(Bloomberg) — Intel Corp. will announce Friday the next step in Chief Executive Officer Pat Gelsinger’s plan to build up semiconductor production in the U.S., seeking to restore the chipmaker’s edge in manufacturing technology.
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The company, which has declined to comment on the site of new plants, is holding a briefing to “share details of Intel’s latest plans for investment in manufacturing leadership.” That event coincides with one being held by Ohio Governor Mike DeWine on “a historic economic development announcement for the state,” according to a statement from the governor’s office. Cleveland.com and other local media have reported that Intel intends to spend as much as $20 billion on a new factory in the Columbus area.
“Intel is committed to investing in manufacturing capacity to meet the surging demand for advanced semiconductors and to build a more resilient, globally balanced supply chain,” the Santa Clara, California-based company said in a statement on its website about the event.
Intel’s leader has been vocal about the need to build more chip factories in the U.S. and Europe, areas where manufacturing of the vital electronic components has declined precipitously. Gelsinger has argued that a rebalancing of production is needed to reverse its increasing concentration in East Asia. He has pointed to the pandemic-induced supply chain crunch and increasing geopolitical tension between China and the U.S. as evidence that Western governments need to find cash to persuade chipmakers to relocate.
Putting some of Intel’s billions of dollars in capital expenditure to work in a new location for the company — it currently has plants in Oregon, Arizona and New Mexico — may help bolster Gelsinger’s appeal for taxpayer money. That in turn will help cushion some of the drag on profitability caused by his ambitious plans to restore Intel’s manufacturing prowess and muscle in on the business of outsourced chipmaking, an area dominated by Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co.
Adding Ohio to its list of locations, not traditionally an area associated with the technology industry, would add to the greater geographical diversity that Gelsinger has championed. Intel is also looking at sites in Germany, Italy and France for new factories, test and assembly plants, and research and design centers, Bloomberg has reported.
Outside of Intel’s U.S. plants, the majority of manufacturing of the most advanced semiconductors takes place in Taiwan and South Korea. Samsung and TSMC are considering building new plants in the U.S. and Gelsinger has already said he’ll construct two new factories in the Phoenix area that will be dedicated to trying to steal outsourced orders from the two Asian companies. Intel’s facilities currently only make its own chips.
Gelsinger rejoined Intel a year ago and announced that he would spend heavily to reassert the company’s production prowess. That lead in the technology that determines the performance of electronic components was the cornerstone of Intel’s decades of dominance of the $400 billion industry. Its position slipped under Gelsinger’s predecessors.
This year Intel’s CEO has budgeted a record amount of spending on new factories and equipment. But, highlighting the massive and growing cost of state-of-the-art chipmaking, TSMC and Samsung are planning to raise the stakes even higher.
TSMC has set aside more than $40 billion for capital expenditures this year. That compares with Intel’s plan to spend up to $28 billion. South Korea’s Samsung, will likely announce its 2020 plans on Jan. 27 in its earnings release. Analysts, on average, predict a company-wide budget of about $36 billion.
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