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.
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 United States.
The funds provided by Biden’s plan for a broader chipmaking renaissance will go a long way to help Intel mend its wounded business model.
For decades, the firm 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 announced a plan in 2021 to return Intel to the No. 1 position, but he has said he will need government support to make the plan profitable.
With that assistance in hand, it is now time for Intel to spend.
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 towards buying chipmaking tools from firms such as ASML.
