For $100 billion, Intel looks to construct biggest chip plant

Intel said on Friday it would invest up to $100 billion to build potentially the world's largest chip-making complex in Ohio, as it looks to boost capacity amid a global shortage of semiconductors used in everything from smartphones to cars.

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 generate 3,000 jobs, Gelsinger said. That could grow to $100 billion with eight total fabrication plants and is the largest investment in Ohio's history, 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 Friday he expected the chip shortages to persist into 2023.

To dramatically increase chip production in the United States, the Biden administration is making a big push to convince Congress to approve $52 billion in subsidy funding.

Biden plans to tout Intel's investment Friday at a White House event with Gelsinger and again make the case for congressional action.

“This project is a crucial step in growing America's domestic chip manufacturing capacity,” Deputy Secretary of Commerce Don Graves said in a separate statement.

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.” 

Intel ceded the No. 1 semiconductor vendor spot to Samsung Electronics in 2021, dropping to second with growth of just 0.5 per cent, 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 coming months. 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.