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Intel to construct two Ohio chip factories by 2025

Highlights

Plant will meet rising demand amid shortages

Site could expand to eight plants over decade

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  • Nick Lazzaro
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  • Richard Rubin
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Intel will invest more than $20 billion to construct two semiconductor chip factories in near Columbus, Ohio, with production expected to start in 2025, to grow domestic production amid surging demand and supply shortages, the company said Jan. 21.

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"Today's investment marks another significant way Intel is leading the effort to restore US semiconductor manufacturing leadership," CEO Pat Gelsinger said in a statement. "Intel's actions will help build a more resilient supply chain and ensure reliable access to advanced semiconductors for years to come."

Construction of the two plants in Licking County is planned to begin by the end of the year.

The semiconductor manufacturer said the factories will represent its first new manufacturing site location in 40 years and produce a variety of chips for several industries. However, production capacity was not disclosed.

The Ohio site will be prepared to potentially accommodate up to eight chip factories with a final investment total of $100 billion over the next decade, Intel said, adding that such an investment would make the site one of the largest in the world.

"The scope and pace of Intel's expansion in Ohio, however, will depend heavily on funding from the CHIPS Act," said Keyvan Esfarjan, senior vice president-manufacturing, supply chain and operations.

The CHIPS for America Act is set to provide $52 billion to promote investment in domestic semiconductor production. Funding for the CHIPs Act is tied to the US Innovation and Competition Act that was passed by the Senate in June 2021.

The Biden administration is now working with the US House of Representatives and the Senate to finalize legislation for CHIPs and USICA.

US officials laud Intel's plans

Officials within the Biden administration welcomed the news of Intel's new planned production in Ohio, adding that the announcements were the result of collaborative efforts over the last year.

"The Biden-Harris administration has been working around the clock with Congress, our international allies and partners and the private sector to expand US chip manufacturing capacity, bring back critical American manufacturing jobs, address the chip shortage and ensure we are not exposed to these disruptions again," the White House said in a Jan. 21 statement. "[Intel's] announcement is the latest marker of progress."

Further, the White House said it was urging Congress to pass the CHIPs funding legislation to accelerate progress on domestic semiconductor capacity.

Commerce Secretary Gina Raimondo said Intel's investment was critical for strengthening the US' economy and supply chains.

"While we celebrate Intel's announcement today, it is more essential than ever that Congress move swiftly to pass the President's proposed $52 billion in funding for domestic semiconductor production," Raimondo said in a Jan. 21 statement.

More chips needed for auto industry

The semiconductor shortage has had a notable impact on the global automotive industry, as major automakers announced continual production cuts in 2021 due to a lack of chip supply.

"Experts estimate that the global chip shortage knocked off a full percentage point from US gross domestic product last year," the White House said. "US autoworkers faced furloughs and production shutdowns due to pandemic-driven disruptions in Asian semiconductor factories, contributing to large increases in the price of cars for US consumers."

Automotive industry analytics firm Cox Automotive said the US supply of available unsold new vehicles stood at about 1.1 million near the end of December, down 62% from the previous year.

"There is widespread agreement that the global computer chip shortage that hit vehicle production last spring will continue through 2022," Cox said in a Jan. 14 statement, adding that some improvement may be evident as the year progresses.

The tight inventory levels have pushed vehicle prices to new record levels, the firm added.

"In December, the average listing price for new vehicles set another record of $45,505, up from $45,084 at the end of November," Cox said. "By comparison, in the same period of December 2020, the average listing price was $40,650."