On Friday, Intel announced it would build the largest manufacturing location on the planet in the United States, on a 1,000-acre plot of land in New Albany, Ohio.
President Biden, Ohio governor Mike DeWine, US Secretary of Commerce Gina Raimondo, Intel CEO Pat Gelsinger, and other executives and local officials suggested the up-to-$100 billion development could be a panacea for a wide variety of issues.
It could become like California's Silicon Valley. The phrase "Silicon Heartland" was used at least eight times.
The investment is a big deal for Intel, which has been clawing its way back from the brink of potential irrelevance by fundamentally changing its entire outlook on the industry: doubling down on manufacturing, building chips for competitors, and relying some of competitors to help build. It is the first time in 40 years that Intel has broken ground on a new manufacturing site.
It could be a huge deal for Ohio.
But inflation? $100 billion in investment for cars? We need to back up a second.
What is the promise of Intel in Ohio?
Intel has made it clear that it is a $20 billion initial investment in two fabrication plants, with the facility expected to open in late 2025.
Gelsinger joked on the call that he would want to know if there was a concrete truck in Ohio that wasn't working for him next year.
The goal is $100 billion.
The idea that the Ohio site might end up housing eight Fabs instead of just two is one of the fuzzier promises. The site could grow to as much as $100 billion over the next decade, making it one of the largest Semiconductor manufacturing sites in the world. If Intel gets federal subsidies, that is more of a stretch goal.
William Moss, an Intel spokesman, said that the company's goal of investing as much as $100 billion over the next decade will be hard to reach without federal government support. The initial $20 billion investment is not dependent on federal subsidies.
Intel is giving itself a decade to spend $100 million on education to help develop and attract a talent pool from within the region, as well as promising approximately 3,000 Intel jobs, 7,000 construction jobs, and 140 existing Ohio companies will do business with Intel as suppliers. The average annual salary at Intel's facilities will be $135,000.
Noupscale is a file on thechorusasset.com.
Ohio Lieutenant Gov. Jon Husted thinks other Ohio companies will benefit from Intel.
Screenshot by Sean Hollister.
How could inflation, chip shortage, and car prices be solved?
It can't.
The chip shortage is affecting the auto industry, but leading chipmakers agree that it will ease in the second half of 2022, and this plant won't be up and running until 2025. Pat Moorhead says that the current chip crisis won't be affected by this new facility going online in 25 years.
At least not yet, Intel doesn't produce chips for cars. The shortage of car chips was not caused by Intel. Mobileye's chips are produced by TSMC, even though Intel bought the company.
US Secretary of Commerce Gina Raimondo and Ohio Governor Mike DeWine brought up cars and tied them to inflation. Raimondo said that car prices are driving a third of inflation because they don't have enough chips. Today's announcement from Intel is exciting.
What will the Ohio plant make?
Gelsinger said in the presentation that Intel will produce advanced chips at the 2nd and below process levels.
The Ohio factories are designed for the Angstrom era, with support for Intel's most advanced process technologies, including Intel 18A.
Would it be the largest manufacturing location on the planet?
It might be, but probably not for a while. The largest production line in the world, called Pyeongtaek Line 2, is roughly the size of 16 soccer fields.
Keyvan Esfarjani, Intel's manufacturing and supply chain boss, said that the Ohio facility might be 30 football fields in size, with clean rooms as large as four football fields each.
:noupscale.cdn.vox-cdn.com/uploads/chorusasset/file/PyeongtaekSemiconductorDRAM_3.
One of the facilities at Pyeongtaek.
The image is of a phone.
The Pyeongtaek Line 2 is one of the facilities in the area, and Japan's Nikkei reports that a new, third facility will have clean rooms that fit 25 soccer fields, compared to Intel's four. Football fields are smaller than soccer fields.
Why is this so big a deal if the actual promise is $20 billion for two fabs, and Intel already spent $20 billion for two new fabs in Arizona, and it won't ease the shortage?
It is a big deal. It is not a bigger deal. The deal is the same size.
