Long before President Joe Biden signed the CHIPS and Science Act into law in August 2022, Intel was a cornerstone of US efforts to increase domestic chip manufacturing. This morning, the White House announced a deal with the Commerce Department that will hand the silicon giant up to $8.5 billion to boost US-based manufacturing.
The CHIPS Act can be seen as a direct result of a number of pressing geopolitical issues. The first is supply chain congestion which has been an ongoing issue since Asia was hit hard in the early days of the pandemic. The second is the simmering tension between the US and China that reached a fever pitch under the previous administration and has continued to simmer under the current one.
Asia — specifically Taiwan — continues to produce the lion’s share of the world’s semiconductors. Between the populous East Asian country’s semiconductor giant TSMC and the massive amount of manufacturing happening in Chinese cities like Shenzhen, major industries ranging from smartphones to autos have been brought to a virtual standstill amid early restrictions.
The above, combined with long-standing efforts to revive American industry, spurred economic efforts to renew manufacturing. Intel, which ceded much of the smartphone industry to the competition, was eager to become an active participant. While the CHIPS Act was still making its way through Capitol Hill, Intel announced plans to open a $10 billion manufacturing facility just outside of Columbus, Ohio. It was a great show of faith not only in US manufacturing capabilities, but also in the growth of tech scenes outside of the usual hubs of San Francisco and New York.
Intel adds that it expects to invest 10 times that over the next half decade, with its eyes on Arizona, New Mexico and Oregon, in addition to Ohio. He expects those efforts to add 20,000 construction jobs and 10,000 manufacturing jobs — music to the ears of an administration intently focused on monthly jobs reports.
There is also the added incentive of having a US-based company manufacturing products in the US, which can alleviate bottlenecks by moving production closer to the point of consumption. All of these points are where an incumbent can potentially hang their hat in an election year.
“With this agreement, we are helping to incentivize more than $100 billion in investment from Intel – marking one of the largest investments ever in US semiconductor manufacturing, which will create more than 30,000 good-paying jobs and fuel the next generation of innovation,” Commerce’s Gina Raimondo notes in a release.
The question of whether the US government is doing enough to level the playing field between domestic chip companies and the competition is another matter entirely. Many industry experts I’ve spoken to over the past few years have suggested that while these initiatives are a good start, they don’t do enough to close the gap between American manufacturing and the leadership enjoyed by the likes of TSMC. One also has to consider the time it will take many of these factories to come online.
Specifically, Intel recently pushed back the construction start date of its New Albany, Ohio, plant by two years to 2027, citing changes in the business environment. According to the report, the company has spent $1.5 billion and had “69 workers from 14 Ohio counties working at the project site and construction workers from 75 of Ohio’s 88 counties have contributed to the project to date.” It’s not yet the kinds of numbers that move the needle on job reports.
Additional locations are planned for Chandler, Arizona. Rio Rancho, New Mexico; and Hillsboro, Oregon.
