SANTA CLARA, California, March 20 (Reuters) – Intel (INTC.O), opens new tab is planning a $100 billion spending spree across four U.S. states to build and expand factories after securing $19.5 billion in federal grants and loans – and it hopes to secure another $25 billion in tax breaks, according to ”reuters.com”.
The centerpiece of Intel’s five-year spending plan is turning empty fields near Columbus, Ohio, into what CEO Pat Gelsinger described to reporters on Tuesday as „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, sending its shares up 4% in premarket trading.
Intel’s plan will also involve revamping sites in New Mexico and Oregon, and expanding operations in Arizona, where longtime rival Taiwan Semiconductor Manufacturing Co (2330.TW), opens new tab is also building a massive factory that it hopes will receive funding from President Joe Biden’s push to bring advanced semiconductor manufacturing back to the U.S.
For decades, Intel 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 cut prices to keep market share with inferior products.
Gelsinger said about 30% of the $100 billion plan will be spent on construction costs such as labor, piping and concrete. The remaining will go to buying chipmaking tools from firms such as ASML (ASML.AS), opens new tab, Tokyo Electron (8035.T), opens new tab, Applied Materials (AMAT.O), opens new tab and KLA (KLAC.O), opens new tab, among others.
Gelsinger has previously said that a second round of U.S. funding for chip factories likely will be needed to re-establish the United States as a leader in semiconductor manufacturing, which he reiterated on Tuesday.
„It took us three-plus decades to lose this industry. It’s not going to come back in three to five years of CHIPS Act” funding, said Gelsinger, who referred to the low-interest-rate funding as „smart capital”.
However, even with the federal backing, Intel needs to show that it can compete with its Taiwanese and Korean rivals sooner rather than later, said Ben Bajarin, CEO of analyst firm Creative Strategies.
„Only Intel has the workforce, technology, and supply chain that is largely U.S. centric. So while what TSMC and Samsung are doing here is important and should be welcomed, it’s also important to have a strong home team,” he said.
Read the full art. on ”reuters.com”.
Photo: ”freepik.com”