Setbacks for Advanced Chip Facilities in the US
Construction delays are hindering the development of advanced chip-making facilities in the US. Taiwanese Semiconductor Manufacturing Co (TSMC) recently admitted that it is unable to keep up with the original schedule for building two factories in Arizona. Similarly, rumors circulate that Intel is facing identical problems with its plan to build two factories in Ohio. The Ohio site is expected to start production only in 2027, due to unresolved issues regarding subsidies.
Intel’s Announced Cost Reduction and Subsidies Hopes
Intel was proud to announce in its recent quarterly conference a $3 billion cost reduction achieved last year. However, the company has challenging years ahead. Not only does it have to invest in new facilities, but it also has to catch up in the manufacturing process. In the face of these challenges, the tech giant was counting on government subsidies to cover up to 30% of its expenditure on these new facilities.
The project to build two factories in Ohio was initially budgeted at $20 billion. Hence, an ideal scenario for Intel would involve subsidies amounting to billions of dollars. Intel had hoped to start chip production in these Ohio facilities by 2025. Still, according to The Wall Street Journal, citing informed sources, the timeframe is now moving to the end of 2026 for construction completion. Setting up equipment will take additional time, inevitably delaying the chip production start date to 2027 at the earliest.
Intel’s Response to Delays
Intel representatives have simply commented on the situation, stating that “managing large projects often involves adapting to changing timelines”. Still, they emphasized the company’s dedication to its plans. From the outset, Intel heavily relied on state subsidies for its Ohio facilities construction plans. Currently, approximately 800 construction specialists are involved in the Ohio project, with prospects of raising the workforce to 7000. In the future, Intel hopes to develop the site further with an investment of up to $100 billion.
Government Involvement and Future Plans
The Ohio state authorities had planned to provide Intel with up to $600 million, anticipating the creation of about 3000 jobs at the future Intel factories. It’s worth noting that Intel’s projects in Oregon, Arizona, and New Mexico have progressed, albeit with difficulties at times, towards the fulfillment of the planned objectives. A potential concern for Intel is the dependence on the Ohio project for the introduction of the advanced Intel 18A process. This process is scheduled for implementation at these facilities. Currently, relevant equipment is being utilized in Oregon, where testing and prototyping are conducted. If delays continue with the Ohio project, Oregon might become the site for serial production of Intel’s most advanced products. This could occur as early as next year.
