Intel’s $100 Billion Plan For Advanced U.S. Manufacturing Delayed To 2022

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U.S. chipmaker Intel Corporation has delayed its announcement of more than $200 billion of chip making facilities in the United States and Europe according to statements made by its chief executive officer Mr. Patrick Gelsinger in Malaysia yesterday. Mr. Gelsinger is on a trip to Asia to engage Intel's suppliers in the region as his company and others in the semiconductor industry struggle with historic supply chain constraints owing to pandemic-induced economic turmoil and historic demand. Intel, which announced another multibillion-dollar plan to build chip making facilities in the United States had also intended to disclose construction sites for additional plants in the U.S. and European Union by the end of this year according to previous statements by Mr. Gelsinger and other executives.

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Soon after Mr. Gelsinger took the top spot at Intel earlier this year, the company announced a $20 million plan to build facilities in Ocotillo, Arizona for manufacturing semiconductor products for other companies. Dubbed as contract manufacturing, the plan aims to target the Taiwan Semiconductor Manufacturing Company (TSMC), who is responsible for providing most consumer electronics and computing firms with the latest processors and other chips that it builds through orders received from others.

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However, the Arizona investment was only the tip of the iceberg for Intel, which is aggressively pushing to develop and commercialize the latest chip manufacturing technologies. The company's production roadmap revealed earlier this year, aims to reduce transistor sizes to as small as 18-Angstroms.

Yet, Intel's plans to announce new chip manufacturing facilities in Europe and U.S. appear to have been delayed. Mr. Gelsinger, in an interview given to the Washington Post in August this year had stated that his company would build its next "major mega-fab location" in the U.S., which would be "the most refined and capable manufacturing capacity, all in the U.S., with U.S. intellectual property."

He also went on to state that:

This would be a very large site, so six to eight fab modules, and at each of those fab modules, between 10- and $15 billion. It's a project over the next decade on the order of $100 billion of capital, 10,000 direct jobs. 100,000 jobs are created as a result of those 10,000, by our experience.

Mr. Gelsinger during his press conference in Malaysia yesterday. Image: AP

Additionally, Intel representatives had also outlined similar plans for facilities in the European Union. These plans would involve two facilities with total annual operations costs of $20 billion for a ten year period, and they involved the chipmaker bringing its 10-nanometer chip technologies to the other side of the Atlantic.

However, Mr. Gelsinger's latest statements during a press conference in Malaysia yesterday seem to indicate that the plans have been delayed. According to Reuters, the Intel chief outlined during the event that his company now aims to announce new European and American chip manufacturing facilities early next year. No reasons have been provided for the delay, as Intel announced a $7 billion Malaysian chip facility for late stage chip manufacturing which involves packaging and testing.

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The delay comes as Mr. Gelsinger remains adamant about U.S. government support for the semiconductor industry. Fearing that valuable intellectual property might be unsafe if American companies are left behind, the executive has pushed for subsidies to U.S. firms for building chip facilities as opposed to giving them to international companies such as TSMC and Samsung, both of who also plan to build new chip plants in America

He believes that the competition is tilted in the favor of the Asian companies who often receive substantially higher subsidies from their government when compared to the support for U.S companies such as Intel and Texas Instruments.

The author has no position in any of the stocks mentioned. WCCF TECH INC has a disclosure and ethics policy.
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