Intel to invest $20bn in two microchip factories in Ohio as US semiconductor industry expands

HOUSTON (ICIS)–Intel will make an initial investment of $20bn to build two new microchip factories in Ohio, the US semiconductor producer said on Friday.

Planning for the first two factories will start immediately, with construction expected to begin later this year. Production is expected to come online in 2025 at what would be the company’s first new manufacturing site location in 40 years.

“Intel’s actions will help build a more resilient supply chain and ensure reliable access to advanced semiconductors for years to come,” said Intel CEO Pat Gelsinger.

CHIP SHORTAGE
A global shortage of microchips emerged as economies across the globe began to reopen after shutting down to help stop the spread of COVID-19, which led to a surge in demand.

The shortage directly contributed to auto manufacturers cutting production, which weighed on demand for chemicals as the automotive industry is a major consumer of petrochemicals that contribute more than a third of the raw material costs of an average vehicle.

Polymers used in automobiles include polypropylene (PP), polyurethanes, nylon, acrylonitrile butadiene styrene (ABS), styrene acrylonitrile (SAN), polycarbonate (PC) and styrene butadiene rubber (SBR).

Sales of new light vehicles in 2021 totalled 14.93m units, which was up by 3.1% from 2020 but well below the 17m sold in 2019, prior to the pandemic.

CHIPS ACT
The US Congress introduced legislation in June (Facilitating American-Built Semiconductors Act) aimed at incentivising increased domestic production of chips with an investment tax credit and providing funding (CHIPS for America Act) for semiconductor manufacturing, design, and research provisions.

US President Joe Biden said his administration is working with the House and the Senate to finalise the legislation. The CHIPS for America Act would provide $52bn to accelerate additional private sector investment.

According to the Semiconductor Industry Association, almost $80bn has been invested in the industry since the start of 2021.

Texas Instruments is investing up to $30bn to build a new 300mm wafer fab production facility in north Texas with the potential for up to four fabs at the site to meet future demand.

The company also said it continues to add incremental capacity at existing sites.

Samsung is also building a $17bn manufacturing facility in Texas, with groundbreaking in the first half of 2022.

A Taiwanese firm, Sunlit Chemical, broke ground this week on a $100m plant in Phoenix, Arizona to produce hydrofluoric acid and other high-purity industrial chemicals for the semiconductor sector.

The project’s first phase is expected to be operational in early 2023, with the remaining $50m phase 2, involving raw material purification, expected operational in 2025.

AUTOMAKER PARTNERSHIPS
Some automakers have entered into deals with chip manufacturers to secure their own lines of supply.

US automaker Ford and semiconductor manufacturer GlobalFoundries announced in November a deal to create additional semiconductor supply.

US automaker General Motors (GM) will work with chip manufacturers Qualcomm Inc, STMicroelectronics NV, Taiwan Semiconductor Manufacturing Co, Renasas Electronics Corp, ON Semiconductor Corp, NXP Semiconductors and Infineon Technologies AG on new strategies designed to improve the supply of microchips needed for modern vehicles.

And German car maker BMW sealed a trilateral “direct supply assurance agreement” with microchip firms INOVA Semiconductors and GlobalFoundries in December to secure semiconductor chip supplies for the long term.

Focus story by Adam Yanelli

Additional reporting by Stefan Baumgarten, Will Beacham