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Intel to build USD20B Ohio chip facility amid global shortage

COLUMBUS, OHIO (AP) – Chipmaker Intel said it will invest USD20 billion to build a new factory in Ohio, an attempt to help alleviate a global shortage of chips powering everything from phones to cars to home appliances while also signalling the giant company’s commitment to manufacturing crucial technology products in the United States (US).

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

Intel said two planned factories, or fabs, will support its own line of processors, as well as its new “foundry” business, which will build chips designed by other firms. Existing chip foundries turn out a vast number of custom-designed chips, mostly in Asia.

The business is currently dominated by Taiwan Semiconductor Manufacturing Co (TSMC).

The future production site aims to meet multiple needs, Intel CEO Patrick Gelsinger said during a White House event. Chips built there won’t just reduce supply chain pressures, he said, but will also bolster US national security while bringing more tech jobs to the region.

The two factories on a 1,000-acre site in Licking County, just east of Columbus, are expected to create 3,000 company 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.

Ohio governor Mike DeWine (C) speaks during the announcement that Intel will invest USD20 billion to build two computer chip factories in Licking County, Ohio. PHOTO: AP

“A semiconductor factory is not like other factories,” said Gelsinger, a former Intel executive who returned to the company as CEO in 2021. “It’s more like a small city supporting a vibrant community of services, suppliers and ancillary businesses. You can think about this as a magnet for the entire tech industry.”

President Joe Biden used Intel’s Ohio announcement to push a USD52 billion bill awaiting House approval that would invest in the chip sector and help ensure more production occurs in the US.

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

Construction is expected to begin this year, with production coming online at the end of 2025. The company is also investing an additional USD100 million for an education pipeline to help provide jobs for the facility. Total investment could top USD100 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, “among the most advanced chips ever made”, according to Forrester analyst Glenn O’Donnell. Those will likely be used in the high-end computers that are popular with video game enthusiasts and needed for the data centres run by tech giants like Amazon and Microsoft.

Gelsinger said he expects the Ohio site will also supply specialised chips for cars – a priority for US consumers and officials – and other products such as mobile devices.

Intel’s Ohio site could help relieve pressure on the company’s other production lines. But making more computer chips in the US won’t entirely protect the industry from supply chain disruptions and shortages because the chips still will be sent to Asia for assembling and packaging, said research analyst at IDC Nina Turner.

After years of heavy reliance on Asia for the production of computer chips, vulnerability to shortages of the crucial components was exposed in the US and Europe as they began to emerge economically from the pandemic.

The US share of the worldwide chip manufacturing market has declined from 37 per cent in 1990 to 12 per cent today, according to the Semiconductor Industry Association, and shortages have become a potential risk.

Shortages of chips have crimped the ability of US automakers to produce vehicles, and last year, General Motors was unseated by Toyota as the nation’s top-selling automaker for the first time.

The US and Europe are pushing aggressively to build chipmaking capacity and reduce reliance on producers now mostly based in Asia. Semiconductor businesses have also been trying to diversify their operations to avoid bottlenecks caused by problems – such as a natural disaster or pandemic lockdown – in a specific region.

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