Intel to build $20 billion fab in Midwest to ease chip shortage – CBS San Francisco

SANTA CLARA (AP) — Silicon Valley chipmaker Intel said Friday it would invest $20 billion to build a new factory in Ohio, an attempt to help ease a global shortage of chips powering everything from phones to cars to appliances, all while pointing to the giant corporation. commitment to making critical technology products in the United States

The move could also create a new tech hub in central Ohio as associated companies that support chip manufacturing open new facilities and bring their expertise to the region.

Intel rendering shows an early plan for two new Intel processor factories in Licking County, Ohio. (Intel via access point)

Intel said two planned fabs, or fabs, will support its own line of processors, as well as its new “foundry” business, which will build chips designed by other companies. Existing chip foundries produce large numbers of custom-designed chips, primarily in Asia. The business is currently dominated by Taiwan Semiconductor Manufacturing Co., or TSMC.

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

The two plants 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.

“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 town supporting a vibrant community of services, vendors, and ancillary businesses. You can think of this as a magnet for the entire tech industry.

President Joe Biden used Intel’s announcement in Ohio to push a $52 billion bill pending House approval that would invest in the chip industry and help ensure a more large production in the United States

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

Construction is expected to begin this year, with production coming online in late 2025. The company is also investing an additional $100 million in an education pipeline to help create jobs for the facility. Total investment could top $100 billion over the decade, with six additional plants, Gelsinger said.

Intel said one of the products it will manufacture in Ohio is the Intel 18A, “among the most advanced chips ever made,” according to Forrester analyst Glenn O’Donnell. These will likely be used in high-end computers that are popular with gamers and needed for data centers run by tech giants like Amazon and Microsoft.

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

Intel’s location in Ohio could help relieve pressure on the company’s other production lines.

But making more computer chips in the U.S. won’t fully protect the industry from supply chain disruptions and shortages, as chips will still be sent to Asia for assembly and packaging, said Nina Turner, an analyst at research at IDC.

After years of heavy reliance on Asia for computer chip production, vulnerability to shortages of crucial components has been revealed in the United States and Europe as they begin to emerge economically from the pandemic.

The United States’ share of the global chip manufacturing market has fallen from 37% in 1990 to 12% today, according to the Semiconductor Industry Association, and shortages have become a potential risk.

Chip shortages have limited the ability of US automakers to produce vehicles, and last year General Motors was knocked down by Toyota as the nation’s top-selling automaker for the first time.

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

Last year, several chipmakers expressed interest in expanding their US operations if the US government is able to facilitate the construction of chip factories. Samsung announced plans in November to build a $17 billion factory outside Austin, Texas.

As Biden alluded to, lawmakers urged House and Senate leaders to fully fund legislation to address the shortage of semiconductor chips. They want Congress to fully fund the $52 billion CHIPS for America Act, allowing investments in the United States in semiconductor factories.

Not only has the chip shortage disrupted the U.S. economy, it is also creating a vulnerability in the country’s defense system, as eight out of 10 chips are produced in Asia, lawmakers say.

Intel executives made it clear Friday that the size of its Ohio complex will depend on passing federal grants sought by the Biden administration and Ohio lawmakers.

“The scope and pace of Intel’s expansion into Ohio,” said Keyvan Esfarjani, Intel’s senior vice president of manufacturing, “will be heavily dependent on CHIPS funding.”

The Intel project is the largest private sector investment in Ohio’s history, tied with a 1977 deal that brought Honda to central Ohio, where it now employs more than 14,000 people.

“Intel’s new facilities will be transformative for our state, creating thousands of well-paying jobs in Ohio, manufacturing strategically vital semiconductors,” Ohio Governor Mike DeWine said in a statement. .

Ohio beat out 40 other states for the draft, DeWine said. State leaders have pledged to work with the company to provide skilled workers who will need two years of training at a community college for advanced degrees.

Intel, based in Santa Clara, Calif., last year announced plans to spend $20 billion on two new factories in Arizona. It is also applying for European grants to build a large factory somewhere within the European Union and said last month it would invest $7.1 billion to expand its decades-old manufacturing facility in Malaysia, which is home to approximately 10% of the company’s global workforce.

Intel also has factories in Ireland, Israel, Vietnam and China.

Intel is the world’s second-largest semiconductor maker, with $73.1 billion in revenue last year, behind South Korea’s global leader Samsung Electronics with $76 billion, according to market analysis by Gartner Inc.

Central Ohio, long known for a largely white-collar workforce in banking and insurance, has added high-tech jobs in recent years, with Amazon, Facebook and Google all building data centers in the region.

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