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.
Dubbed the silicon
heartland, it could become "the largest semiconductor manufacturing
location on the planet," he said.
While chipmakers are
scrambling to boost output, Intel's plans for new factories will not alleviate the
current supply crunch, because such complexes take years to build.
Gelsinger reiterated
on Friday he expected the chip shortages to persist into 2023.
To dramatically
increase chip production in the United States, the Biden administration aims to
persuade Congress to approve $52 billion in subsidy funding.
US House Speaker Nancy
Pelosi said on Friday the House of Representatives would soon introduce a bill
on competitiveness to help bolster semiconductor investment and supply chains.
That would include the $52 billion funding.
US President Joe Biden
touted Intel's investment on Friday at a White House event with Gelsinger and
again made the case for congressional action.
"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.
US 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."
THE CHIP FEAST AND
FAMINE
Intel ceded the No. 1
semiconductor vendor spot to Samsung Electronics in 2021, dropping to second
with growth of just 0.5%, the lowest rate in the top 25, data from Gartner
showed.
As part of its
turnaround plan to become a major manufacturer of chips for outside customers,
Intel broke ground on two factories in Arizona in September. The $20 billion
plants will bring the total number of Intel factories at its campus in the
Phoenix suburb of Chandler to six.
Gelsinger told Reuters
he still hoped to announce another major manufacturing site in Europe in the
coming months.
It is not just Intel
ramping up investments. Rivals Samsung Electronics and Taiwan Semiconductor
Manufacturing Co or TSMC also have announced big investment plans in the US And
that's raising questions about a glut in chips going forward.
"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.
US-CHINA TECH WAR
The US build-up comes
as a tech war between the US and China is causing a decoupling of certain
technologies, such as chips. Companies looking to sell technologies to China
are considering basing outside of the US to avoid being snagged by US export
control rules. China is also investing heavily in its semiconductor
manufacturing capacity.
While Gelsinger also
touted the security and economic benefits of boosting US chip production on
Friday, Bloomberg reported in November that the Biden administration pushed
back against a prior plan by the company to boost silicon wafer production in
China over national security concerns.
Intel has drawn fire
for its decision to delete references to Xinjiang from an annual letter to
suppliers after the chipmaker faced a backlash in China for asking suppliers to
avoid the sanctions-hit region.
When asked about it in
a briefing last month, White House press secretary Jen Psaki said she could not
comment on the company specifically, but 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 labour from Xinjiang and
urging companies to oppose China's "weaponizing of its markets to stifle
support for human rights."
Intel's Ohio
investment is expected to attract partners and suppliers. Air Products, Applied
Materials, LAM Research and Ultra Clean Technology have shown interest in
establishing a presence in the region, Intel said.
Construction of the
first two factories is expected to begin late in 2022 and production in 2025.