Intel has been a cornerstone of U.S. efforts to increase domestic chip manufacturing even before President Biden signed the Chip and Science Act into law in August 2022. This morning, the White House announced an agreement with the Commerce Department to provide the silicon giant with up to $8.5 billion in funding to support U.S. production.
The CHIPS Act can be seen as a direct result of many pressing geopolitical issues. The first is supply chain bottlenecks, which have been an ongoing issue since Asia was hit hard early in the pandemic. The second is the simmering tensions between China and the United States, which reached a fever pitch during the previous administration and continue to simmer under the current situation.
Asia—especially Taiwan—continues to produce the largest share of the world’s semiconductors. Between semiconductor giant TSMC in the densely populated East Asian country and the vast amount of manufacturing going on in Chinese cities like Shenzhen, major industries from smartphones to cars came to a near standstill during the early lockdowns.
These factors, combined with long-standing efforts to revitalize U.S. industry, have spurred economic efforts to bring manufacturing back. Intel, which has ceded much of the smartphone industry to rivals, is eager to become an active player. While the CHIPS Act was still being considered on Capitol Hill, Intel announced plans to open a $10 billion manufacturing plant outside Columbus, Ohio. It’s a confidence not only in America’s manufacturing capabilities but also in the growth of the tech scene outside of the usual hubs like San Francisco and New York.
Intel added that it expects to invest 10 times that amount over the next five years, with an eye on Arizona, New Mexico and Oregon in addition to Ohio. The company said it expects the efforts to create 20,000 construction jobs and 10,000 manufacturing jobs – a boon for a government obsessed with monthly jobs reports.
There is an added incentive for an American company to make a product in the United States, which can alleviate bottlenecks by moving manufacturing closer to the point of consumption. All of these points are something incumbents can achieve in an election year.
“Through this agreement, we will help spur Intel’s investment of more than $100 billion, one of the largest investments ever in U.S. semiconductor manufacturing, which will create more than 30,000 high-paying jobs and inspire the next generation of semiconductor manufacturing,” the Secretary of State said. A generation of innovation,” Commerce Department Gina Raimondo said in a press release.
Whether the U.S. government is doing enough to level the playing field for domestic chip companies and competition is another question entirely. Many industry experts I’ve spoken to over the past few years say that while these initiatives are a good start, they don’t go far enough to bridge the gap between U.S. manufacturing and the leadership positions enjoyed by companies like TSMC. One also has to consider the time it will take to bring many of these plants online.
Notably, Intel recently delayed the start of production at its New Albany, Ohio, factory by two years to 2027, citing changes in the business environment. As of the report, the company has spent $1.5 billion, “with 69 employees from 14 Ohio counties working on the project site, and construction workers from 75 of Ohio’s 88 counties have contributed to the project to date.” Contribution.” The data that would drive the jobs report are not yet available.
Additional sites are planned in Chandler, Arizona; Rio Rancho, New Mexico; and Hillsboro, Oregon.
