In a move to boost domestic chip manufacturing, President Joe Biden recently signed the CHIPS and Science Act, which has been in the making since August 2022. Leading the charge in this effort is tech giant Intel, which has long been a cornerstone of U.S. industry.
This morning, the White House announced a collaborative agreement with the Department of Commerce that would provide up to $8.5 billion in funding for Intel’s U.S.-based production.
The CHIPS Act can be seen as a direct result of a number of pressing geopolitical issues.
One of these issues is the ongoing supply chain bottleneck that has been exacerbated by the pandemic, particularly in Asia. This has been further compounded by simmering tensions between the U.S. and China, which have intensified in recent years.
Most of the world’s semiconductors are still produced in Asia, specifically in Taiwan, where major companies like TSMC and Chinese cities like Shenzhen play a significant role in the manufacturing process. However, early pandemic lockdowns in these areas led to a virtual standstill in industries such as smartphones and automotive.
The desire to revitalize U.S. industry and reduce reliance on foreign manufacturing has been a driving force behind the CHIPS Act. One clear example of this is Intel’s decision to open a massive $10 billion manufacturing facility near Columbus, Ohio, even before the Act was signed into law.
Intel’s investment is also indicative of the growth of tech scenes in areas outside of traditional hubs like San Francisco and New York.
Speaking of their plans, Intel stated,
it expects to invest 10 times that amount over the next five years, with additional sites planned for Arizona, New Mexico, and Oregon, in addition to Ohio.
This ambitious undertaking is expected to create 20,000 construction jobs and 10,000 manufacturing jobs, which is music to the ears of an administration focused on improving monthly jobs reports.
But there’s more to this move than just job creation. By having a U.S.-based company manufacture products in the U.S., bottlenecks can be addressed by bringing manufacturing closer to the point of consumption. In an election year, these are all potential selling points for an incumbent candidate.
According to U.S. Secretary of Commerce Gina Raimondo, the agreement with Intel could potentially incentivize over $100 billion in investments, marking one of the biggest investments ever in U.S. semiconductor manufacturing and creating over 30,000 new jobs.
Despite these efforts, questions remain about whether the U.S. government is doing enough to level the playing field between domestic chip companies and their foreign competitors. Industry experts have expressed concerns that while initiatives like the CHIPS Act are a good start, they are not enough to close the gap between U.S. manufacturing and the lead held by companies like TSMC. Additionally, it will take considerable time for these new factories to become operational.
Just recently, Intel pushed back the start date of its New Albany, Ohio plant by two years, citing changes in the business environment. As of now, the company has spent $1.5 billion on the project, with only 69 employees from 14 Ohio counties and construction workers from 75 of Ohio’s 88 counties involved. These numbers may not significantly impact job reports just yet, but as Intel continues to forge ahead with its plans, the potential for long-term growth and job creation remains promising.
Key Takeaways:
- President Joe Biden signed the CHIPS and Science Act into law in August 2022, aimed at increasing domestic chip manufacturing in the U.S.
- Intel, a major player in the tech industry, received $8.5 billion from the Department of Commerce in support of their U.S.-based production efforts.
- Revitalizing U.S. industry and reducing reliance on foreign manufacturing were key factors in the formation of the CHIPS Act.
- Intel plans to invest $10 billion in a manufacturing facility outside Columbus, Ohio, with plans for additional sites in Arizona, New Mexico, and Oregon.
- The project is expected to create 20,000 construction jobs and 10,000 manufacturing jobs, a welcome boost for an administration focused on improving monthly job reports.
- The agreement with Intel has the potential to incentivize over $100 billion in investments and create over 30,000 jobs.
- Despite these efforts, questions remain about whether the U.S. government is doing enough to level the playing field for domestic chip companies.
- Intel recently pushed back the start date of its Ohio plant by two years, but remains committed to its long-term goals.
