On Friday, Intel Corp said that it would invest up to $100 billion to build potentially the world’s largest chip-making complex in Ohio. It will enhance the capacity as a global shortage of semiconductors affects everything from smartphones to cars.
The move is part of Chief Executive Officer Pat Gelsinger’s strategy to restore Intel’s dominance in chip making and reduce America’s reliance on Asian manufacturing hubs, which have a tight hold on the market.
An initial $20 billion investment – the largest in Ohio’s history – on a 1,000-acre site in New Albany will create 3,000 jobs, Gelsinger said. That could grow to $100 billion with eight total fabrication plants and would be the largest investment on record in Ohio, he told Reuters.
Called the silicon heartland, it could become “the largest semiconductor manufacturing location on the planet,” he said.
To massively increase chip production in the United States, the Biden administration aims to persuade Congress to approve $52 billion in subsidy funding. U.S. House Speaker Nancy Pelosi said on Friday the House of Representatives would soon bring forward a bill on competitiveness to help bolster semiconductor investment and supply chains.
“China is doing everything it can to take over the global market so they can try to out-compete the rest of us,” Biden said. U.S. Commerce Secretary Gina Raimondo said at the event the current semiconductor supply chain is “far too dependent on conditions and countries halfway around the world.”
Gelsinger said without government funding “we’re still going to start the Ohio site. It’s just not going to happen as fast and it’s not going to grow as big as quickly.”
Intel ceded the No. 1 semiconductor vendor spot to Samsung Electronics Co Ltd in 2021, dropping to second with growth of just 0.5%, the lowest rate in the top 25, data from Gartner showed.
The $20 billion plants of Intel will bring the total number of Intel factories at its campus in the Phoenix suburb of Chandler to six. They also plan to open a factory in Europe.
Rivals Samsung Electronics and Taiwan Semiconductor Manufacturing Co or TSMC are also planning to expand into the industry.
“We still have years in front of us before we’re even having a semblance of supply-demand balance,” said Gelsinger. “Ask yourself what portion of your life is not becoming more digital.”
“Yes, the industry is growing, and maybe the metaverse solves world hunger for the semiconductor industry. But there is a big bubble coming,” said Alan Priestley, an analyst at Gartner.
White House press secretary Jen Psaki said, “American companies should never feel the need to apologize for standing up for fundamental human rights or opposing repression,” reiterating a call to industry to ensure that they are not sourcing products that involve forced labor from Xinjiang and urging companies to oppose China’s “weaponizing of its markets to stifle support for human rights.”
Air Products Applied Materials, LAM Research, and Ultra Clean Technology have shown their interest in investing in Intel’s project.
Construction of the first two factories is expected to begin late in 2022 and production in 2025.