tied to anticipated government funding if Congress adopts a spending package known as the CHIPS Act.

According to Intel, President Biden will meet with Mr. Gelsinger at the White House on Friday to discuss the project in more detail. Officials from the Obama administration have been strong in their support for the CHIPS Act.

Intel’s decision has geopolitical ramifications, as well as concerns for supply chain management. Chips, which serve as the brains of computers and a wide range of other gadgets, are mostly produced in Taiwan, which China has claimed as its own territory. While the epidemic has been going on, they have also been in low supply because to the high demand and Covid-related interruptions in manufacturing and labour supply, creating concerns about how to maintain a constant chip pipeline.

Intel is making its first relocation to a new manufacturing state in more than 40 years, according to the company. The firm, which is headquartered in Silicon Valley, has manufacturing facilities in Oregon, New Mexico, and Arizona. Earlier this year, Mr. Gelsinger selected a pre-existing facility in Phoenix for a $20 billion expansion, which is now under construction.

Mr. Gelsinger, on the other hand, had stated that a new site was required in order to accommodate the increased demand for talent, water, electrical power, and other resources required for the intricate process of chip manufacturing. In search of suitable locations, Intel has searched the nation, pushing states to vie for one of the most significant economic development awards in recent history.

Located in New Albany, a suburb east of Columbus, the location for the new facility was selected since it is in a region recognised for its affordable land and housing. The nearby Ohio State University is a large supply of graduates with engineering degrees, which Intel might use to fill its open engineering positions. Columbus is also a convenient location for receiving materials and exporting completed chips because of its central location.

It is believed that the construction of the first two plants would begin later this year, with manufacturing set to begin by 2025, according to Intel. According to Intel, the property is more than 1,000 acres in size, with enough capacity to accommodate up to eight plants and associated activities in total.

While the pandemic was a contributing element to the shortage, another long-term issue was the migration of chip manufacture to Asian nations that provide subsidies to corporations who locate plants there. The United States is responsible for around 12 percent of world chip manufacturing, a significant decrease from its previous share of 37 percent in 1990. During that time span, Europe’s share in the global market fell from 40% to 9 percent.

Previously, Ohio did not have a significant chip manufacturing presence. As Dan Hutcheson, analyst at VLSI Research, points out, moving to a state where there are no established chip plants involves a number of hurdles, such as acquiring permissions and convincing suppliers of gases, chemicals, and manufacturing machinery to set up offices in the surrounding area. Having factories in more states, on the other hand, gives the company greater bargaining power in Washington, according to him.

Intel is not the only corporation that is increasing manufacturing in the United States. T.S.M.C. started building on a $12 billion facility approximately 50 miles from Intel’s headquarters in Phoenix, Arizona, earlier this year. A $17 billion plant for Samsung Electronics has been chosen in Taylor, Texas, with building scheduled to begin in 2022.

Mr. Gelsinger’s plan is predicated in part on the assumption that Intel would be able to compete with T.S.M.C. and Samsung in the production of chips for other firms. The majority of Intel’s history has been spent manufacturing solely the microprocessors and other chips that the company creates and sells to customers.

Because Intel has slipped behind its Asian competitors in terms of squeezing more circuitry into each slice of silicon, which boosts the capabilities of products such as cellphones and laptops, the plan is fraught with danger. Mr. Gelsinger has said that Intel is on pace to catch up over a number of years, but that it will not be simple given the fact that other firms are continuing to develop new technologies of their own.

Jonathan James
I serve as a Senior Executive Journalist of The National Era
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