In response to a global shortage of microprocessors used in everything from phones and cars to video games, Intel will invest $20 billion in a new computer chip facility in Ohio.
After years of relying heavily on Asia for computer chip production, the vulnerability to shortages of critical components was exposed in the United States and Europe as they began to recover economically from the pandemic.
According to the Semiconductor Industry Association, the United States’ share of the global chip manufacturing market has declined from 37 percent in 1990 to 12 percent today, and shortages have become a potential risk. The company and local and state officials announced Friday that two chip factories on the 1,000-acre site in Licking County, just east of Columbus, will create 3,000 company jobs and 7,000 construction jobs, as well as support tens of thousands of additional jobs for suppliers and partners.
Construction is set to begin this year, with production set to begin at the end of 2025.
Chip shortages have hampered US automakers’ ability to produce vehicles, and for the first time last year, Toyota surpassed General Motors as the nation’s top-selling automaker.
The United States and Europe are working hard to increase chip manufacturing capacity and reduce reliance on Asian producers. Several chipmakers expressed an interest in expanding their American operations last year if the US government can make it easier to build chip plants.
In response to the shortages, chipmakers are diversifying their manufacturing sites. In November, Samsung announced plans to build a $17 billion factory outside of Austin, Texas.
Micron Technology, based in Boise, Idaho, announced a $150 billion global investment in memory chip development over the next decade, with a potential U.S. manufacturing expansion if tax credits can help offset the higher costs of American manufacturing.
However, demand for computer chips remains high.
Lawmakers have urged House and Senate leaders to fully fund legislation aimed at addressing the semiconductor chip shortage. They want Congress to fully fund the $52 billion CHIPS for America Act, which would allow for domestic investment in semiconductor plants. The chip shortage has not only disrupted the US economy, but it has also created a vulnerability in the country’s defense system, according to lawmakers, because eight out of every ten chips are produced in Asia.
Separate federal legislation is also being considered, which would establish a new tax credit for investment in semiconductor manufacturing facilities.
The announcement was applauded by US Commerce Secretary Gina Raimondo.
“Intel’s work is critical to our efforts to rebuild America’s chip manufacturing capacity and create the types of good-paying jobs that support a vibrant American economy,” she said.
The Intel project is the state’s largest single private-sector investment, on par with a 1977 agreement that brought Honda to central Ohio, where it now employs over 14,000 people. The Intel jobs are expected to pay an average of $135,000 per year plus benefits, with the project expected to add $2.8 billion to Ohio’s annual gross product, according to Ohio Gov. Mike DeWine in a statement.
“Intel’s new facilities will be transformative for our state,” DeWine said, “creating thousands of good-paying jobs in Ohio manufacturing strategically vital semiconductors.”
Intel, based in Santa Clara, California, announced plans last year to invest $20 billion in two new Arizona factories. It is also seeking European subsidies to build a large plant somewhere in the European Union, and it announced last month that it will invest $7.1 billion to expand its decades-old manufacturing operation in Malaysia, which employs roughly 10% of the company’s global workforce. Intel has existing plants in Ireland, Israel, Vietnam, and China, in addition to the United States and Malaysia.
According to Gartner Inc. market research, Intel is the world’s second largest semiconductor manufacturer, with $73.1 billion in revenue last year, trailing South Korean world leader Samsung Electronics’ $76 billion.
Central Ohio, long known for its predominantly white-collar workforce, has seen an increase in high-tech jobs in recent years, with Amazon, Facebook, and Google all constructing data centers in the area.