(Adds background on U.S.-China tech war)
WASHINGTON/SAN FRANCISCO, Jan 21 (Reuters) - Intel Corp
said on Friday it would invest up to $100 billion to
build potentially the world's largest chip-making complex in
Ohio, looking to boost capacity as a global shortage of
semiconductors affects everything from smartphones to cars.
The move is part of Chief Executive Officer Pat Gelsinger's
strategy to restore Intel's dominance in chip making and reduce
America's reliance on Asian manufacturing hubs, which have a
tight hold on the market.
An initial $20 billion investment - the largest in Ohio's
history - on a 1,000-acre site in New Albany will create 3,000
jobs, Gelsinger said. That could grow to $100 billion with eight
total fabrication plants and would be the largest investment on
record in Ohio, he told Reuters.
Dubbed the silicon heartland, it could become "the largest
semiconductor manufacturing location on the planet," he said.
While chipmakers are scrambling to boost output, Intel's
plans for new factories will not alleviate the current supply
crunch, because such complexes take years to build.
Gelsinger reiterated on Friday he expected the chip
shortages to persist into 2023.
To dramatically increase chip production in the United
States, the Biden administration aims to persuade Congress to
approve $52 billion in subsidy funding.
U.S. House Speaker Nancy Pelosi said on Friday the House of
Representatives would soon introduce a bill on competitiveness
to help bolster semiconductor investment and supply chains. That
would include the $52 billion funding https://www.reuters.com/world/us/pelosi-says-us-house-will-soon-introduce-competitiveness-bill-2022-01-21.
U.S. President Joe Biden touted Intel's investment on Friday
at a White House event with Gelsinger and again made the case
for congressional action.
"China is doing everything it can to take over the global
market so they can try to out compete the rest of us," Biden
U.S. Commerce Secretary Gina Raimondo said at the event the
current semiconductor supply chain is "far too dependent on
conditions and countries halfway around the world."
Gelsinger said without government funding "we're still going
to start the Ohio site. It's just not going to happen as fast
and it's not going to grow as big as quickly."
THE CHIP FEAST AND FAMINE
Intel ceded the No. 1 semiconductor vendor spot to Samsung
Electronics Co Ltd in 2021, dropping to second with
growth of just 0.5%, the lowest rate in the top 25, data from
As part of its turnaround plan to become a major
manufacturer of chips for outside customers, Intel broke ground
on two factories in Arizona in September. The $20 billion plants
will bring the total number of Intel factories at its campus in
the Phoenix suburb of Chandler to six.
Gelsinger told Reuters he still hoped to announce another
major manufacturing site in Europe in coming months.
It is not just Intel ramping up investments. Rivals Samsung
Electronics and Taiwan Semiconductor Manufacturing Co
or TSMC also have announced big investment plans in the U.S. And
that's raising questions about a glut in chips going forward.
"We still have years in front of us before we're even having
a semblance of supply demand balance," said Gelsinger. "Ask
yourself what portion of your life is not becoming more
"Yes, the industry is growing, and maybe the metaverse
solves world hunger for the semiconductor industry. But there is
a big bubble coming," said Alan Priestley, an analyst at
U.S.-CHINA TECH WAR
The U.S. build up comes as a tech war between the U.S. and
China is causing a decoupling of certain technologies, such as
chips. Companies looking to sell technologies to China are
considering basing outside of the U.S. to avoid being snagged by
U.S. export control rules. China is also investing heavily in
its semiconductor manufacturing capacity.
While Gelsinger also touted the security and economic
benefits of boosting U.S. chip production on Friday, Bloomberg
reported in November that the Biden administration pushed back
against a prior plan by the company to boost silicon wafer
production in China over national security concerns.
Intel has drawn fire for its decision to delete references
to Xinjiang from an annual letter to suppliers after the
chipmaker faced a backlash in China for asking suppliers to
avoid the sanctions-hit region.
When asked about it in a briefing last month, White House
press secretary Jen Psaki said she could not comment on the
company specifically, but said "American companies should never
feel the need to apologize for standing up for fundamental human
rights or opposing repression," reiterating a call to industry
to ensure that they are not sourcing products that involve
forced labor from Xinjiang and urging companies to oppose
China's "weaponizing of its markets to stifle support for human
Intel's Ohio investment is expected to attract partners and
suppliers. Air Products, Applied Materials, LAM
Research and Ultra Clean Technology have shown interest
in establishing a presence in the region, Intel said.
Construction of the first two factories is expected to begin
late in 2022 and production in 2025.
(Reporting by David Shepardson and Alex Alper in Washington,
Jane Lee in San Francisco, Jeff Mason in Washington D.C.,
Nivedita Balu, Sweta Singh and Akriti Sharma in Bengaluru;
Editing by Christopher Cushing, Anil D'Silva, John Stonestreet
and Bernard Orr)