Intel to build, expand chip factories worth $100 billion in 4 states

After securing US$19.5 billion in federal grants and loans provided by President Joe Biden’s initiative for a broader U.S. chipmaking renaissance, Intel is planning a $100-billion spending spree across four states.

With the funding, the chip maker will build and expand factories and hopes to secure another $25 billion in tax breaks.

The centerpiece of the company’s five-year spending plan is turning empty fields near Columbus, Ohio, into a significant chip-making facility.

This week, CEO Pat Gelsinger said the site will be “the largest AI chip manufacturing site in the world,” and will become operational from 2027.

The U.S. government announced the federal funds to Intel under the CHIPS Act on March 20.

Intel’s plan will also involve upgrading its facilities in New Mexico and Oregon and expanding its operations in Arizona.

Rival chipmaker Taiwan Semiconductor Manufacturing Co is also building a massive factory in Arizona. The Taiwanese company has applied for funding from Biden’s drive to bring advanced semiconductor manufacturing back to the U.S.

For many decades, Intel was the global leader in making the fastest and smallest semiconductors, but it lost that position to TSMC in the 2010s.

In 2021, Gelsinger announced a plan to restore Intel to its leading position, but he said that government support is required to make the plan profitable.

He added that 30 percent of the $100-billion plan will be spent on construction costs, such as labor, piping, and concrete, while the rest will go towards buying chipmaking tools from firms such as ASML, Tokyo Electron, Applied Materials, and KLA.

Kinngai Chan, an analyst at Summit Insights, said, “It will still take three to five years for Intel to become a serious player in the foundry market.”

However, he added that more investment would be needed before Intel could overtake TSMC, stressing that the Taiwanese company will continue to lead for “some time to come.”

Ben Bajarin, CEO of analyst firm Creative Strategies, said, “Even with the federal backing, Intel needs to show that it can compete with its Taiwanese and Korean rivals sooner rather than later.”

“It will be important to know how much longer ‘smart capital’ is needed for Intel before they can stand on their own,” he added.