• Intel is planning a US$100-billion spending spree across four U.S. states to build and expand factories.
  • The centerpiece of Intel’s five-year spending plan is turning empty fields near Columbus, Ohio, into “the largest AI chip manufacturing site in the world”, starting as soon as 2027.

The U.S. government announced the federal funds to Intel under the Chips Act on Wednesday. Intel prepares for a US$100 billion spending spree across four US states to build and expand factories after securing $19.5 billion in federal grants and loans.

Rivals

Intel’s plan will also involve revamping sites in New Mexico and Oregon and expanding operations in Arizona. However, Intel’s longtime rival Taiwan Semiconductor Manufacturing Company (TSMC) also building a massive factory that it hopes will receive funding from President Joe Biden.

The funds provided by Biden’s plan for a broader chipmaking renaissance will go a long way to help Intel mend its wounded business model.

For decades, the firm led the world in making the fastest and smallest semiconductors, selling them at a premium price and plowing the profits back into more research and development to stay ahead of the pack.

But Intel lost that manufacturing edge in the 2010s to TSMC and its profit margins plummeted as it maintained market share with inferior products through price cuts.

Also read: Intel aims for over 100 million AI PCs globally by 2025

Plans for renaissance

Inter CEO Pat Gelsinger announced a plan in 2021 to return Intel to the No. 1 position, but he has said he will need government support to make the plan profitable.

Gelsinger said about 30% of the US$100-billion plan will be spent on construction costs such as labor, piping, and concrete, the remaining will go towards buying chipmaking tools from firms such as Advanced Semiconductor Material Lithography (ASML), Tokyo Electron, Applied Materials, and KLA Corporation among others.

Those tools will help bring the Ohio site online by 2027 or 2028, though Gelsinger warned the timeline could slip if the chip market dives.

Beyond grants and loans, Intel plans to make most of the purchases from its existing cash flows.

Kinngai Chan, an analyst at Summit Insights said, “It will still take three to five years for Intel to become a serious player in the foundry market for cutting-edge chips.”