Even prior to President Joe Biden’s signing of the CHIPS and Science Act into law in August 2022, Intel has played a crucial role in U.S. endeavors to enhance domestic chip manufacturing. Earlier today, the White House made an announcement regarding an agreement with the Department of Commerce. This agreement aims to provide financial support of up to $8.5 billion to strengthen domestic production in the silicon industry.
Several urgent geopolitical concerns directly led to the creation of the CHIPS Act. The supply chain bottleneck, which emerged when the initial stages of the pandemic severely impacted Asia, is one of the persistent challenges. There is ongoing tension between the U.S. and China that has been building up since the previous administration and remains unresolved.
Asia, particularly Taiwan, remains the dominant producer of the world’s semiconductors. Amid early lockdowns, major industries such as smartphones and automotive came to a virtual standstill due to the impact on the densely populated East Asian country’s semiconductor giant TSMC and the extensive manufacturing in Chinese cities like Shenzhen.
In addition to ongoing initiatives to rejuvenate American industry, this has encouraged economic endeavors to bring manufacturing back to the country. Intel, having lost ground in the smartphone industry, was determined to take a more active role. Amidst the progress of the CHIPS Act in the legislative process, Intel has made a notable announcement regarding their intention to establish a substantial $10 billion manufacturing facility near Columbus, Ohio. It was a remarkable display of confidence in both the prowess of American manufacturing and the expansion of technology ecosystems beyond the traditional centers of San Francisco and New York.
According to Intel, it anticipates a significant increase in investments over the next five years. The company has identified Arizona, New Mexico, Oregon, and Ohio as potential locations for its future endeavors. The anticipated outcome of these efforts is the generation of 20,000 construction and 10,000 manufacturing jobs, which is highly favorable for an administration that places great importance on monthly job reports.
Additionally, there is the advantage of having a company based in the United States that produces goods domestically. By bringing manufacturing closer to the product’s consumption location, this can help address bottlenecks. In an election year, an incumbent may find these points advantageous.
“Through this agreement, we are facilitating the encouragement of more than $100 billion in investments from Intel.”This represents one of the most substantial investments ever made in U.S. semiconductor manufacturing, resulting in the creation of over 30,000 well-compensated jobs and sparking the advancement of future innovation,” states U.S. Secretary of Commerce Gina Raimondo in a press release.
The question of whether the U.S. government is adequately addressing the issue of balancing the opportunities for domestic chip companies and their competitors is a separate and complex one. According to various industry experts I’ve consulted with in recent years, there is a consensus that although these initiatives are a positive step, they fall short of bridging the disparity between U.S. manufacturing and the advantageous position held by companies like TSMC. It is important to consider the time it will take for these factories to become operational.
Significantly, Intel has recently delayed the commencement of manufacturing at its New Albany, Ohio, facility by two years until 2027, attributing it to alterations in the business environment. According to the report, the company has invested a substantial amount of $1.5 billion in the project. It is worth noting that the project site has attracted a significant workforce, with employees hailing from 14 different counties in Ohio. Additionally, construction workers from 75 out of Ohio’s 88 counties have made valuable contributions to the project thus far. These figures aren’t yet making a significant impact on job reports.
There are plans to establish additional sites in Chandler, Arizona; Rio Rancho, New Mexico; and Hillsboro, Oregon.
