Intel is investing $100 billion over five years to build and expand its facilities in four US states. About 19.5 billion of this amount was received in the form of federal grants and soft loans. In addition, the company hopes to receive another $25 billion in tax breaks.
A key focus of Intel's five-year modernization and expansion plan will be the construction of new facilities near Columbus, Ohio. According to the head of the company, Pat Gelsinger, “the world’s largest production of AI chips” will be built here by 2027. After the US federal government on Wednesday announced the allocation of federal funds to Intel in accordance with the CHIPS and Science Act, the company's shares rose 4% before the opening of trading, writes Reuters.
Intel's plan will also include revamping facilities in New Mexico and Oregon, as well as expanding production in Arizona, where Intel's rival on the contract manufacturing front, Taiwan's TSMC, is also building its massive chip plant.
The funds Intel received from the US government as part of a program to revive American chip manufacturing should help the company correct its failures in this segment, where it has lost its primacy. Intel has been a leader in producing the most advanced and fastest semiconductor chips for decades, selling them at high prices and investing the proceeds in new technology research and development. All this allowed it to stay ahead of its competitors. In the 2010s, the company lost its status as a leader in the development of new technological processes, losing it to TSMC. Its revenues began to decline as Intel had to lower the prices of its products to withstand pressure from competitors.
In 2021, the new head of Intel, Pat Gelsinger, announced goals to return the American company to the title of the world's leading chip manufacturer. However, the implementation of this plan requires the support of the American government.
From Gelsinger's recent statement, it is known that about 30% of the $100 billion investment will be used to create and update the infrastructure of its production facilities, as well as to hire a fresh workforce. The remainder of the funds will be invested in new production equipment. Suppliers in this regard will be ASML, Tokyo Electron, Applied Materials and KLA. Intel plans to launch the new facility in Ohio in 2027 or 2028, but Gelsigner said the timeline could be pushed back if the semiconductor market slows by then.
A significant portion of Intel's investments in the construction of new and renovation of old enterprises, as well as the purchase of new equipment, will come from its own funds, rather than from loans and grants. Previously, Gelsinger said that a second round of federal support may be required to complete all the tasks set as part of modernization and returning the United States to the status of the world's leading semiconductor manufacturer.
“It took us three-plus decades to lose leadership in this industry. It will not come back to us in three to five years of the Chips and Science Act,” Gelsinger said, while calling the program to finance semiconductor companies at preferential interest rates “smart capital.”
However, experts say Intel has yet to prove that it can compete with Taiwanese and Korean chip makers. This opinion is shared, for example, by the head of the analytical company Creative Strategies, Ben Bajarin, who gave a comment to Reuters.
“It is important to understand how long this assistance in the form of “smart capital” will be required for Intel before it becomes independent in this matter,” the expert commented.
For the United States, Intel will in any case remain the number one company in terms of national interests, even despite the fact that its competitors are also building new enterprises here.
“Only Intel has the workforce, technology and supply chains that are 100% US-centric. TSMC and Samsung are also investing in American chip production. This is important and should be welcomed. However, it is also important to have your own strong manufacturing team,” Jimmy Goodrich, an expert on semiconductor technologies at the RAND research company, commented to Reuters.
If you notice an error, select it with the mouse and press CTRL+ENTER.