Intel plans to build $20 billion chip complex in Ohio

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Intel plans to build $20 billion chip complex in Ohio

Intel INTC plans to build a $20 billion chip manufacturing complex in Ohio on Friday. The chip giant believes that the build-out will include two new plants but could eventually lead to as many as eight factories, making it one of the largest semiconductor manufacturing sites on Earth.

This is just the latest effort to reduce our reliance on scant foreign chips. In September Intel broke ground on two new plants in Arizona, while Samsung and Texas Instruments TXN are set to build sites in Texas, and we've got plants going up, and huge investments happening across the U.S. GlobalFoundries GFS is going to put up a new facility in New York.

Automakers cut their orders of chips at the beginning of the epidemic, only to see demand for autos soar. Chipmakers turned their attention to the growing need for home electronics. The combination of automakers trying to get chips and tech companies snagging them, coupled with COVID shutdowns, resulted in an implosion of the industry, and huge delays of chips.

New plants won't throw chips overnight, while the investments in new factories benefit the U.S. and its global competitiveness in the semiconductor industry.

Everything from cars to video game consoles will be affected by the shortage.

It takes years to build factories and months to produce chips.

Semiconductors are extremely intricate products that require factories built on seismically stable ground to prevent interruptions during production. It takes years to build those plants. Intel will break ground on its two new factories this year, but won't complete until 2025.

These new facilities won't be able to pump out chips anytime soon. The semiconductors would take months to produce even if they were able to put them up quickly. Processors require high-performance machines that layer various materials onto silicon wafers that are then divided into individual chips.

Lead times of up to 26 weeks, or roughly six months, are the norm in the industry to produce a finished chip, according to the Semiconductor Industry Association. When they are fabricated, those chips need to be shipped and installed into the products you want to buy, whether it's home appliances like washers and dryers or computer monitors. During a press conference at the White House announcing Intel's investment on Friday, President Joe Biden pointed out the ongoing chip crisis as one of the driving factors of inflation.

Everything from cars to dishwashers are delayed in order to get to showrooms and customers as demand goes up, he said. We're really behind the curve because supply is low. Prices are going up. The shortage has hit the cars in particular. Automakers from Ford F to Toyota TM and GM GM have been forced to idle plants as they wait for more chips. In the coming years, the need for chips in vehicles will increase as more advanced driver assistance systems are added. By 2030, chips alone will make up 20% of the cost of a vehicle, according to Pat Gelsinger, Intel CEO.

A few months ago, I wrote how I've been trying to help two friends score a PlayStation 5: I still haven't been able to snag one. They are still going for hundreds of dollars over the suggested retail price of the manufacturers.

The new factories will ensure that the U.S. has its own chips supply, rather than solve the chip shortage now, so manufacturers don't have to rely on overseas companies or supply chains.

The chip shortage will be there for a few more months, likely for a few more months. The cars, game consoles, and graphics cards will be more expensive, or in short supply until then.

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