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Intel invested a massive amount in the Ohio chip plant and the big amount sums to $20 billion

Intel stated on Friday that it would construct the “world’s largest silicon fabrication plant” in New Albany, Ohio, on a 1,000-acre tract of land.

Hours later, 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 project could solve a variety of problems, including global competitiveness, national security, chip shortages, high car prices, racial and gender gaps in STEM employment, and even inflation itself.

Several others speculated that it would become Ohio’s version of Silicon Valley. Over the course of two livestreams, the phrase “Silicon Heartland” was said at least eight times.

There’s no doubt that the investment is significant for Intel, which has been clawing its way back from the brink of irrelevance by fundamentally changing its approach to the industry: doubling down on manufacturing, building chips for competitors, and enlisting the help of some competitors to help build its own chips. Intel is building a new production facility for the first time in 40 years. (The Intel expansions in Arizona, New Mexico, and Oregon merged existing Intel operations.)

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It might also be a big thing for Ohio.

Intel Ohio plant 770x433 1 Intel invested a massive amount in the Ohio chip plant and the big amount sums to $20 billion
Via images.moneycontrol.com

IN OHIO, WHAT DOES INTEL ACTUALLY PROMISE?

Intel’s own pronouncements on the matter have been very clear: it’s a $20 billion first investment in two fabs (fabrication plants that generally create silicon wafers), with construction starting in late 2022 and the facility opening in late 2025.

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On the phone, Gelsinger remarked, “If there’s a concrete truck in Ohio that isn’t working for me next year, I want to know about it.”

A STRENGTH GOAL OF $100 BILLION:

The rest of Intel’s claims are murkier, such as the possibility of eight fabs instead of two at the Ohio plant. According to Intel’s press announcement, “after full buildout, the site’s total investment could climb to as much as $100 billion over the following decade, making it one of the world’s largest semiconductor manufacturing facilities.” However, that isn’t a solid commitment; if Intel receives federal subsidies, it will be more of a stretch goal.

They want to invest up to $100 billion over the next ten years, but Intel spokesperson William Moss says that without federal government help, they won’t be able to meet that target in that time frame.

ohio-factory

Intel is also committing to spending $100 million on education over the next ten years in order to “help create and attract a pipeline of qualified talent from inside the region,” while also pledging 3,000 Intel employment, 7,000 construction jobs, and 140 existing Ohio companies as suppliers. The average yearly pay at Intel’s locations is expected to reach $135,000, according to the company.

How does any of this help with today’s chip shortages, automobile costs, or inflation?

There’s no way.

While the chip shortage is a massive supply chain issue that has a direct impact on the auto industry, prominent chipmakers concur that it will alleviate in the second half of 2022, and this plant won’t be operational until at least 2025.

Also, Intel, at least for the time being, does not manufacture chips for automobiles. The lack of vehicle chips has nothing to do with Intel. (Intel purchased Mobileye, a maker of autonomous driving processors, in 2017, but TSMC produces its chips.)

But it didn’t stop US Secretary of Commerce Gina Raimondo and Ohio Governor Mike DeWine from bringing up automobiles and associating them to inflation on multiple occasions. Raimondo stated that  they don’t have enough chips, therefore car prices are driving a third of inflation, noting that each electric vehicle requires 2,000 chips. 

Intel Plant Ohio 4 Intel invested a massive amount in the Ohio chip plant and the big amount sums to $20 billion

What exactly will the Ohio factory produce?

Intel hasn’t provided any specifics, but Gelsinger stated in the presentation that advanced devices will be produced at process nodes “2nm and below.”

What they’ve said is that the Ohio factories are intended for the ‘Angstrom era,’ with support for Intel’s most advanced process technologies, including Intel 18A, according to an Intel representative.

Is it indeed the “world’s largest silicon production facility”?

It could be, but only for a short period of time. Samsung stated in August 2020 that it has started making memory chips on the world’s largest production line, Pyeongtaek Line 2, which is the equivalent of 16 soccer fields in size.

Keyvan Esfarjani, Intel’s vice president of production and supply chain, said the company’s Ohio plant might be the size of 30 football fields, with clean rooms as large as four football fields each.

However, Samsung’s Pyeongtaek Line 2 is just one of the nearby facilities, and according to Nikkei, a new, third Samsung fab will feature clean rooms the size of 25 soccer fields, compared to Intel’s four. Soccer fields, on the other hand, are significantly larger than football fields.

Samsung 8 Intel invested a massive amount in the Ohio chip plant and the big amount sums to $20 billion

Why is this such a huge issue if the actual pledge is $20 billion for two fabs, and Intel has already spent $20 billion on two new fabs in Arizona, and it will not alleviate the shortage?

This is a significant event! It’s not like it’s a major issue. The contract is still the same size as it is now.

However, the Biden administration and Ohio want to be seen doing something significant for the economy, which Biden can use to persuade the House of Representatives to enact a vital bill.

In return for this investment, what did Ohio guarantee Intel?

Intel refuses to provide specifics (other than to note that the package includes tax incentives, exemptions, and infrastructure improvements), but Ohio Lieutenant Governor Jon Husted appears to have anticipated the query. During the presentation, he made an unprompted statement that Intel will make a $1 for every six cents invested in Ohio’s capital.

jon husted ohio lieutenant governor Intel invested a massive amount in the Ohio chip plant and the big amount sums to $20 billion

To entice Intel, Ohio has to amend its laws to allow large developments such as Intel’s to receive job creation tax credits for 30 years rather than 15 years.

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