On Jan. 22, Intel announced that it will be investing $20 billion in the United States to build two chip plants in Ohio. Covering almost 1,000 acres, the new factories will be located around 30 miles away from Columbus, the state capital.
Intel could invest up to $100 billion at the site, potentially making it one of the biggest semiconductor manufacturing centers in the world. Construction activities will begin in late 2022 and production is expected to start sometime in 2025. Intel’s investment in Ohio follows the company’s $20 billion investment in Arizona last year where it is already building two chip plants.
“Our new megasite can accommodate a total of eight chip factories over its life… Today we’re starting with the first two, with a clear intention to build more… We’re getting started. But we need Congress to quickly and affirmatively act to finish CHIPS Act and get it funded, because I want the project to be bigger and faster as a result of the support of the CHIPS Act,” Intel CEO Pat Gelsinger said in an online event on Jan. 21.
Back in June, the Senate had passed the Innovation and Competition Act that set aside $52 billion for the CHIPS Act to support domestic semiconductor industries. The CHIPS Act is seen as critical to America as it could make local chipmakers competitive.
According to executives from semiconductor companies, it costs around 30 percent more to manufacture chips in the U.S. than in Asian nations. As such, the financial incentives granted under the CHIPS Act could make investments in the sector more attractive to semiconductor companies.
President Joe Biden has urged lawmakers to pass the CHIPS Act. In a statement on Jan. 21, Biden highlighted the poor state of American semiconductor manufacturing. Decades ago, America used to invest two percent of its GDP in research and development. At present, it is less than one percent, the president stated.
Taking on the competition
The U.S. used to be ranked number one in the world in research and development. But now, the country is at the ninth position. Meanwhile, China, which used to be at the eighth position three decades ago, is now number two, he added.
“Today we barely produce 10 percent of the computer chips, despite being the leader in chip design and research. And we don’t have the ability to make the most advanced chips now — right now… Today, 75 percent of production takes place in East Asia. Ninety percent of the most advanced chips are made in Taiwan… China is doing everything it can to take over the global market so they can try to outcompete the rest of us and have a lot of applications — including military applications,” Biden said.
Intel has also committed to spending $100 million over 10 years in Ohio to “develop and attract a pipeline of skilled talent” from the region. The company promises to create 3,000 jobs at Intel and 7,000 construction jobs. 140 local companies are expected to supply to Intel. The tech firm calculates the average salary of its Ohio employees to be $135,000.
Intel’s American investments come as the company’s semiconductor dominance has waned in recent years. In 2021, Samsung was the biggest semiconductor revenue earner, raking in $75.9 billion. Intel fell to the second spot with $73.1 billion.
In November, Samsung had announced an investment of $17 billion to set up a chip manufacturing plant in Texas. The company also has plans to invest in acquisitions and mergers to strengthen its hold in the industry. TSMC, a major semiconductor manufacturer based out of Taiwan, is constructing a $12 billion chip plant in Arizona. It will be investing $44 billion in 2022 and $100 billion in a three-year period ending 2023.