Intel is about to pour $20 billion into a mega chip factory

Intel plans to invest $20 billion in building out a 1,000-acre chip manufacturing mega site outside of Columbus, Ohio, the company said Friday, a project it said would create 3,000 permanent jobs in the region.

“The only way to address this economic and security risk is to increase our domestic semiconductor manufacturing capacity,” Intel CEO Pat Gelsinger said at a Friday press conference with President Joe Biden and Commerce Secretary Gina Raimondo.

The White House touted the announcement as part of its ongoing efforts to increase chip manufacturing in the U.S. in response to the ongoing shortage and supply chain crisis exacerbated by the pandemic.

"Experts estimate that the global chip shortage knocked off a full percentage point from U.S. gross domestic product (GDP) last year," the White House wrote in a fact sheet. "U.S. autoworkers faced furloughs and production shut downs due to pandemic-driven disruptions in Asian semiconductor factories, contributing to large increases in the price of cars for U.S. consumers."

For Intel, the new factory is a strategic maneuver. After years of dysfunction in its manufacturing operations under Gelsinger’s leadership, the company has vowed to return to its former self. Part of the plan includes a bet of hundreds of billions of dollars that it can again produce the world’s most advanced chips, and that it can sell its manufacturing capacity to fabless chip makers such as Nvidia and Qualcomm.

For the Biden administration, Intel’s ambition to regain its chipmaking throne fits neatly into its economic and national security plans. And at the press conference, Biden reiterated the U.S. commitment to regaining its former ability to manufacture chips that are vital to a growing part of the economy.

“[Chips power] your phone, your car, your refrigerator, your washing machine, hospital equipment, the internet, the electric grid and so much more,” Biden said. “And here's the deal: America invented these chips. America invented these chips and federal research and development led to the creation of these chips.”

Gelsinger described the new factory as the “catalyst for a Silicon Heartland” in Ohio; it will be the first new domestic fab site for Intel in 40 years. Construction on the first two fabs will start late this year, and chip production will begin in 2025. The first two fabs account for $20 billion, and Gelsinger said the company could spend as much as $100 billion on the entire site, for eight plants in total.

“A semiconductor factory is not like other factories,” Gelsinger said Friday. “It's more like a small city supporting a vibrant community of services suppliers and ancillary businesses. You can think about this as a magnet for the entire tech industry.”

Biden urged Congress to act on its plans to invest in the industry through the U.S. Innovation and Competition Act, which includes the $52 billion in subsidies for factory construction and research and development. The funding has already made it through the Senate, but has been stalled in the House for months.

This story was updated to include remarks by Biden, Gelsinger and Raimondo at a press conference Friday.