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Intel’s $ 100 billion Ohio “megafab” could become the world’s largest chip factory

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Intel’s Fab 42 in Chandler, Arizona

Stephen Shankland / CNET

Intel has selected 1,000 acres of land in New Albany, Ohio as the third major chip manufacturing site in the United States. Construction will begin this year and operations will begin in 2025. Intel has promised to spend $ 20 billion on two chip manufacturing facilities or fabs. But in the end, we expect a total of eight fabs with plans that could reach $ 100 billion.

“Our hope is that this will be the largest silicon manufacturing site on the planet,” CEO Pat Gelsinger told Time. He is meeting at the White House on Friday, and President Joe Biden will comment on politically important projects later that day.

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This announcement is central to Intel’s efforts to regain the lead in chip technology and revitalize American manufacturing. In addition to a new site on the outskirts of Columbus, Ohio, Intel also plans to build a second $ 100 billion “megafab” in Europe, but the decision is likely to be three to four months away, Intel said. Keyvan Esfarjani, who heads the manufacture and operation of the company, said.

Taiwan Semiconductor Manufacturing and Samsung in South Korea soared when Intel’s previous steady chip miniaturization progress stagnated more than five years ago. Many top chip designers, including Qualcomm, AMD, Tesla and Apple, rely on TSMC to manufacture their products. Intel, again under the leadership of engineers, will catch up with TSMC and Samsungby in 2024, with Gelsinger returning as CEO, and will surpass them in 2025.

The Ohio Megafab will be at the center of our efforts. For many years, Intel has concentrated its manufacturing industry in Arizona and Oregon. The new site will be the third major hub, with at least 3,000 employees in states that have been hit hard by the declining influence of US manufacturing. According to the semiconductor industry association, the US share of the chip manufacturing business fell from 37% in 1990 to 12% today, but Gelsinger wants to bring it back to 30%.

Intel called it the largest private sector investment ever made in the state and said it would spend an additional $ 100 million on education partnerships on Friday. At its peak of activity, it will employ 7,000 construction workers, and in fact, the supply of these workers is one factor that has attracted Intel to Ohio, Esfarjani said. Other factors include property taxes, land availability, partnerships with universities and community colleges to train PhDs and technicians, and cost benefits such as preparing connections to electricity, water, and natural gas. Tax system is included. He said Intel rated over 35 sites before choosing Ohio.

Intel can get a boost from a federal law called the CHIPS Act, which subsidizes chip makers for $ 52 billion. Congress hasn’t allocated the necessary funding yet, but if so, it would cut about $ 3 billion from the $ 10 billion fab price tag and make the United States compete with South Korean and Taiwanese government incentives, Intel said. .. Intel will move forward regardless of the progress of the CHIPS law, but government subsidies will increase the scale and speed of Intel’s expansion, Esparjani said.

“It’s very important to make sure the CHIPS for America Act passes,” he said. “It really sets the pace and size of projects like this.”

Gelsinger told CNET in a previous interview that he returned to Intel last year after more than a decade away, provided the board supports Intel’s recovery plans, including huge spending on new chip manufacturing capabilities. Told.

It’s hard to stay at the forefront of chip manufacturing, as evidenced by IBM and GlobalFoundries’ recent decision to stay at the forefront. Chipmaking rewards mass production, and large-scale operations can justify the cost of progress development and fab construction.

Engineers like Intel’s restored technical focus, but the company has a lot to do. Stacy Ragson, an analyst at Sanford Bernstein, has a negative rating on stock prices as Intel is piloting a new course “to atone for 10 years of sin.” In a report in early January, he talked about Intel’s “rising” capital spending, declining profit margins, potential loss of future market share, “aggressive roadmap with risks, unusual growth targets”. I complained.

Fabs are very expensive. According to the manufacturer ASML, the latest machines for engraving electronic circuits on silicon wafers on the smallest scale are expected to sell for an average of $ 340 million each. Intel is the first buyer of next-generation machines, but it takes time to learn how to use it effectively, an area where Intel lags behind Samsung and TSMC. TSMC will spend $ 40 to $ 44 billion on new fabs in 2022 alone.

Gelsinger elaborated on Intel’s plans to accelerate manufacturing progress. Upgrades occur almost every year. The most advanced “node” that the company has disclosed in this manufacturing process roadmap is called the Intel 18A. According to Esfarjani, the Ohio site will manufacture chips with Intel 18A or a more advanced process.

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Ohio sites significantly increase Intel’s capacity. The chips are engraved on silicon crystal wafers with a diameter of 300 mm (about 1 foot), and each wafer has dozens or hundreds of chips, depending on the size of the chip. According to Esfarjani, each Intel fab typically processes 4,000 to 6,000 wafers per week.

Chip manufacturing is not just a lucrative business for a manufacturing company. It also means money for a group of other companies that supply fabs and package their products into electronic devices.

As happened in the Oregon and Arizona businesses, Intel expects a surge in supporters in Ohio.

“We will build this city, the ecosystem, starting from almost nothing. [of] Vendors, suppliers, and partners, “said Esfarjani. They are all in attendance and they are ready to come. “

Proponents of the CHIPS Act, with its essential processors for everything from washing machines and cars to military aircraft and schools, want the United States to make semiconductor manufacturing independent of foreign companies. The global chip shortage caused by the COVID-19 pandemic has revealed that many industries are dysfunctional when supply is not available. Part of Gelsinger’s Intel recovery plan is to use a new business unit called Intel Foundry Services to build chips for others as well as themselves.

It’s not yet clear how much Ohio fab capacity will go to Intel and how much it will be for foundry customers, but it’s important to increase capacity.

“For now, our problem is the more demanding side,” Esfarjani said. “We need to make more than we have.”

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