Intel to Invest US$20bn to Build 2 Plants in Ohio

U.S. President Joe Biden stresses the importance of semiconductor supply at the White House in February 2021.

The United States has made clear its intention to reorganize the semiconductor manufacturing ecosystem around the United States. 

U.S. President Joe Biden and Intel CEO Pet Gelsinger announced on Jan. 21 (U.S. local time) that Intel will invest US$20 billion to build two semiconductor production plants in the U.S. state of Ohio. The plants will begin operations in 2025. Intel said its Ohio investment in Ohio will be expanded to up to US$100 billion.

Intel is the world’s No. 1 system semiconductor company. It enjoys the largest share in the central processing unit (CPU) market. It is an integrated device manufacturer (IDM) that both designs and produces chips. However, growth has stagnated due to its weak CPU competitiveness. According to market research firm Gartner, Intel lost its No. 1 position in terms of semiconductor sales to Samsung Electronics for the first time in three years in 2021. 

Intel is trying to find a breakthrough by entering the foundry industry. This means that the company will collide head-on with TSMC and Samsung Electronics, which rank first and second in the foundry industry, respectively.

Most of the world’s high-ranking fabless companies are based in the U.S. According to TrendForce, a market research firm, six of the top 10 fabless companies were American firms as of the third quarter of 2021.

The U.S. government wants semiconductors designed by U.S. companies to be made in the United States. It called for the passage of the US Innovation and Competition Act. The bill is aimed at changing the current semiconductor industry landscape, where 75 percent of the world’s semiconductors are produced in East Asia and 95 percent of advanced system semiconductors in Taiwan. If the bill is approved, up to US$90 billion can be used to support the U.S. manufacturing industry.

Shortly after taking office, President Biden called semiconductor companies to the White House to pressure them to invest in the U.S. It kept in place semiconductor export controls on China used by former President Donald Trump. In 2021, the U.S. Department of Commerce received information on the semiconductor industry’s supply chain. The results are scheduled to come out by the end of January.

Global semiconductor companies have pledged to invest a total of US$80 billion in the U.S. by 2025. TSMC has decided to invest US$12 billion and Samsung Electronics US$17 billion. Texas Instruments, which is the eighth-largest company in terms of semiconductor sales in the world, will invest US$30 billion. GlobalFoundries, the world’s fourth-largest foundry company, will set up a new factory in the state of New York. Micron Technology, the world’s third-largest memory manufacturer, has decided to expand U.S. production. SK Hynix will establish an R&D center in the United States.

Meanwhile, Korean chipmakers have to ponder more about their semiconductor business. They have been put into a position to take into account both economic variables and political variables. In particular, Samsung Electronics has seen uncertainties growing in its future foundry business.

Samsung Electronics has secured corporate customers by taking the initiative in introducing the sub-7nm ultra-micro fabrication process. It has taken orders that TSMC could not accept or establish multiple production systems with TSMC. Intel plans to operate an ultra-micro foundry like TSMC and Samsung Electronics. Inevitably, Samsung Electronics and Intel will fiercely compete for the second place. 

SK Hynix has plenty to ponder regarding the operations of production facilities in China as conflicts are continuing between the United States and China. Following DRAMs, SK Hynix will also produce NAND flashes in China starting in 2022. It acquired the NAND flash business unit from Intel. It will engage in the foundry business in China, too. Its system semiconductor subsidiary is about to complete relocation of its production lines in Korea to China. The United States is controlling the supply of semiconductor production equipment built with U.S. technology to China. It opposed the introduction of extreme ultraviolet (EUV) facilities to SK Hynix’s DRAM plant in China. China put conditions on SK Hynix’s acquisition of the NAND business unit from Intel. It was unusual. SK Hynix said there was nothing to worry about. The market appears to be concerned about the company's future.

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