Intel to spend $20 billion on Ohio chipmaking hub meant to become the world’s largest

The chipmaker will begin construction of two fabrication plants on a 1,000-acre site in New Albany, which it expects to be operational by 2025, said the person, asking not to be identified before a planned public announcement. Time magazine reported the plans earlier, citing an interview with Chief Executive Officer Pat Gelsinger. He said the Santa Clara, California-based company will use the location as a hub to research, develop and manufacture its most advanced chips and will have the option to expand to 2,000 acres and up to eight fabs.

“We helped to establish the Silicon Valley,” Gelsinger told Time. “Now we’re going to do the Silicon Heartland.”

Intel shares rose 0.6% in pre-market trading in New York. 

Intel’s leader has been vocal about the need to build more chip factories in the U.S. and Europe, areas where manufacturing of the vital electronic components has declined precipitously. Gelsinger has argued that a rebalancing of production is needed to reverse its increasing concentration in East Asia. He has pointed to the pandemic-induced supply chain crunch and increasing geopolitical tension between China and the U.S. as evidence that Western governments need to find cash to persuade chipmakers to relocate. 

Adding Ohio to its list of locations, not traditionally an area associated with the technology industry, adds to the greater geographical diversity that Gelsinger has championed. Intel is also looking at sites in Germany, Italy and France for new factories, test and assembly plants, and research and design centers, Bloomberg has reported.

Putting some of Intel’s billions of dollars in capital expenditure to work in a new location for the company — it currently has plants in Oregon, Arizona and New Mexico — may help bolster Gelsinger’s appeal for taxpayer money. That in turn will help cushion some of the drag on profitability caused by his ambitious plans to restore Intel’s manufacturing prowess and muscle in on the business of outsourced chipmaking, an area dominated by Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co.

This year Intel’s CEO has budgeted a record amount of spending on new factories and equipment. But, highlighting the massive and growing cost of state-of-the-art chipmaking, TSMC and Samsung are planning to raise the stakes even higher. 

TSMC has set aside more than $40 billion for capital expenditures this year. That compares with Intel’s plan to spend up to $28 billion. South Korea’s Samsung will likely announce its 2020 plans on Jan. 27 in its earnings release. Analysts, on average, predict a companywide budget of about $36 billion.