Chipmaker Intel is going to invest 20 billion dollars (more than 17.6 billion euros) in two new chip factories in the American state of Ohio. The chipmaker wants to become less dependent on Asian suppliers, especially now that there is a worldwide shortage of computer chips. Chips are used in computers, telephones, but also increasingly in cars, game consoles and millions of other devices.
Intel’s choice to invest in production capacity on American soil fits in with a trend that is also noticeable in Europe. In recent years, for example, the US share of global potato chips production has fallen from 37 percent in 1990 to 12 percent today. Asia has become dominant in semiconductor manufacturing, which has increased vulnerability to shortages in Europe and the US. Just as the economic recovery after the pandemic wants to pick up again, they are encountering shortages, which could again slow down growth.
The factories to be built in Ohio will not solve the chip shortage in the short term. The first semiconductors will not roll off the production line in Licking County until 2025.
To pay for the expansion plans, Intel is explicitly calling on American and European governments. Earlier this week, Intel boss Pat Gelsinger said he was counting on government support to bring production back.
Executives of more than 50 American companies have also called on their governments to pass a law that would free up USD 52 billion in subsidies for the domestic production of chips.
The European Commission is also working on such legislation. Commission President Ursula von der Leyen announced this week that plans will be presented next month to enable chip production in member states. This will probably require a change in the law, so that governments can offer more support in setting up the – usually very expensive – chip factories. Current state aid legislation now prevents this.
Last fall, Intel had already announced to invest 95 billion euros in European production. With the investments, Intel is also aiming for a return as the largest chip maker in the world. In terms of turnover (77.9 billion dollars in 2020), it still has to tolerate the Korean Samsung. In terms of market value, Intel lost out to competitor Nvidia at the end of October.
The factory site in Ohio to be developed can make a difference for Intel. In the near future there will be room for eight factories on the total plot. If the available space is used to the maximum, total investments could reach $100 billion over the next ten years. Licking County, with 145,000 inhabitants, would instantly become one of the largest areas for chip production in the world. Whether things will pick up that much depends a lot on how much money Intel gets from the federal support program Chips for America.