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Intel plans to spend $100 billion on US chip manufacturing plants

Money waterfall: The Biden Administration is investing a substantial amount of money to establish a chipmaking industry in the US, and private companies are not idling either. Intel, a major American corporation with significant expertise and manufacturing capabilities in the chip business, aims to play a pivotal role in this new industrial renaissance.

Just after the White House announced the $19.5 billion investment as part of the CHIPS Act initiative, Intel has unveiled its ambitious plan for the future of chip manufacturing in the US. The x86 chipmaker plans to invest $100 billion in the next few years, constructing new manufacturing plants and expanding existing locations across the country.

According to Intel CEO Pat Gelsinger, the corporation aims to transform empty fields near Columbus, Ohio, into the “largest AI chip manufacturing site in the world,” with actual chip production commencing as soon as 2027. The new plant will play a pivotal role in Intel’s $100 billion plan, while additional building and revamping initiatives will involve the company’s sites in New Mexico, Oregon, and Arizona.

Gelsinger explained to reporters that approximately 30 percent of the investment will be allocated to construction costs, including labor, piping, and concrete. The remainder will be spent on acquiring new, advanced chip manufacturing machinery developed by ASML, Tokyo Electron, Applied Materials, KLA, and other companies.

Most of the newly acquired manufacturing tools will go to the Ohio plant, Gelsinger said, and will begin producing new chips by 2027 or 2028. There is no set timeline, and plans could change based on market conditions or trends in silicon spending. Federal subsidies and low-interest loans are crucial to Intel’s plan, but the company expects to finance most of the purchases needed for the new plant with its own funds and cash flows.

According to Summit Insights analyst Kinngai Chan, Intel will need three to five years to become a significant player in the global foundry market. Even with a $100 billion investment, Chan warns, Intel may not acquire a major stake in the chipmaking market. Taiwanese company TSMC is likely to maintain its position as the world’s largest chip foundry business for the foreseeable future.

Intel isn’t expected to lose its dominant position in the x86 PC chip market anytime soon. However, Gelsinger acknowledged that the US lost its global chip supremacy over the past three decades. Gelsinger stated that the industry won’t rebound within three to five years of CHIPS Act subsidies, and a second round of federal investments will likely be necessary to have a lasting impact on the market.

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