USA announces aid
Intel wants to catch up with competition with $100 billion
March 20, 2024, 3:01 p.m
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For a long time, the semiconductor manufacturer Intel was the leader in the industry. But the tide has long since turned. Now the group wants to catch up with its Taiwanese competitor TMSC with massive investments. Help comes from the US government.
Following its investment plans in Magdeburg, Intel now also wants to significantly expand its existing semiconductor production on the US home market with government aid. The former market leader wants to make up for its shortfall in the field of chips for artificial intelligence (AI) in the long term. In the next five years, $100 billion will be invested in the construction and expansion of plants in several US states, the company said. This is to be financed with $19.5 billion in loans and grants from the federal government, with the hope of $25 billion in tax relief and from current business. Intel shares rose four percent premarket on Wednesday.
The heart of the investment plans is the construction of a new factory that will become the world’s largest production facility for AI chips, explained Intel boss Pat Gelsinger. The factory will be built on a greenfield site near the city of Columbus in the state of Ohio and will go into operation in 2027 or 2028. In addition, plants in New Mexico and Oregon are to be modernized and expanded in Arizona.
Intel rival Taiwan Semiconductor Manufacturing Co (TSMC) is also building a factory in Arizona. He also relies on government subsidies. With its Chips Act of 2022, President Joe Biden’s government wants to bring semiconductor production, which has often moved to Asia, back to the USA. The US government announced the Intel aid on Wednesday.
Intel lost leadership position
For decades, Intel was the world’s leading manufacturer of fast and small semiconductors, which it was therefore able to sell at top prices. Intel invested the money in research and development and was able to maintain its leading position for a long time. But in the 2010s, the US group was overtaken by TSMC.
In 2021, Intel boss Gelsinger promised to bring the company back to the top with significant investments. But he demanded government support for this. In addition, it will take years to rebuild the US chip industry. “It took more than three decades to lose this industry,” Gelsinger said. “With the Chips Act, it won’t come back in three to five years.”
In Germany, Intel in Magdeburg and TSMC in Dresden also want to set up chip factories with billions in state aid. In Italy and France, however, Intel has postponed similar plans, according to the Italian government.