The Biden administration and Ohio want to be seen doing something important for the economy, so they can use it to pressure the House of Representatives to pass a key piece of legislation.
Tell me more.
Intel wants a federal subsidy to help build out the Ohio fabs. The Senate passed a bill in June that would provide $52 billion for domestic Semiconductor manufacturing in the United States, after Biden called for federal funding to ease the Semiconductor shortage.
It never made it to the House of Representatives. The so-called "CHIPS Act" has bipartisan support, but the money isn't available because it has been stopped in the House. Biden held up Intel and Ohio as examples of what could be done if we invested in domestic chipmaking, while raising the specter of national security and global competitiveness if we don't pass the bill.
We were ranked number one in the world. Biden pointed out how much US chip manufacturing has gone down. 75 percent of production takes place in East Asia. Taiwan makes 90 percent of the most advanced chips.
Gelsinger stated on the Biden call that the project would be bigger and faster with the CHIPS Act.
There is a national security concern.
Maybe.
The public has never heard of evidence of Chinese chips being used to spy on the United States, but that hasn't stopped the United States from cracking down on Chinese telecommunications vendors in particular due to national security concerns.
If China attacked Taiwan or if North Korea attacked South Korea, the US would not have access to leading edge semiconductors, which is an issue. This deal is mostly about protecting US interests.
What about economic competitiveness?
Even if the House approved $52 billion in funding for domestic chip manufacturing and Intel spent the full $100 billion in Ohio, they will still bedwarfed by TSMC and SAMSUNG.
According to the report, TSMC has earmarked a record $44 billion on manufacturing capacity in 2022, after spending $30 billion in 2021. It seems unlikely that Intel would catch up.
There is hope that when Intel chooses to build new facilities in the United States, others will follow suit, as evidenced by the fact that both TSMC and Samsung are planning to build advanced chipmaking plants in Texas.
Intel isn't just playing for the US. It plans to invest up to 80 billion euros in Europe over the next decade. Margrethe Vestager, head of the EU's antitrust division, warned in November that chipmakers might play governments against each other to get government subsidies. Intel will begin its European expansion in France, Germany, and Italy.
Intel hopes to make an announcement about major, new EU investment plans within the next several months.
:noupscale is a file on thechorusasset.com.
Intel had initial plans in Ohio.
The image is of Intel.
Is Ohio going to become a new Silicon Valley?
Silicon Valley is unique because it is more than just a manufacturing area, it is a mass of talent and investment, and it causes problems like crazy housing prices.
The CEO of Intel seemed to have a slightly looser definition during his presentation.
The Silicon Forest was established when we moved to Oregon. The Silicon Desert was established by us when we went to Arizona. We helped to create the Silicon Isle. He said that they helped to establish the Silicon Oasis.
If you want moreSilicon place names, here are them.
According to Time, New Albany, Ohio, is one of the wealthiest places in Ohio, and that Intel isn't the first big tech company to break ground. The New Albany International Business Park has data centers from all over the world.
Noupscale is a file on the New Albany Business Park.
The dark grey chunk is where Intel will be located.
New Albany Company.
Intel liked the idea of being associated with New Albany. New Albany annexed the land underneath Intel's new facilities just before the deal was made.
Ohio promised Intel in exchange for this investment.
Ohio Lieutenant Governor Jon Husted asked if tax credits, exemptions, and infrastructure improvements are part of the package, but Intel did not say anything. He said that Intel would make a dollar for every six cents of capital investment Ohio made.
Is Ohio contributing more than Intel's $20 billion? Intel wouldn't say anything. The state agreed to invest $1 billion in infrastructure improvements, including widening State Route 161, to support the factory and the nearby community.
Ohio had to change its laws to give job creation tax credits for 30 years instead of 15 years in order to win the interest of Intel. Husted told The Columbus Dispatch that until that happened, they weren't in the game.
Why does this remind me of a story in the magazine?
We are not getting the same vibes from the Intel deal yet.
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